1984 (1) TMI 46 - HC - Income Tax

Summary

Issues Involved:
1. Maintainability of the appeal under Section 246 of the Income-tax Act, 1961.

Detailed Analysis:

Issue 1: Maintainability of the Appeal under Section 246

Facts:
The assessee, Badri Prasad Gour, filed returns for the assessment years 1962-63 and 1963-64, and provisional assessments were made. After his death, regular assessments were made, which were appealed by his legal representatives. The Tribunal cancelled the regular assessments, resulting in revised assessments showing nil income. The ITO, however, directed that the tax deposited under the provisional assessments should not be refunded. The legal representatives appealed this direction under Section 246, which was dismissed by the AAC and affirmed by the Tribunal. The matter was then referred to the High Court.

Contentions:
- Assessee's Argument: The appeal is maintainable under Section 246(n) as it pertains to an order under Section 237, which should be read with Section 240. The ITO's direction not to refund the tax, despite the revised income being nil, is appealable.
- Revenue's Argument: An appeal is a statutory right and does not lie unless specified. Section 246(n) allows appeals against orders under Section 237, which requires a refund claim under Section 239. Since no such claim was made, the appeal is not maintainable. Refunds under Section 240 can be enforced via a writ of mandamus or civil suit, but not through an appeal.

Legal Provisions:
- Section 237: Entitles an assessee to a refund if the tax paid exceeds the amount chargeable.
- Section 239: Prescribes the form and limitation for claiming refunds.
- Section 240: Mandates the ITO to refund amounts due as a result of orders in appeals or other proceedings without a claim being made.

Court's Analysis:
The court examined Sections 237, 239, and 240 together. It concluded that:
- Section 237 provides the right to a refund for excess tax paid.
- Section 239 outlines the procedure and limitation for claiming refunds.
- Section 240 acts as an exception to Section 239, requiring the ITO to refund amounts due from appellate or other proceedings without a claim.

The court held that the ITO's refusal to refund the tax, despite the revised income being nil, constitutes an order under Section 237. Thus, the appeal under Section 246(n) is maintainable. The obligation under Section 240 to refund without a claim does not negate the right to appeal under Section 246(n).

Distinguishing Case Law:
The court distinguished the Full Bench decision of the Punjab and Haryana High Court in R. A. Boga v. AAC of Income-tax, which involved a remand for reassessment, from the present case where the assessment proceedings had concluded with a nil tax liability.

Conclusion:
The court answered the reference in the affirmative, holding that the appeal filed by the applicant before the Appellate Assistant Commissioner of Income-tax was maintainable under Section 246 of the Income-tax Act, 1961. The parties were directed to bear their own costs.