TMI Blog2011 (12) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... e refund at proper time - Decided in favor of the assessee - WP(C) NOs. 1732, 3435 & 3436 OF 2008 - - - Dated:- 9-12-2011 - P.R. RAMACHANDRA MENON, J. P. Balakrishnan and K.C. Kiran for the Petitioner. P.K.R. Menon and Jose Joseph for the Respondent. JUDGMENT 1. The main issue involved in all these cases preferred by the partners of a firm is rather the same, i.e. whether the rejection of their claim for' interest on refund of the tax paid under the Wealth Tax Act, stating that the tax paid was not in response to any 'demand' raised, but by way of self-assessment, is justified or not. 2. Since the sequence of events in all the three cases is almost similar, but for the name of the parties and difference in respect of the assessment year concerned, it will be enough, if reference is made to the facts, figures, exhibits and parties as arrayed in W.P. (C) No. 1732 of 2008, more so, when the issue involved is purely a 'question of law'. 3. The petitioner is a partner of the firm by name M/s Abad Fisheries and also a partner of another establishment by name M/s Abad Enterprises. In respect of the assessment year 1991 - '92, return was filed under the Wealt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax paid by the petitioner and as such, Ext. P4 petition was filed by the petitioner/assessee before the Assessing Officer for granting interest, pointing out that, there was a mistake apparent on the face of the records, which required to be rectified. The Assessing Officer considered the matter, who held that, the payment effected by the petitioner/assessee was not against any notice of payment issued under Section 30 of the Act, the petitioner having effected payment Under Section 15B of the Act. According to the Assessing Officer, 'Explanation' to Section 34(4B)(a) clarified that, interest would be payable, only if the payment was against any 'notice of demand' issued under Section 30. The claim for interest was accordingly rejected as per Ext. P5. Ext. P6 petition filed by the petitioner/assessee, before the first respondent under Section 25 of the Act, did not turn to be fruitful and the same was dismissed as per Ext. P7 order dated 28.09.2007, which made the petitioner to approach this Court by filing W.P.(C) 1732 of 2000. Almost similar is the course and events, pursued by the other petitioners and the authorities under the Act, in respect of W.P.(C) Nos. 3435 3436 of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner as above, the crucial question to be considered is, whether the tax liability of 'the petitioner/assessee was fixed based on the actual net wealth, as given in the revised return, facilitating refund if any, on time. 10. Going by the contents of Ext. P1 original assessment order passed by the second respondent, filing of the revised return is very much taken note of. It was also taken note of by the Assessing Authority that the Tribunal had already held in the assessee's own case that the element of purchase tax was an admissible liability and that the assessee is entitled to have the assessment finalized in tune with the revised return. But, the said plea was not accepted by the second respondent/assessing authority, as given in Ext. P1 order itself, holding that, the Department had sought for a reference against the Tribunal's order and the assessment was finalized accordingly, mulcting a higher liability. This made the petitioner/assessee to have it challenged by filing appeal before the first appellate authority, which was considered and allowed; but, the department succeeded in getting the same reversed. It was thereupon, that the petitioner/assessee approached thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax on the basis of the figures given in the return, including by way of interest, if there is any delay in filing return. Sub section (2) of Section 15B says that, after the regular assessment under Section 16, the amount if any paid under sub Section (1) shall be deemed to have been paid towards- such regular assessment. When any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under the Wealth Tax Act, 1957, the Assessing Officer shall serve upon assessee, a notice of demand in the prescribed form specifying the sum so payable, as provided under Section 30 of the Act. Section 31 explains, when the tax becomes payable and when the assessee shall be deemed to be in default, with reference to the entries in the demand notice to be given under Section 30. Refunds are provided under Chapter VII A of the Act, more particularly, under Section 34A. Sub-sections 3, 3A and 4 of Section 34A specifying the rate of interest and such other relevant aspects, are specifically made not applicable in respect of any assessment for the assessment year commencing from 01.04.1989 or any subsequent assessment year, as provided under sub Section (4A). The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m put forth by the petitioner/assessee will be more beneficial. 13. The assessee/partner of the firms 'Abad Fisheries' and 'Abad Enterprises' limited, is engaged in the export of marine products. The firms purchase products locally and subject to certain process, the same is exported to foreign countries. The firms claimed exemption from the liability to pay purchase tax under Section 5 of the KGST Act in respect of the purchase turnover. It was on the ground that the said turnover was exempted under Section 5(3) of the CST Act and in the return filed by the assessee, he claimed his share in the previous year of its accounts for liability towards payment of purchase tax under the KGST Act, showing it as a 'debt' owed by him. It was with reference to the said factual position, that some observations were made by this Court, when the assessing officer was directed to 're-do' the assessment, as taken note of by the assessing authority while passing Ext. P2 order. It was accordingly, that the particulars were called from the assessee in this regard as well, however, holding that, as on date, there was no liability towards the payment of purchase tax, as a result of sales tax assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the balance amount of tax, interest, penalty or fine as the case may be, in consequence of any order under the Act, would it become necessary to have issued a demand notice under Section 30. If the amount is paid accordingly, in terms of the Statute as above, the same would require to be refunded with interest as specified when the actual liability is subsequently varied on appeal/revision/order rectifying the mistake, or under such other circumstances. 15. The absence of issuance of any notice under Section 30 will not or cannot tilt the balance in any manner as the liability to pay the amount is not on the basis of the demand notice, but on the basis of the assessment. Issuance of notice under Section 30 is only a consequential step to have the due amount realized. To put it more clear, a law-abiding citizen, who discharges the liability voluntarily as a prudent man to satisfy the same pursuant to the assessment (whether it be self-assessment or otherwise) without waiting for issuance of notice of demand, cannot be put in more disadvantageous position than a person who satisfies the due amount with interest or otherwise for the delay if any, after issuance of a notice of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... soning given in Ext. P7 to distinguish Modi Industries Ltd. ( supra ) is quite wrong and misconceived, if not puerile. 17. The Apex Court had further occasion to consider the law, as to the liability to satisfy interest on refund in respect of 'advance tax' paid in excess of the tax as assessed, in Sandvik Asia Ltd. ( supra ). After referring to the earlier decisions on the point, including Modi Industries Ltd. case ( cited supra ). It was held by .the Bench that the assessee was entitled to have interest, also by virtue of general principles to pay interest, on the accounts wrongfully retained. The said decision was relied on by a Division Bench of the Madras High Court in CIT v. Cholamqndalam Investment Finance Co. Ltd. [2007] 294 ITR 438/[2008] 166 taxman 132 and the appeal preferred by the Department/Revenue was dismissed, upholding the eligibility of the assessee to have interest on refund. The substantial question of law sought to be considered by the Bench was with reference to the question whether the assessee was entitled to have interest on the refund of lax paid under Section 140 A, made on 'self-assessment' , bringing the same within the purview of "any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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