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2017 (2) TMI 37 - RAJASTHAN HIGH COURT

2017 (2) TMI 37 - RAJASTHAN HIGH COURT - TMI - Refunds of tax due to regular assessment proceedings - assessed tax is lower than returned tax - amount of tax recovered without any authority of law - Held that:- The contention raised by the appellant that on acceptance of the scrutiny, if he is entitled for other benefits which he has not claimed, the same be refunded to him i.e. after the proceeding if it is found that assessee is entitled for refund, the same should be refunded as the State can .....

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dismissed the appeal filed by the assessee and confirmed the order of the CIT(A). 2. This Court while admitting the appeal No.128/2006 on 05.07.2007 and appeal No.34/2008 on 20.08.2008 has framed the following substantial questions of law: 1. Whether Income Tax Appellate Tribunal overlooked and ignored the provision contained in Section 254(1) of the Income Tax Act in non granting relief to the assessee and affirming the order of the Commissioner of Income Tax (Appeals)? 2. Whether the Income Ta .....

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er: A word of caution. The authorities under the Act are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or on not being properly instructed, is over-assessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. This Court, in an unreported decision in case of Vinay Chandulal Satia v. Shri N.O.Parekh., the Commissioner of Income Tax, .....

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chnical pleas if the citizens have a lawful right and the lawful right is being denied to them merely on technical grounds. The State authorities cannot adopt the attitude which private litigants might adopt." 3.2. In the case of Commissioner of Income Tax Vs. Bakelite Hylam Ltd.- (1999) 237 ITR 0392, Andhra Pradesh High Court has held as under: On a reading of clause (b) of subsection (4) of Section 143 of the Act, it is clear that on an assessment made under Section 143(1)(a) of the Act, .....

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nation of the words so used in clause (b) of subsection (4) of Section 143 of the Act, we cannot borrow a different meaning than the one intended by flic Legislature to say that the Legislature did not visualise a situation permitting the assessing authority to grant refund also under regular assessment in favour of an assessee. Though the learned Standing Counsel for the Income Tax Department has contended that in the decision cited 205 ITR 585 (supra), the Bombay High Court has examined the sc .....

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t to Section 143 of the IT Act from the assessment year 1989-90 onwards. The Division Bench in the said decision has no occasion to deal with a question as to whether the Assessing Authority had the power to order refund while making a regular assessment under Section 143(3) of the Act. We are, therefore, of the view that this decision cannot render any assistance to the Revenue to say that the decision of the Bombay High Court is in line with the thinking of the Revenue. Merely because there ar .....

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by way of amendment in the year, 1989, we are inclined to hold that the Assessing Authority is entitled to determine the quantum of refund also in a regular assessment made under Section 143(3) of the Act. 3.3. In the case of Commissioner of Income Tax Vs. Vali Brothers- (2006) 282 ITR 0149 (All), Allahabad High Court has held as under: Section 237of the Act contemplates refund which reads as follows:- Section 237-Refunds:- "If any person satisfies the Income Tax Officer that the amount of .....

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cess amount. In the present case, admittedly, no amount has been held chargeable, therefore, the entire amount deposited towards advance tax was in excess and was refundable. The argument of learned Standing Counsel that in the present case, proceedings under Section 148 of the Act was drooped, therefore, there was no assessment and as such, the assessee was not entitled for refund, has no merit. In the case of Esthuri Aswathiah v. Income Fax Officer, Mysore State, their Lordships of the Supreme .....

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gs with an order that no assessment would be levied. Though, the assessee had offered an item of income for assessment as his, the Income Tax Officer came to the conclusion that it was the Hindu undivided family that was liable to be assessed on that income and not the assessee. It was a conclusion, whether it was right or wrong, that he had jurisdiction to reach; and, once be reached that conclusion, he could not tax the assessee. In Esthuri Aswathiah v. Income Tax Officer, Mysore State, their .....

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was not a case for the application of Section 35." 3.4. In the case of Seshammal (R.) Vs. Income-tax Officer- (1999)237 ITR 0185, Madras High Court has held as under: The fact that the petitioner had paid the monies to the Government under the mistaken notion that the association of persons would be liable for tax even when the assessment was not required to be made as an association of persons; that the amount though paid was not actually required to be paid and that the State has not refu .....

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at section. Section 237 of the Act provides that if monies have been paid in excess of the amount for which the payer is "properly chargeable under the Act for that assessment year" such person is entitled to get the refund of the excess amount. The entire amount paid by the assessee was in excess of the amount which was actually chargeable. The assessee was, therefore, entitled to have refund of the excess amount. Section 237 of the Act does not specify that an assessment order must b .....

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ular and yet the Assessing Officer has considered the circular and, therefore, he has not exercised powers independently. He has not exercised his own discretion. In the instant case, therefore, in paragraph 12, after rounding off the taxable income the following paragraph found in the assessment order, which reads as under, is quashed and set aside. However, as per the Central Board of Direct Taxes, New Delhi s Circular No.549 (see [1990] 182 ITR (St.)1), para. No.5.12, dated October 31, 1989, .....

