TMI Blog2011 (6) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 239 of the 1961 Act but there is a procedural lapse, for non-compliance, the refund should not be denied. - contention of the department rejected. In the present case the respondent has deprived the petitioner of its money which was refundable as per statute. The question of delay invoking writ jurisdiction has to be considered with a duty cast by the statute on the authority. When a statutory authority does not pass any order and fails to comply with the statutory mandate within reasonable time, they cannot take the defence of laches and delay. - Invoking the provisions of Article 300A of the Constitution, refund allowed to assessee. - 15639 OF 2006 AND 7127 OF 2008 - - - Dated:- 3-6-2011 - DIPAK MISRA, SANJIV KHANNA, JJ. Salil Aggarwal and Y.K. Kapur for the Petitioner. N.P. Sahni and Ms. Rashmi Chopra for the Respondent. JUDGMENT Sanjiv Khanna, J. These two writ petitions were heard on different dates, but as the issue and subject-matter are similar, they are being disposed of by this common decision. Factual aspects have been discussed below and the result would show one writ petition is being allowed and the other is being dismissed by applying th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly applicable to the arguments raised. The Supreme Court in the said case has held that Article 265 mandates that no tax can be levied or collected except by authority of law, which means that tax collected contrary to law has to be refunded; but the question is - when a tax is considered to have been levied and collected without authority of law. The Supreme Court visualized several hypothetical situations and answered questions but for the purpose of this case we are required to examine two distinct situations/categories. The first situation is where the tax is collected or voluntarily paid to the authority under a valid enactment but by misconstruing or by wrong interpretation of the provisions of the enactment or by erroneous determination of relevant facts. The second category of cases is where the enactment by which tax is levied is an unconstitutional enactment or its provisions transgress the constitutional limitations. In such cases, refund becomes due because enactment/statute imposing the tax or the provision is unconstitutional. This second category of cases will normally be cases; (1) where legislative competence of the legislature is challenged and questioned on the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jected. But it so happens that sometime later - may be one year, five years, ten years, twenty years or even fifty years - the Supreme Court holds, in the case of some other manufacturer that the levy of that kind is not exigible in law. (We must reiterate - we are not speaking of a case where a provision of the Act whereunder the duty is struck down as unconstitutional. We are speaking of a case involving interpretation of the provisions of the Act, Rules and Notifications.) The question is whether "X" can claim refund of the duty paid by him on the ground that he has discovered the mistake of law when the Supreme Court has declared the law in the case of another manufacturer and whether he can say that he will be entitled to file a suit or a writ petition for refund of the duty paid by him within three years of such discovery of mistake? Instances of this nature can be multiplied. It may not be a decision of the Supreme Court that leads "X" to discover his mistake; it may be a decision of the High Court. It may also be a case where "X" fights up to first appellate or second appellate stage, gives up the fight, pays the tax and then pleads that he has discovered the mistake of law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Preamble and the guiding principles of State Policy adumbrated in Articles 38 and 39 - an aspect dealt with at some length at a later stage. The very concept of economic justice means and demands that unless the claimant (for refund) establishes that he has not passed on the burden of the duty/tax to others, he has no just claim for refund. It would be a parody of economic justice to refund the duty to a claimant who has already collected the said amount from his buyers. The refund should really be made to the persons who have actually borne its burden - that would be economic justice. Conferring an unwarranted and unmerited monetary benefit upon an individual is the very antithesis of the concept of economic justice and the principles underlying Articles 38 and 39. Now, the right to refund arising as a result of declaration of unconstitutionality of a provision of the enactment can also be looked at as a statutory right of restitution. It can be said in such a case that the tax paid has been paid under a mistake of law which mistake of law was discovered by the manufacturer/assessee on the declaration of invalidity of the provision by the court. section 72 of the Contract Act may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Contract Act along with section 17(1)(c) of the Limitation Act, 1963, the period of limitation for making such a claim for refund, whether by way of a suit or by way of a writ petition, is three years from the date of discovery of such mistake of law? Kanhaiya Lal is understood as saying that such a course is permissible. Later decisions commencing from Bhailal Bhai have held that the period of limitation in such cases is three years from the date of discovery of the mistake of law. With the greatest respect to the learned Judges who said so, we find ourselves unable to agree with the said proposition. Acceptance of the said proposition would do violence to several well-accepted concepts of law. One of the important principles of law, based upon public policy, is the sanctity attaching to the finality of any proceeding, be it a suit or any other proceeding. Where a duty has been collected under a particular order which has become final, the refund of that duty cannot be claimed unless the order (whether it is an order of