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2016 (11) TMI 1014 - DELHI HIGH COURT

2016 (11) TMI 1014 - DELHI HIGH COURT - [2016] 388 ITR 280 - Claim of refund of tax paid earlier since the return was treated as Invalid by the AO - delay in rectification of return u/s 139(9) - After declaring the above return of income as invalid return, the revenue invoking coercive action for recovery of the tax and interest - attachment orders - Held that:- This court is of opinion that the reliance on the Karnataka High Court ruling in K. Nagesh (2015 (6) TMI 217 - KARNATAKA HIGH COURT ) f .....

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ses an order, leading to refund. Now, it is moot whether the nullification on ground of non-compliance due- not due to denial of liability - but other reasons, automatically leads to a situation contended by the assesseee. Facially, the contention is insubstantial, because Section 139, even while obliging the officer to a course of action, i.e., declaring the return invalid, also says significantly that ďand the provisions of this Act shall apply as if the assessee had failed to furnish the retu .....

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annot succeed. - W.P. (C) 2569/2015 - Dated:- 21-9-2016 - MR. S. RAVINDRA BHAT AND MS. DEEPA SHARMA JJ. Appellants Through: Mr. Ajay Vohra, Sr. Advocate with Mr. Vaibhav Kulkarni, Advocates. Respondents Through: Mr. Rahul Chaudhary, Sr. Standing Counsel. S.RAVINDRA BHAT, J. 1. The petitioner seeks quashing of the notice dated 12.03.2015 issued under section 226(3) of the Income-tax Act, 1961( the Act ) and a further direction to the respondent Income tax authorities (hereafter the revenue ) to v .....

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the said income, total tax and interest payable in accordance with the provisions of the Act worked out to ₹ 113,60,91,737/-. Against this, the Petitioner claimed credit of prepaid taxes amounting to ₹ 27,63,84,333/-. Since the Petitioner was facing liquidity crunch at that point of time, the Petitioner, therefore, in the return of income showed ₹ 85,97,07,400/- as balance tax payable. The Petitioner also paid ₹ 65 Crores on different dates in April 2014 thereby leaving .....

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income was to be treated as invalid return. As the defect was not rectified, the revenue issued a letter dated 03.11.2014 declaring the return of income filed by the Petitioner for the assessment year 2013-14 as invalid return under section 139(9) of the Act. The petitioner, on 26.12.2014 through a letter to the revenue, contended that the defect of non-payment of tax and interest was not rectified due to the financial crisis faced by it. 3. After declaring the above return of income as invalid .....

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f income would become non est, thereby, ousting all the officers of the revenue from taking cognizance whatsoever, of the information furnished in the said return of income. Reliance is placed upon Section 139 (9) particularly the non-obstante clause to contend that in case an assessee fails to rectify the defect in the return of income within the stipulated time period, then, overriding all other provisions of the Act, the said return of income shall be treated as invalid return of income and i .....

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f-assessment tax under section 140A of the Act. 5. The petitioner argues that since the return of income filed by it was treated as invalid by the revenue, the tax and interest shown as payable in the said invalid return of income would become nugatory and would be of no consequence. Further, submitted senior counsel that presently, no valid demand of tax and interest has been raised by the revenue upon the petitioner inasmuch as neither any notice has been issued under Section 156 nor any intim .....

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n Telengana State Beverage Corporation Ltd v Union of India 2015 60 Taxmann.com 236. Mr. Vohra further states that after filing of the present petition, on 14.03.2015, the assessee filed a belated return, claiming total income of ₹ 139.60 crores, on which after adjusting amounts paid, a refund of over ₹ 21 crores was claimed. Later, during pendency of the present proceedings, search proceedings took place in the petitioner s premises, after which it received notice under Section 153A .....

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ring an income of ₹ 289,61,04,740/-. On the said income, total tax and interest payable then was Rs.l13,60,91,737/-. Hence it is clear and evident that the total admitted tax and interest liability payable at that point of time amounted to ₹ 113,60,91,737/-. After adjusting pre-paid taxes amounting to ₹ 27,63,84,333/-, the balance amount payable was ₹ 85,97,07,400/-. Thereafter the petitioner paid ₹ 65 crores only on different dates in April 2014. Yet, the balance o .....

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titioner filed its return, it admitted tax liability. Though the return was initially without the full tax amount, it claims that after filing returns it deposited ₹ 65 crores. There was yet a shortfall of about ₹ 24 crores; since this shortfall was not made good- not because the assessee disclaimed liability, but rather because of its financial constraint, the assessing officer declared the return invalid. When the revenue has sought to take coercive measures, the assessee petitione .....

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t to the assessee and give him an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the Assessing Officer may, in his discretion, allow; and if the defect is not rectified within the said period of fifteen days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, the return shall be treated as a .....

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tions are fulfilled, namely :- 16(a) the annexures, statements and columns in the return of income relating to computation of income chargeable under each head of income, computation of gross total income and total income have been duly filled in; [(aa) the tax together with interest, if any, payable in accordance with the provisions of section 140A, has been paid on or before the date of furnishing of the return;] (i) the tax, if any, claimed to have been deducted or collected at source and the .....

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ection (14) of section 155; (ii) the amount of compulsory deposit, if any, claimed to have been made under the Compulsory Deposit Scheme (Income-tax Payers) Act, 1974 (38 of 1974) Section 140A reads as follows: 140A. (1) Where any tax is payable on the basis of any return required to be furnished under section 115WD or section 115WH or section 139 or section 142 or section 148 or section 153A or, as the case may be, section 158BC, after taking into account,- (i) the amount of tax, if any, alread .....

