TMI Blog2020 (8) TMI 193X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee which cannot be retracted subsequently only because the initiation of proceedings under section 158 BC were quashed by the High Court due to technical defect in the notice issued under section 158BC. We have already noted that the return of income was filed by the assessee after 20 days of the notice issued under section 158 BC and, therefore, the mandatory period as provided under section 158BC was availed by the assessee in filing the return of income. Once the return of income was a valid return and there was no bonafide or apparent mistake in the said return, then the tax paid on the income declared in the return is not refundable in view of clause (b) of proviso to section 240 of the IT Act. Accordingly, the appeal of the assessee has no merit. - ITA No. 1013/JP/2019 - - - Dated:- 30-7-2020 - Shri Vijay Pal Rao, JM And Shri Vikram Singh Yadav, AM For the Assessee : Written submission For the Revenue : Ms Chanchal Meena (Addl.CIT) ORDER PER VIJAY PAL RAO, JM : This appeal by the assessee is directed against the order dated 13.05.2019 of ld. CIT (A), Ajmer for the assessment year 1998-99. The assessee has raised the following grounds :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the written argument, the assessee has submitted that the Hon'ble Rajasthan High Court in appeal No. 2/2008 dated 21/03/2017 has held that we are of the opinion, fifteen days means clear fifteen days which is the requirement under law. In that view of the matter, we are of the view that the notice which was issued by the authority asking the assessee to file the return within fifteen days is not in accordance with the provisions of the Income tax Act and therefore it is invalid. In pursuance of this order assessee is claiming refund of tax and interest paid on return filed in response to notice under section 158BC of the I. T. Act, 1961. Section 240 and the proviso (b) are reproduced below for ready reference: Section 240 - Where, as a result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to the assessee, the Assessing officer shall, except as otherwise provided in this Act, refund the amount to the assessee without his having to make any claim in that behalf. Provided that where, by the order aforesaid, - (a) On assessment is set-aside or cancelled and an order of fresh assessment is directed to be made, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by assessee under the return filed under section 158 BC of the Act is declared to be invalid. In such circumstances, the provisions of self assessment under section 140-A of the Act, are not attracted. If the assessing officer is barred from framing a fresh assessment based on any invalid return, non est in the eye of law, though is chargeable under section 4 of the Act. The Department retaining that amount of tax paid on the basis of an invalid return without there being any self assessment / assessment made by the authorities under the Act, would violate articles 265 of the Constitution of India. In view of the same, the assessing officer was required to refund the further amount of ₹ 525484/- along with interest under section 244 A of the Act paid by the assessee as per return filed for block period under proviso (b) to section 240 of the Act. In support of the above contention, the assessee relied on the judgment of Hon'ble Karnataka High Court in case of K. Nagesh Vs. Assistant Commissioner of Income Tax reported in (2015) 376 ITR 473 (Kar.) wherein it is held that If the return itself is declared to be invalid by the authorities as well as by the Tribunal, such r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other hand, the ld. D/R has submitted that the legal proposition as relied upon by the assessee is not applicable in the case of the assessee because the declaration of income in the return is voluntary though the return was filed in response to notice under section 158BC of the Act. The return filed by the assessee was valid return and, therefore, the tax paid declared in the return of income is not refundable as per the provisions of section 240 of the IT Act. The ld. D/R has relied upon the decision of Hon'ble Delhi High Court in case of Shakti Bhog Foods Ltd. vs. DCIT, 388 ITR 280 (Delhi) as well as the decision of Hon'ble Supreme Court in case of CIT vs. Micro Nova Pharmaceutical (P) Ltd., 43 taxmann.com 379 (SC). 5. We have considered the rival submissions as well as the relevant material on record. The main contention of the assessee is that once the assessment is quashed by the Hon'ble High Court, the tax paid by the assessee on the income declared in the return of income filed in response to notice under section 158 BC also becomes refundable. It is the contention of the assessee that once the notice issued under section 158BC itself is quashed by the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome after 20 days from the date of notice issued under section 158BC of the Act. Though the notice under section 158BC was quashed by the High Court on the ground that the AO has not provided minimum 15 days to the assessee to file the return of income, however, the return of income filed by the assessee after 20 days from the date of notice issued under section 158BC is a valid return and even not treated by the AO as invalid. The block assessment was completed by the AO based on the return of income filed by the assessee. There is no dispute that the return was filed in response to notice under section 158BC. However, the income declared by the assessee in the said return is a voluntary declaration of the assessee and the assessee cannot deny the said voluntary declaration of the income except any mistake apparent on record. Therefore, the decision relied upon by the assessee of Hon'ble Karnataka High Court is not applicable in the facts of the case of the assessee where the return of income filed in response to notice under section 158BC is a valid return. The Hon'ble Delhi High Court in case of Shakti Bhog Foods Ltd. vs. DCIT (supra) has discussed this issue in detail a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely, was to refund the amount which exceeded the tax which was properly chargeable under the Act. The Supreme Court observed as follows: In the cases in hand the question is only with regard to the refund of tax paid by way of advance tax or self-assessment tax which was paid by the assessees 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 appeals is whether on the failure or inability of the authorities to frame a regular assessment after the earlier assessment is set aside or nullified, the tax deposited by an assessee by way of advance tax or self assessment tax, or tax deducted at source is liable to be refunded to the assessee, since its retention by the revenue would result in breach of Article 265 of the Constitution which prohib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 assessee admits to have incurred in accordance with the provisions of the Finance Act and the Income Tax Act. Both the quantum of tax payable and its mode of recovery are authorized by law. The liability to pay income tax chargeable under section 4 (1) of the Act thus, does not depend on the assessment being made. As soon as the Finance Act prescribes the rate or rates for any assessment year, the liability to pay the tax arises. The assessee is himself required to compute his total income and pay the 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 furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riate cases therefore, it is open to the assessee to bring facts to the notice of the concerned authority 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 made in accordance with law. 11. This court is of opinion that the reliance on the Karnataka High Court ruling in K. Nagesh ( supra ) is inapt. That court, with respect, appears to have overlooked the salient aspect underscored by the Supreme Court, i.e., the levy of tax is under Section 4 (1); the rates may vary. Likewise, filing of return, self assessment tax, advance tax, etc. and provisions which flesh out the mechanisms under the Act for collection cannot be construed literally. Even Section 240 presupposes an order, leading to refund. Now, it is moot whether the nullificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders dated 26.03.2012 was restricted to Question 'C' as quoted above. The Question 'C' that is raised by the Revenue is no more debatable in view of the decision of this Court in the case of CIT v. Shelly Products [2003] 261 ITR 367/129 Taxman 271 (SC). Accordingly, Question No. 'C' is answered in favour of the Revenue. Therefore, in case of block assessment where the initiation of proceedings are quashed, the judgment of the Hon'ble Supreme Court in case of Shelly Products (supra) is applicable and consequently the refund of tax is limited only to the extent of the tax liability due to the addition made by the AO and not the tax paid by the assessee on the income declared by it while filing the return in response to notice under section 158BC of the Act. Therefore, the declaration of income in the return filed by the assessee is a voluntary act and admitted by the assessee which cannot be retracted subsequently only because the initiation of proceedings under section 158 BC were quashed by the High Court due to technical defect in the notice issued under section 158BC. We have already noted that the return of income was filed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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