assessment, adjudication or any other order under which the duty is paid) is set aside according to law. So long as that order stands, the duty cannot be recov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovides for both the situations represented by sections 11-A and 11-B. As held by a seven-Judge Bench in Kamala Mills, following the principles enunciated in Firm Illuri Subbayya Chetty, the words "any assessment made under this Act" are wide enough to cover all assessments made by the appropriate authorities under the Act whether the assessments are correct or not and that the words "an assessment made" cannot mean an assessment properly and correctly made. It was also pointed out in the said decision that the provisions of the Bombay Sales Tax Act clearly indicate that all questions pertaining to the liability of the dealer to pay assessment in respect of their transactions are expressly left to be decided by the appropriate authorities under the Act as matters falling within their jurisdiction. Whether or not a return is correct and whether a transaction is exigible to tax or not are all matters to be determined by the authorities under the Act. The argument that the finding of the authority that a particular transaction is taxable under the Act is a finding on a collateral fact and, therefore, resort to civil court is open, was expressly rejected and it was affirmed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een meant to provide for this. We are, therefore, of the clear and considered opinion that the theory of mistake of law and the consequent period of limitation of three years from the date of discovery of such mistake of law cannot be invoked by an assessee taking advantage of the decision in another assessee s case. All claims for refund ought to be, and ought to have been, filed only under and in accordance with Rule 11/Section 11-B and under no other provision and in no other forum. An assessee must succeed or fail in his own proceedings and the finality of the proceedings in his own case cannot be ignored and refund ordered in his favour just because in another assessee's case, a similar point is decided in favour of the manufacturer/assessee. (See the pertinent observations of Hidayatullah, C.J. in Tilokchand Motichand extracted in para 46.) The decisions of this Court saying to the contrary must be held to have been decided wrongly and are accordingly overruled herewith." 9. Like the Central Excise and Salt Act, 1944, the two enactments, i.e., the 1961 Act and the 1957 Act are self-contained codes exhaustive of matters dealt with therein. They are also exhaustive to obligat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction/claim, even when the order/assessment has attained finality 11. Provisions of assessment are independent of provisions of refund, but the provisions relating to refund may be dependent on the assessment. (See CIT v. Central India Industries Ltd. [1971] 82 ITR 555 (SC)). An assessment order or an order quantifying the income/net wealth can be rectified or modified in the proceedings as contemplated by the enactment. The assessment order or the order quantifying the income or taxable wealth cannot be challenged on merits while the authorities examine the question of refund. The authorities cannot go behind the assessment order or the order quantifying net wealth/income. Section 242 of the 1961 Act is apposite and is reproduced below:- "242. Correctness of assessment not to be questioned. In a claim under this Chapter, it shall not be open to the assessee to question the correctness of any assessment or other matter decided which has become final and conclusive or ask for a review of the same, and the assessee shall not be entitled to any relief on such claim except refund of tax wrongly paid or paid in excess." 12. Another principle is that the refund provisions should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income-tax, or is not income within the contemplation of law, he may likewise bring this to the notice of the assessing authority, which if satisfied, may grant him relief and refund the tax paid in excess, if any. Such matters can be brought to the notice of the concerned authority in a case when refund is due and payable, and the authority concerned, on being satisfied, shall grant appropriate relief." Facts of the W.P. (C) No. 7127 of 2008 14. The petitioner No. 1, Indglonal Investment Finance Limited, by this writ petition has prayed for quashing of the order dated 23rd August, 2007 passed by the respondent No. 1, Income-tax Officer, Ward No. 11(4), New Delhi and for direction that the respondent should refund Rs. 5,73,038 along with interest. It is stated that this amount was deducted as TDS during the period relevant to the assessment year 1994-95 and is refundable. 15. By the impugned order dated 23rd August, 2007, the claim for refund has been rejected on the ground that in the return of income for the assessment year 1994-95 filed on 29-11-1994, the assessee/petitioner had declared total loss of Rs. 4,56,994 and no amount was shown as deducted towards TDS and no cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proper manner within one year from the last date of the relevant assessment year. Rule 41 of the Income-tax Rules, 1962 (Rules, for short) is also relevant. As per the aforesaid Rule, claim for refund is to be accompanied by a return in the prescribed form and in case a person makes a claim for refund that consists of dividend from any other income on which tax has been deducted at source, the claim is required to be accompanied by certificate of TDS. The said provisions for refund have been liberally interpreted in favour of the assessee and hyper-technical grounds which hinder the right of the assessee to get refund have not been encouraged. When there has been substantial compliance of sections 237 and 239 of the 1961 Act but there is a procedural lapse, for non-compliance, the refund should not be denied. 