2021 (11) TMI 1055 - HC - Income Tax

Protective assessment u/s 143-A - Settlement of case under the Vivad se Vishwas scheme under VSV Act 2020 - first respondent passed an order under Section 154 by concluding that the petitioner was indeed entitled for refund on sum paid as proportionate tax paid on the advance which was offered as tax by the petitioner and further interest under Section 244A - HELD THAT - There is no dispute that the petitioner has paid the tax for the relevant assessment year viz. 2011-12 and therefore the protective assessment for the year 2014-15 results in excess payment of tax. The petitioner cannot be taxed twice on the same income. Ultimately the purpose of exercising power under the Act is only intended to collect correct and just tax under the provisions of the Income Tax Act 1961 from an assessee. The Act is not intended either to collect or retain any amount which is not due from an assessee. In this connection a reference may be made to the decision of the Hon ble Supreme Court in Unichem Laboratories Ltd vs. Collector of Central Excise Bombay 2002 (9) TMI 110 - SUPREME COURT wherein the Hon ble Supreme Court held that it is no part of duty of the department to levy and collect tax which is not due to the department. As the department has also not disputed the fact that the petitioner has settled the dispute under the Vivad se Vishwas scheme for the assessment year 2011-12 as a consequence of which the tax offered and paid by the petitioner during the assessment year 2014-15 had become excess. That apart under Section 237 under Chapter XIX of the Income Tax Act there is no limitation prescribed for granting refund of the amount paid in excess as tax. Therefore I do not find any merits in the submissions made by the learned Senior Standing Counsel appearing on behalf of the respondents. Therefore these Writ Petitions deserves to be allowed.

Summary

Issues Involved:
1. Refund of tax paid for the Assessment Year 2014-15.
2. Validity of the order passed under Section 154 of the Income Tax Act, 1961.
3. Applicability of the Direct Taxes Vivad se Vishwas Scheme.
4. Department's contention on revising the assessment under Section 263 of the Income Tax Act, 1961.
5. Availability of alternate remedy through appeal.

Issue-wise Detailed Analysis:

1. Refund of tax paid for the Assessment Year 2014-15:
The petitioner sought a refund of Rs. 95,20,460/- and Rs. 91,05,200/- for the Assessment Year 2014-15, as determined by the first respondent under Section 154 of the Income Tax Act, 1961. The petitioner had initially paid tax on advances received from customers, which were later settled under the Direct Taxes Vivad se Vishwas Scheme for the Assessment Year 2011-12. The court noted that the petitioner cannot be taxed twice on the same income and emphasized that the purpose of the Act is to collect the correct and just tax, not to retain any amount not due from an assessee.

2. Validity of the order passed under Section 154 of the Income Tax Act, 1961:
The respondents argued that the first respondent was incompetent to revise the assessment made on 31.03.2016 under Section 154 of the Income Tax Act, 1961, citing the Supreme Court decision in Goetze (India) Ltd. However, the court found that the decision in Goetze was rendered in a different context and did not relate to the power of the Assessing Officer to entertain a claim for revision otherwise than by filing a revised return. The court upheld the validity of the order passed under Section 154 for the assessment year 2014-15.

3. Applicability of the Direct Taxes Vivad se Vishwas Scheme:
The petitioner had opted for the Vivad se Vishwas Scheme and settled the dispute for the Assessment Year 2011-12. As per Circular No.7 of 2020, on settlement of the dispute related to substantive addition under Vivad se Vishwas, the Assessing Officer must pass a rectification order deleting the protective addition relating to the same issue. The court found that the petitioner had complied with the scheme, and the tax paid during the Assessment Year 2014-15 had become excess due to the settlement.

4. Department's contention on revising the assessment under Section 263 of the Income Tax Act, 1961:
The respondents contended that there was a proposal to revise the order passed under Section 154 under Section 263 of the Income Tax Act, 1961. However, the court noted that the respondents had not disputed the fact that the petitioner had settled the dispute under the Vivad se Vishwas scheme, resulting in excess tax payment for the Assessment Year 2014-15. The court found no merit in the respondents' submissions and directed the refund of the excess amount.

5. Availability of alternate remedy through appeal:
The respondents suggested that the petitioner should approach the Appellate Commissioner as an alternate remedy. However, the court found that there was no limitation prescribed for granting a refund of the amount paid in excess as tax under Section 237 of the Income Tax Act. The court concluded that the writ petitions deserved to be allowed and directed the respondents to refund the excess amount paid for the Assessment Year 2014-15 within 45 days.

Conclusion:
The court allowed the writ petitions and directed the respondents to ascertain and refund the correct amount paid in excess for the Assessment Year 2014-15, along with interest, within 45 days. The court emphasized that the petitioner cannot be taxed twice on the same income and highlighted the importance of collecting the correct and just tax under the provisions of the Income Tax Act, 1961.