TMI Blog1998 (10) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... is correct in law in coming to the conclusion that an assessment made under section 143(3) can result in refund with effect from April 1, 1989 ?" The assessee-company filed its return of income for the assessment year 1989-90 on December 29, 1989, admitting a net income of Rs. 2,32,41,730. The return was processed under section 143(1)(a) of the Income-tax Act accepting the returned income and an intimation to that effect was issued to the assessee-company on June 11, 1990, which resulted in a refund of an amount of Rs. 1,08,00,894. Out of the said amount, a sum of Rs. 23,12,066 was adjusted towards tax arrears of the assessee for the assessment year 1986-87 and the balance of Rs. 84,88,828 was refunded to the assessee-company. Subsequently, the case of the assessee-company was taken up for scrutiny under section 143(3) of the Act on March 27, 1992. The Assessing Officer determined the taxable income at Rs. 1,76,62,580 which resulted in a further refund of Rs. 44,82,929. The Revenue was of the view that the income assessed by the Assessing Officer in respect of the assessee-company under section 143(3) of the Act cannot be less than the returned income shown by the assessee-com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income-tax that with effect from April 1, 1989, an assessment made under section 143(3) of the Act cannot result in a refund, is erroneous. On a consideration of the submissions and relevant provisions, the Income-tax Appellate Tribunal allowed the appeal filed by the assessee-company and set aside the order dated March 17, 1993, passed by the Commissioner of Income-tax under section 263 of the Act, by an order dated March 30, 1994. Aggrieved by the said order of the Tribunal dated March 30, 1994, the Revenue filed R. A. No. 381/Hyd of 1994 under section 256(1) of the Act formulating the two questions of law, as indicated above, and required the Tribunal to state the case and refer the questions of law for the opinion of this court. However, by an order dated January 23, 1995, the Tribunal rejected the said R. A. holding that no referable question of law arises for seeking the opinion of this court. Against the said order of the Tribunal dated January 23, 1995, the Revenue has preferred the present ITC under section 256(2) of the Income-tax Act. Sri J. V. Prasad, learned standing counsel for the Income-tax Department, appearing for the petitioner has submitted that w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -tax under section 263 of the Income-tax Act, dated March 17, 1993. According to learned standing counsel for the Income-tax Department, the Income-tax Appellate Tribunal fell in error while accepting the submissions of the assessee-company and the order of the Income-tax Appellate Tribunal in I.T.A. No. 950/Hyd of 1993 is contrary to the provisions of section 143(3) of the Income-tax Act and also the instructions issued by the Central Board of Direct Taxes, dated October 31, 1989. According to learned standing counsel, as against the order of the Tribunal, the Revenue filed R. A. No. 38 1 /Hyd of 1994 requiring the Tribunal to state the case and refer the two questions of law formulated by it for the opinion of this court, but the Tribunal rejected the said R. A. Learned standing counsel contended that the Tribunal ought to have held that the assessment made under section 143(3) of the Act cannot result in determination of income at a figure lesser than the returned income and no refund of amount can be ordered. In support of his contentions, learned standing counsel for the Revenue has taken us to a decision of the Bombay High Court reported in LML Ltd. v. M. K. Venkataraman, Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng authority does is only to compute the taxable income and neither a demand nor refund is made The demand is made only under section 156 of the Act. The liability to pay income-tax is provided -under sections 4 and 5 of the Act which are charging provisions and the other sections only provide the mechanism to determine the liability. Learned counsel further contended that under sections 199 and 219 of the Act, credit for such taxes deducted at source and advance tax paid already are to be given and it is only under section 237 of the Act if the taxes so paid by the assessee either by way of advance tax or tax deducted at source, after giving credit, if the tax liability is less than the tax paid, the assessee is entitled to seek refund under section 237 of the Act. Counsel nextly contended that even assuming for a moment that the instructions issued by the Central Board of Direct Taxes dated October 31, 1989, preclude the assessing authority from granting refund, such instructions cannot have overriding effect on the statutory provisions of the Income-tax Act. Learned counsel, therefore, submits that no referable questions of law are involved in interpreting the provisions under s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... do not empower the Assessing Officer to determine the income at less than the returned income and he is not entitled to order refund, we are not inclined to accept such contention. It is seen that the language so used under clause (b) of sub-section (3) of section 143 gives an impression that the Assessing Officer has got the power to determine the tax liability and also to refund the excess amount to the assessee. However, after amendment, the language employed by the Legislature under section 143(3) of the Act does not implicitly say that the Assessing Officer is entitled to grant refund also. However, this does not mean that the Legislature has withdrawn the powers of the assessing authority to grant refund to the assessee in appropriate cases. In our considered view, the provisions under sub-section (3) of section 143(3) of the Act, cannot be read in isolation. Had it been the intention of the Legislature to prevent the assessing authority from granting refund to the assessee, then the insertion of subsection (4) of section 143 of the Act would lose its significance. It is interesting to note that through the amendment in the year 1989 which has come into force from April 1, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment 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 are certain departmental instructions as provided in Circular Reference No. 549, dated October 31, 1989, issued by the Central Board of Direct Taxes, we are of the view, such instructions cannot overweigh the statutory provisions of the Income-tax Act and as such we are not persuaded to hold that the circular instructions of the Central Board of Direct Taxes should bind the assessing authority even bypassing the provisions of the Income-tax Act. Having regard to the above discussion and in the light of sub-section (4) of section 143 of the Income-tax Act which was inserted 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 assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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