18. Section 240 of the 1961 Act provides that where, as a result of any order passed in appeal or other proceedings under the Act, refund of any amount becomes due to any assessee, the Assessing Officer shall refund the amount to the assessee without his having made any claim in that behalf. Interpreting the expression "other proceedings" in section 240 of the 1961 Act i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. Photocopy of the acknowledgment issued by the Department at the time of filing of return is available on our file. Acknowledgment shows that there was a specific column i.e. column No. 5, in which the assessee was required to show total tax deducted and collected at source. Against the said column, the figure written is NIL. A perusal of the acknowledgment of return also shows that no specific claim for refund was mentioned. The column has been left blank. In the column relating to number of documents attached regarding pre-paid taxes etc., no detail has been given. 21. The original file of the department was called and has been produced before us. We have examined the original file. The Income-tax form for the said year consisted of 10 pages. The original return available on record consists of the first 4 pages and pages 9 and 10. Pages 5 to 8 are not available on the record. It is obvious that these have been removed. However, at page 3 of the return, income of Rs. 20,83,125 has been declared as dividend from Asian Consolidated Industries Limited. Page No. 10 of the return available on record, shows that the assessee had filed statement of assessable income, statutory audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return : Provided that where the assessee rectifies the defect after the expiry of the said period of fifteen days or the further period allowed, but before the assessment is made, the Assessing Officer may condone the delay and treat the return as a valid return. Explanation. For the purposes of this sub-section, a return of income shall be regarded as defective unless all the following conditions are fulfilled, namely: (a) the annexures, statements and columns in the return of income relating to computation of income chargeable under each head of income, computation of gross total income and total income have been duly filled in ; (b) the return is accompanied by a statement showing the computation of the tax payable on the basis of the return; (bb) the return is accompanied by the report of the audit obtained under section 44AB; (c) the return is accompanied by proof of (i) the tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re a part of the return. As a matter of abundant caution, we clarify that the statutory provision with regard to return have undergone a change as now in some cases documents along with return are not required to be filed. However, we are not concerned with the present statutory provisions. Once we examine and consider the documents attached to the return, it is apparent that the petitioner had made a claim for refund of Rs. 5,73,034. 25. The Income-tax return as filed consists of 10 pages. Pages 5 to 8 which are the relevant pages pertaining to refund are missing. There is no explanation by the revenue/respondent why and how they are missing. Although these are pages missing from the Income-tax return filed by the petitioner, statement of total income, computation of tax payable on the total income and attachment of the original TDS certificate with the original return, have not been denied or disputed by the respondent. This supports the stand of the petitioner. The statement of assessable income on record clearly shows that TDS on dividend amounting to Rs. 5,73,038 is refundable. The return for the relevant assessment year had been filed by the petitioner well within the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court for quashing the land acquisition proceedings on the ground that the proceedings for acquisition of the lands in question have remained pending for more than a decade, in the cases of Aflatoon v. Lt. Governor of Delhi and Ramjas Foundation v. Union of India. According to us, the question of delay in invoking the writ jurisdiction of the High Court under Article 226 or of this Court under Article 32, has to be considered along with the inaction on the part of the authorities, who had to perform their statutory duties. Can the statutory authority take a plea that although it has not performed its duty within a reasonable time, but it is of no consequence because the person, who has been wronged or deprived of his right, has also not invoked the jurisdiction of the High Court or of this Court for a suitable writ or direction to grant the relief considered appropriate in the circumstances? The authorities are enjoined by the statute concerned to perform their duties within a reasonable time, and as such they are answerable to the Court why such duties have not been performed by them, which has caused injury to claimants. By not questioning, the validity of the acquisition procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llants, we are satisfied that the case projected before the court by the appellants is utterly untenable and not worthy of emanating from any State which professes the least regard to being a welfare State. When we pointed out to the learned counsel that, at this stage at least, the State should be gracious enough to accept its mistake and promptly pay the compensation to the respondent, the State has taken an intractable attitude and persisted in opposing what appears to be a just and reasonable claim of the respondent. 