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iable to pay such tax together with interest payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, before furnishing the return and the return shall be accompanied by proof of payment of such tax and interest33. Explanation. - Where the amount paid by the assessee under this subsection falls short of the aggregate of the tax and interest as aforesaid, the amount so paid shall first be adjusted towards the interest payabl .....

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relief of tax claimed under section 90A on account of tax paid in any specified territory outside India referred to in that section; and (e) any tax credit claimed to be set off in accordance with the provisions of section 115JAA or section 115JD; (ii) undersection 115WK shall be computed on the amount of tax on the value of the fringe benefits as declared in the return as reduced by the advance tax, paid, if any. (1B) For the purposes of sub-section (1), interest payable under section 234B sha .....

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account in computing such total income; (ii) any relief of tax or deduction of tax claimed under section 90 or section 91 on account of tax paid in a country outside India; (iii) any relief of tax claimed under section 90A on account of tax paid in any specified territory outside India referred to in that section; and (iv) any tax credit claimed to be set off in accordance with the provisions of section 115JAA or section 115JD. (2) After a regular assessment under section 115WE or section 115WF .....

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of the tax or interest or both remaining unpaid, and all the provisions of this Act shall apply accordingly. (4) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to .....

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assessment is set aside or cancelled and an order of fresh assessment is directed to be made, the refund, if any, shall become due only on the making of such fresh assessment; (b) the assessment is annulled, the refund shall become due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee. 9. In Shelly Enterprises (supra), discussing a full bench judgment of the Gujarat High Court, the Supreme Court observed that an assessee upo .....

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e view that liability to pay tax arises because of Section 4 (1) which does not depend on an assessment order, but upon the rate or rates applicable for a given assessment year. The liability to pay tax arises on the total income on the publication of rates; such tax is to be computed by the assessee in accordance with the provisions of the Act. By the process of self-assessment, the assessee is required to pay tax on the basis of his return and such tax is treated as assessed tax. Therefore, un .....

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rns filed by the assessee can ensue and such tax which is collected on the basis of the return filed by the assessee remains a valid and legal recovery in accordance with the provisions of the said Act and there is no question of any violation of Article 265 of the Constitution of India in respect of the tax so recovered on the basis of the total income shown by the assessee in his return." 10. The Gujarat High Court had also said that Section 240 as it stood prior to the addition of the pr .....

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essees themselves admitting their liability to pay such tax. The asseessees do not contend that the tax of which refund is claimed was not chargeable or payable, but claim refund on the sole ground of the failure of the authorities to pass an order of assessment. Having considered the authorities on the subject, we find ourselves in agreement with the view of the Gujarat High Court in Saurashtra Cement and Chemical Industries Ltd. (supra). The question that falls for our consideration in these a .....

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e position that if an assessment is framed, which is later nullified in appeal or revision or other proceedings, any amount paid by way of income tax pursuant to the order of assessment, over and above the advance tax and self-assessment tax is undoubtedly refundable under Section 240 of the Act. The only dispute is with regard to the refund of the advance tax and self-assessment tax which is paid by the assessee on his own assessment of his liability and is based on the return of income filed b .....

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payable and provides for other matters relevant to the computation of tax. Thus the tax is required to be paid in advance by the assessee, even before assessment is made, and he himself is required to compute his liability having regard to the rates and exemptions applicable. Thus, both the levy and collection of tax is in accordance with law. We find considerable force in the submission of the revenue and it must be upheld. We have earlier noticed the scheme of the Act. Section 4 of the Act cr .....

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ides for payment of tax in this manner by the assessee. The Act also enjoins upon the assessee the duty to file a return of income disclosing his true income. On the basis of the income so disclosed, the assessee is required to make a self-assessment and to compute the tax payable on such income and to pay the same in the manner provided by the Act. Thus the filing of return and the payment of tax thereon computed at the prescribed rates amounts to an admission of tax liability which the assesse .....

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income tax thereon which involves a process of self-assessment. Since all this is done under authority of law, there is no scope for contending that Article 265 is violated. What then is the effect of the failure to make an order of assessment after the earlier assessment made is set aside or nullified in appropriate proceedings? If the assessing authority cannot make a fresh assessment in accordance with the provisions of the Act it amounts to deemed acceptance of the return of income furnished .....

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income disclosed. Even if the tax paid is found to be less than that payable, no further demand can be made for recovery of the balance amount since a fresh assessment is barred. In other words, the tax paid by the assessee must be accepted as it is, and in the event of the tax paid being in excess of the tax liability duly computed on the basis of return furnished and the rates applicable, the excess shall be refunded to the assessee, since its retention may offend Article 265 of the Constitut .....

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nd of the excess tax paid in the course of assessment proceeding. He can certainly make such a claim also before the concerned authority calculating the refund. Similarly, if he has by mistake or inadvertence or on account of ignorance, included in his income any amount which is exempted from payment of income-tax, or is not income within the contemplation of law, he may likewise bring this to the notice of the assessing authority, which if satisfied, may grant him relief and refund the tax paid .....

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on the basis of the return furnished, which may have a bearing on the quantum of the refund, such as those the assessee could have urged under Section 237 of the Act. The concerned authority, for the limited purpose of calculating the amount to be refunded under section 240 of the Act, may take all such facts into consideration and calculate the amount to be refunded. So viewed, an assessee will not be placed in a more disadvantages position than what he would have been, had an assessment been .....

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