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TMI Blog2014 (11) TMI 1224X X X X Extracts X X X X X X X X Extracts X X X X ..... sclosing the income of Rs. 83,00,000/- for the block period 1-4-1986 to 11-10-1996. Thereafter it was ascertained that Rs. 23,10,973/ as income of the assessee on account of film Indian. Further, Rs. 59,87,218/ was considered as unexplained cash credits. The assessment was concluded vide order dated 23-2-2001. The assessee submitted that he had already paid advance tax of Rs. 14,38,570/ for the period and the balance was to be collected from the list of debtors mentioned therein. Considering the challans, credit of Rs. 14,50,000/- was given in the assessment order and balance payable was calculated at Rs. 47,25,200/. Aggrieved by the said order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) (hereinafter referred to as 'the First Appellate Authority' for short), which came to he dismissed on the ground of want of jurisdiction. Thereafter, an appeal was preferred to the Tribunal. The Tribunal held that the assessment is invalid as the assessment is pursuant to invalid notice issued. The defect is not curable under the provisions of Section 292B of the Act. Insofar as the assessment of undisclosed income is concerned, the Tribunal was of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und the amount to the assessee without his having to make any claim in that behalf." Proviso (a) to Section 240 of the Act has no application to the facts of this case because after setting aside the order of assessment, no direction is given for making a fresh assessment. But the Tribunal held that the assessee is entitled for refund by virtue of provision (b) of Section 240 and directed refund of the amount. Aggrieved by the said order, the present appeal is filed. 4. The appeal is admitted to consider the following substantial question of law: Whether the Tribunal was correct in holding that the assessee would be entitled to claim the entire refund of taxes paid on the undisclosed income declared m the return of income filed by the assessee of Rs. 83 lakhs and the admitted tax paid along with the return of Rs. 14,50,000/- and the balance after assessment, since the assessment order was set aside by ignoring the principle that the amount admitted in the return of income cannot be refunded. 5. Learned counsel for the Revenue assailing the impugned order contends that In pursuance of the notice issued under Section 138BC, calling upon the assessee to file a return of income, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the previous year of every person. Sub-Section (2) provides for deduction of tax at source or paid in advance, where it is so deductable or payable under any provision of this Act. 8. Section 139 of the Act makes it obligatory that every person shall furnish a return of his income in the prescribed form within the time stipulated therein. Section 139(5) of the Act provides for filing of a revised return again within the prescribed time. Chapter XIV B deals with the special procedure for assessment of search cases. If in a search conducted under Section 132 in a proceeding under Section 132A the undisclosed income is unemthed, Section 158BC of the Act empowers the Assessing Officer to call upon the assessee to furnish a return within the prescribed time setting forth his total income including undisclosed income for the block period. The condition precedent for issue of search notice under Section 158BC is that the condition stipulated in Section 132 or 132A should exists. If such condition exists and the proceedings are initiated validly under Chapter XIV B and a return is filed in pursuance of the notice issued under Section 158BC, then the said Chapter provides for passi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is any arithmetical error or inaccuracy, it is open him to claim refund of the excess tax paid in the course of assessmut 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 with in 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 in excess, if any. Such matters can be brought to the notice of the concerned authority in a case when refund is due and payable, and the authority concerned, on being satisfied, shall grant appropriate relief. In cases governed by section 240 of the Act, an obligation is cast upon the revenue to refund the amount to the assessee without his having to make any claim in that behalf. In appropriate 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 cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the proviso has been held to be declaratory it does not follow that the second part of the proviso is also declaratory. However, the view that we have taken supports the stand of the revenue that proviso (b) to section 240 is also declaratory. We have held that even under the unamended section 240 of the Act, the assessee was only entitled to the refund of tax paid in excess of the tax chargeable on the total income returned by the assessee. We have held so without taking the aid of the amended provision. It, therefore, follows that proviso (b) to section 240 is also declaratory. It seeks to clarify the law so as to remove doubts leading to the courts giving conflicting decisions, and in several cases directing the revenue to refund the entire amount of income-tax paid by the assessee where the revenue was not in a position to frame a fresh assessment, Being clarificatory in nature it must be held to be retrospective, in the facts and circumstances of the case. It is well settled that the legislature may pass a declaratory Act to set aside what the legislature deems to have been a judicial error in the interpretation of statute. It only seeks to clear a meaning of a provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome. It is very Pertinent to note at this stage that for this purpose, specific provision in the form of Section 158BA(2) is inserted making it a charging section. Thus, a diagnostic of Chapter XIVB of the Act leads to irresistible conclusion that it contains the provisions starting from charging section till the completion of assessment, by prescribing special procedure in relation thereto, making it a complete Code by itself: Looking it from this angle, the character and nature of 'undisclosed income' to in Chapter XIVB becomes quite distinct from 'total income ' referred to in Section 5. It is of some significance to observe that when a separate charging section is introduced specially, to assess the undisclosed income, notwithstanding a provision in the nature of Section 4 already on the statute book, this move of the legislature has to be assigned some reason, otherwise, there was no necessity to make a provision in the form of Section 158BA(2). It could only be that for assessing undisclosed income, charging provision is Section 158BA(2) alone. What follows from the said judgment is, Chapter XIV B is a complete code in respect of assessments of 'undisclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e return filed by the assessee showing his total income and paying tax. Thereafter, if the Assessing Officer were to make any addition and pass an assessment older and if that assessment is annulled, then, what is annulled is not the entire liability to pay tax. What is annulled is only additional tax foisted on the assessee by virtue of the assessment order in which event the tax refundable is only additional tax paid in pursuance of the assessment order and not the tax paid as per the returns. The returns filed was in pursuance of the notice issued under Section 158BC and it is not voluntary act. Whether the assessee files a NIL return or files a return showing a particular undisclosed income and pays tax, if the entire proceedings initiated is found to be without jurisdiction, the return filed becomes without jurisdiction and the order passed thereon also becomes without jurisdiction, in which event there is no liability to pay tax at all. Merely because the return was filed in pursuance of the said notice, it cannot be said that the assessee has filed a return showing his total income. The effect of setting aside the assessment order passed under Chapter XIV B is that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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