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assessed itself had included that dividend income in its return for the year in question but there is no estoppel in the Income-tax Act and the assessed having itself challenged the validity of taxing the dividend during the year of assessment in question, it must be taken that it had resoled from the position which it had wrongly taken while filing the return. Quite apart from it, it is incumbent on the income-tax department to find out whether a particular income was assessable in the particul .....

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of Jute Corporation of India Ltd. Vs. Commissioner of Income Tax and another- (1991) 187 ITR 688 (SC), the Supreme court has held as under: Power to enhance Tax on discovery of new source of income is quite different than granting deduction on the admitted facts fully supported by the decision of this Court. If the tax liability of the assessee is admitted and if the Income Tax Officer is afforded opportunity of hearing by the Appellate Authority is allowing the assessee's claim for deducti .....

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sistant Commissioner in such an appeal. Under Section 31(3)(a) in disposing of such an appeal the Appellate Assistant Commissioner may, in the case of an order of assessment, confirm, reduce, enhance or annul the assessment; under clause (b) thereof he may set aside the assessment and direct the Income Tax Officer to make a fresh assessment. The Appellate Assistant Commissioner has, therefore, plenary powers in disposing of an appeal. The scope of his power is conterminous with that of the Incom .....

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ional ground even if not raised before the Income Tax Officer. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise an Appellate Authority while hearing appeal against the order of a subordinate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations if any prescribed by the statutory provi- sions. In the absence o .....

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er of Income-tax- (1998) 229 ITR 0383, the Supreme Court has held as under: 3. The assessee contended that on account of two orders of Special Benches of the Tribunal in the cases of Arasan Aluminium Industries (P) Ltd. and Nagarjuna Steels Ltd., the assessee learnt that the interest earned in this manner before the setting up of business is not taxable as income and it goes to reduce the capital cost of the plant. On learning about this legal position, the assessee sought to include the above t .....

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early. It is as follows: Where on the facts found by the authorities below a question of law arises (though not raised before the authorities) which bears on the tax liability of the assessee, whether the Tribunal has jurisdiction to examine the same ? 5. Under Section 254 of the Income-tax Act, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus .....

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first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under Section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings althou .....

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e subordinate authority may have in the matter. There is no good reason to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer. This Court further observed that there may be several factors justifying the raising of a new plea in an appeal and each case has to be considered on its own facts. The Appellate Assistant Commissioner must .....

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has held as under: In the case of the Appellate Assistant Commissioner there is an express power granted to him to enhance the tax liability. This is because the Department does not have a right of appeal before the Appellate Assistant Commissioner. As far as the Appellate Tribunal is concerned, the case may be, if it is aggrieved by any part of the order of the Appellate Assistant Commissioner. Therefore, any express power of enhancement has not been conferred on the Appellate Tribunal. The Tr .....

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Commissioner. We do not find anything in section 254 which would thus restrict the powers of the Appellate Tribunal while considering an appeal before it. As we have said earlier, the basic purpose of an appeal procedure in an income-tax matter is to ascertain the correct tax liability of the assessee in accordance with law. Therefore, at both the stages, either before the Appellate Assistant Commissioner or before the Appellate Tribunal, the appellate authority can consider the proceedings bef .....

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d before them or allowed to be raised before them either by the assessee or by the Department, as the case may be. They can consider the entire proceeding to determine the tax liability of the assessee. But they cannot travel beyond the proceedings to bring in new sources of income. The Explanation to section 251(2) clearly brings out this aspect. The Explanation clarifies the extent of the powers of an Appellate Assistant Commissioner. But, even before the Explanation was added to section 251, .....

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can be levied or collected save under authority of law. The task of an appellate authority under the taxing statute, especially a nondepartmental authority like the Tribunal, is to address its mind to the factual and legal basis of an assessment for the purpose of properly adjusting the taxpayer's liability to make it accord with the legal provisions governing his assessment. Since the be-all and end-all of the statutory provisions, especially those relating to the administration and manage .....

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oceedings. This is so, because the very object of the appeal is not to decide a point raised as a dispute, but any point which goes into the adjustment of the taxpayer's liability. In that sense, a view prevails, even in England, that the authorities sitting in appeal in a tax case, cannot be regarded as deciding a lis, but they are only engaged in an administrative act of adjusting the taxpayer's liability. Under our fiscal jurisprudence, we may regard the appellate authorities as exerc .....

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uits of finality, as it is called, and the appellate authority being confined to the subjectmatter of the appeal are all ideas which might have relevance if the discussion centers on purely civil litigation and such like adversary proceedings as in an industrial dispute. But in a case where the Revenue is all the while a party, in a manner of speaking, and is also at the same time, an authority vested with the responsibilities of drawing up the assessment and laying down the correct liability, i .....

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