2006 (3) TMI 203 - AT - Income Tax

Summary

Issues Involved:
1. Justification of the learned CIT(A) in rejecting the claim of refund of Rs. 7.50 lakhs.
2. Whether the claim of the assessee is time-barred under section 239(1)(c) of the Act.
3. Whether the order of the Assessing Officer rejecting the claim of the assessee is appealable or not.

Detailed Analysis:

1. Justification of the learned CIT(A) in rejecting the claim of refund of Rs. 7.50 lakhs:

The assessee-firm was assessed for the block period ending 4-12-1997, resulting in a demand of Rs. 19.99 lakhs and an additional demand of Rs. 1.59 lakhs for the assessment year 1997-98. The assessee paid Rs. 7.50 lakhs in installments, which were mistakenly specified for the assessment year 1997-98 instead of the block period. The CIT(A) set aside the block assessment and deleted certain additions, resulting in a "NIL" income assessment. Consequently, the payment of Rs. 7.50 lakhs became refundable. However, the Assessing Officer did not credit this amount, asserting it was paid for the assessment year 1997-98. The CIT(A) agreed with the Assessing Officer, stating the refund claim was time-barred and suggesting the assessee seek relief under section 119(2)(b) of the Act.

2. Whether the claim of the assessee is time-barred under section 239(1)(c) of the Act:

The Tribunal noted that article 265 of the Constitution of India mandates that no tax shall be collected except by authority of law. Section 237 of the Income-tax Act, 1961, entitles the assessee to a refund if the tax paid exceeds the amount chargeable. The Assessing Officer denied the refund claim, citing it was time-barred under section 239(2)(c). The Tribunal clarified that section 239(2)(c) applies to claims made within one year from the last date of the concerned assessment year. However, refunds ascertainable after the assessment or appellate order, such as under section 240, are outside the scope of section 239(2)(c). Therefore, the limitation period under section 239(2)(c) does not apply to refunds under section 240.

3. Whether the order of the Assessing Officer rejecting the claim of the assessee is appealable or not:

The Tribunal emphasized that the right of appeal is conferred by statute, specifically under section 246A(1)(i) for orders made under section 237. Section 239 does not restrict this right of appeal. The Tribunal held that the CIT(A) could not dismiss the appeal on the grounds of limitation under section 239(2)(c). Refunds under section 240, which do not require a claim by the assessee, are still within the scope of section 237. Therefore, the order of the Assessing Officer denying the refund was appealable.

Conclusion:

The Tribunal concluded that the claim of the assessee for refund falls within the scope of section 237 and is not barred by the limitation period under section 239(2)(c). Consequently, the order of the Assessing Officer was appealable, and the CIT(A) was not justified in refusing the refund. The Tribunal set aside the CIT(A)'s order and directed the Assessing Officer to allow the refund after verification. The appeal of the assessee was allowed.