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2014 (11) TMI 1224 - HC - Income TaxRefund of the tax paid in pursuance of the declaration filed u/s 158BC - entitled to claim the entire refund of taxes paid on the undisclosed income declared m the return of income filed by the assessee - Whether the Tribunal was correct in holding that the assessee would be entitled to claim the entire refund of taxes paid on the undisclosed income declared in the return of income filed by the assessee of ₹ 83 lakhs and the admitted tax paid along with the return of ₹ 14,50,000/- and the balance after assessment, since the assessment order was set aside by ignoring the principle that the amount admitted in the return of income cannot be refunded? - HELD THAT:- Proviso (b) to section 240 is also declaratory. It seeks to clarify the law so as to remove doubts leading to the courts giving conflicting decisions, and in several cases directing the revenue to refund the entire amount of income-tax paid by the assessee where the revenue was not in a position to frame a fresh assessment, Being clarificatory in nature it must be held to be retrospective, in the facts and circumstances of the case. It is well settled that the legislature may pass a declaratory Act to set aside what the legislature deems to have been a judicial error in the interpretation of statute. It only seeks to clear a meaning of a provision of the principal Act and make explicit that which was already implicit. Where the assessment is annulled, the refund shall become due only In respect of the amount, if any, paid in excess of the tax chargeable on the total income return by the aesessee. Therefore, it necessarily follows that there should be return filed by the assessee showing his total income and paying tax. Thereafter, if the Assessing Officer were to make any addition and pass an assessment older and if that assessment is annulled, then, what is annulled is not the entire liability to pay tax. What is annulled is only additional tax foisted on the assessee by virtue of the assessment order in which event the tax refundable is only additional tax paid in pursuance of the assessment order and not the tax paid as per the returns. The returns filed was in pursuance of the notice issued under Section 158BC and it is not voluntary act. Whether the assessee files a NIL return or files a return showing a particular undisclosed income and pays tax, if the entire proceedings initiated is found to be without jurisdiction, the return filed becomes without jurisdiction and the order passed thereon also becomes without jurisdiction, in which event there is no liability to pay tax at all. Merely because the return was filed in pursuance of the said notice, it cannot be said that the assessee has filed a return showing his total income. The effect of setting aside the assessment order passed under Chapter XIV B is that there is no liability to pay tax insofar as the assessee is concerned. If any tax is collected in pursuance of such Cider, the entire tax becomes liable to be refunded. That is what the Tribunal has exactly held. - Decided against revenue.
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