7. Ours is a constitutional democracy and the rights available to the citizens are declared by the Constitution. Although Article 19(1)(f) was deleted by the Forty-fourth Amendment to the Constitution, Article 300A has been placed in the Constitution, which reads as follows : "300A. Persons not to be deprived of property save by authority of law. No person shall be deprived of his property save by authority of law." 8. This is a case where we find utter lack of legal authority for deprivation of the respondent s property by the appellants who are State authorities. In our view, this case was an eminently fit one for exercising the writ jurisdiction of the Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest, then, without prejudice to the provisions of sub-section (2), an intimation shall be sent to the assessee specifying the sum so payable, and such intimation shall be deemed to be a notice of demand issued under section 30 and all the provisions of this Act shall apply accordingly ; and (ii) if any refund is due on the basis of such return, it shall be granted to the assessee and an intimation to this effect shall be sent to the assessee : Provided that except as otherwise provided in this sub-section, the acknowledgement of the return shall be deemed to be intimation under this sub-section where either no sum is payable by the assessee or no refund is due to him : Provided further that no intimation under this sub-section shall be sent after the expiry of two years from the end of the assessment year in which the net wealth was first assessable. (1A) and (1B) omitted by FA 1999 with effect from 1-6-1999. (2) Where a return has been made under section 14 or section 15, or in response to a notice under clause (i) of sub-section (4) of this section, the Assessing Officer shall, if he considers it necessary or expedient to ensure that the assessee has not understat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : Provided that such opportunity shall be given by the Assessing Officer by serving a notice calling upon the person to show cause, on a date and time to be specified in the notice, why the assessment should not be completed to the best of his judgment : Provided further that it shall not be necessary to give such opportunity in a case where a notice under sub-section (4) has been issued prior to the making of the assessment under this sub-section. (6) Where a regular assessment under sub-section (3) or sub-section (5) is made, (a) any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment; (b) if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly." 35. Section 16(1) of the 1957 Act stipulated that where a return of wealth was filed, the Assessing Officer would on the basis of such return examine whether after adjustment of the amount paid by way of tax or interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (2), which read as under : "34A. Refunds.--(1) Where, as a result of any order passed in appeal or other proceeding (including a rectification proceeding) under this Act, refund of any amount becomes due to the assessee, the Assessing Officer shall, except as otherwise provided in this Act, refund the amount to the assessee without his having to make any claim in that behalf : Provided that where, by the order aforesaid, (a) an assessment is set aside or cancelled and an order of fresh assessment is directed to be made, the refund, if any, shall become due only on the making of such fresh assessment; (b) the assessment is annulled, the refund shall become due only of the amount, if any, of the tax paid in excess of the tax chargeable on the net wealth returned by the assessee. (2) Where refund of any amount becomes due to the assessee as a result of and order under this Act or under the provisions of sub-section (1) of section 16 after a return has been made under section 14 or section 15 or in response to a notice under clause (i) of sub-section (4) of section 16 and the Assessing Officer is of the opinion, having regard to the fact that, (i) a notice has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead to unacceptable consequences. There will be cases or writ petitions by the assessee, or even by the Revenue if a wrong order is passed by the Tribunal, based on the premise that the order or intimation on record being contrary to the provisions of the Act are null and void and, therefore, either tax should be refunded or tax should be paid. This is not acceptable. The Act itself is a complete code that deals with the question of payment of tax and refund of tax. It is not as if the petitioner was without remedy. The petitioner had remedy to either file a revised return or file a revision. The petitioner did not avail of the said remedies and the limitation period has now expired. The petitioner cannot get over the period of limitation by this method. Whether or not an asset was eligible to wealth tax is determined under the 1957 Act. 41. Reliance placed by the petitioner on Sandvik Asia Ltd. v. CIT [2006] 280 ITR 643/150 Taxman 591 (SC) is misconceived. In the said case, the assessee had claimed interest on the amount refundable. The amounts refundable represented interest which was paid by the assessee to the department under the 1961 Act. It was noticed that there was del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Subsequently, the assessee revised his return to claim deduction under section 10(10C) but the same was beyond limitation. The Assessing Officer had passed a rectification order under section 154 of 1961 Act, and had allowed the said deduction. But this order was reversed by the Commissioner exercising power under section 263 of the 1961 Act. The assessee filed a revision petition under section 264 of the 1961 Act which was dismissed. The High Court in the writ proceedings referred the two orders under section 263 and 264 of the 1961 Act. It was held that the Commissioner had the power to revise the assessment order under section 264, even if the revised return was not filed, once the assessee was able to show that he was over assessed. 46. Decision of Calcutta High Court in Mayank Poddar (HUF) v. WTO [2003] 262 ITR 633/130 Taxman 500, is on an appeal filed under the provisions of the 1957 Act. The same is not the position here. Conclusion 47. Accordingly, writ of mandamus is issued directing the respondent to process the claim on merits for refund to the petitioner-Indglonal Investment Finance Ltd., Rs 5,73,034 along with the interest as per the 1961 Act within eight weeks ..... 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