TMI Blog2020 (11) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... t. But, the assessment order on the admitted income was not nullified. Only because, there is an observation that the relevant year of assessment is 1993-1994 in view of Section 53-A of Transfer of Property Act, it will not confer any legal right on the assessee to claim refund. Admittedly, the income is assessable to tax and it was not assessed due to the statement made by the assessee that the transfer was not complete in terms of the sale agreement. The assessee cannot blow hot and cold or approbate and reprobate that what is not paid on due date cannot be assessed at all. It is true to state that there is no estoppel against law. The chargeability is dependent on the charging section. It is not in dispute that the income of the petitioner is chargeable to tax. In other words, the assessment authority has not assessed the income which is not assessable to tax. Hence, the claim for refund of tax paid on admitted income is not sustainable. When the assessment order, which accepts the tax liability as proposed by the assessee, is intact, the consequential order refusing to rectify the defects in filing the returns on wrong advice cannot be sustained. As mandated by law, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice of the Auditor. 3. However, the Assessment Officer had added the sale consideration of ₹ 4.30 Crores in addition to ₹ 62,00,000/- received by the writ petitioner and passed an assessment order on 31.10.2006. The Commissioner of Income Tax, by his order dated 29.12.2009, confirmed the Assessment order, against which, the petitioner preferred an appeal to the Income Tax Appellate Tribunal. The Appellate Tribunal, by its order dated 16.12.2010, had quashed the addition of ₹ 4.30 Crores under Section 45(5)(b) of the Income Tax Act, 1961, and held that the transfer, as contemplated in Section 2(47) of the Act had happened in the year ended 31.03.1993, the relevant assessment year 1993-1994 and not in Assessment years 2000-2001 or 2002-2003. 4. The Assessing Officer, while giving effect to the Tribunal's order dated 16.12.2010, had re-determined the income at ₹ 51,85,268/- as per the returns filed by the petitioner and passed the revised assessment order on 25.02.2011. Thereafter, the petitioner filed a Miscellaneous Petition for clarification with regard to the retention of the capital gains wrongly admitted by the petitioner on the ground that vol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und for refund. The income is assessable to tax and nonpayment of tax taking dubious stands is nothing but tax avoidance, which cannot be entertained. 9. Of course, it is an admitted fact that the writ petitioner is an assessee and derived income under the head capital gains for selling the property. The sale agreement was admittedly entered on 27.08.1992 and possession was handed over to the purchaser. However, the amount was not disclosed on the ground that as per the terms of sale agreement, the sale would be complete on registering the property. The balance sale consideration of ₹ 12,00,000/- was made on 10.12.1999 and the assessee had executed a Power of Attorney in favour of the purchaser. The possession would have been handed over at least on 10.12.1999 on the date of receipt of balance sale consideration. Therefore, the transfer is complete in view of Section 53-A of Transfer of Property Act on the date of putting the purchaser in possession of the property either on 27.08.1992 or on 10.12.1999. The relevant assessment years for paying the tax is 1993-1994 or 2000-2001. 10. The petitioner has not paid the tax during the assessment year 1993-1994 on the ground th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payer to decrease the amount of what otherwise would be his taxes, or altogether to avoid them, by means which the law permits, cannot be doubted. A tax-saving motivation does not justify the taxing authorities or the courts in nullifying or disregarding a taxpayer's otherwise proper and bona fide choice among courses of action, and the state cannot complain, when a taxpayer resorts to a legal method available to him to compute his tax liability, that the result is more beneficial to the taxpayer than was intended. It has even been said that it is common knowledge that not infrequently changes in the basic facts affecting liability to taxation are made for the purpose of avoiding taxation, but that where such changes are actual and not merely simulated, although made for the purpose of avoiding taxation, they do not constitute evasion of taxation. Thus, a man may change his residence to avoid taxation, or change the form of his property by putting his money into non-taxable securities, or in the form of property which would be taxed less, and not be guilty of fraud. On the other hand, if a taxpayer at assessment time converts taxable property into non-taxable property for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Mr. Justice Holmes, who said, Taxes are what we pay for civilized society. I like to pay taxes. With them I buy civilization. But, surely, it is high time for the judiciary in India too to part its ways from the principle of Westminister and the alluring logic of tax avoidance. We now live In a welfare state whose financial needs, if backed by the law, have to be respected and met. We must recognise that there is behind taxation laws as much moral sanction as behind any other welfare legislation and it is a pretence to say that avoidance of taxation is not unethical and that It stands on no less moral plane than honest payment of taxation. In our view, the proper way to construe a taking statute, while considering a device to avoid tax, is not to ask whether the provisions should be construed literally, or liberally, nor whether the transaction is not unreal and not prohibited by the statute, but whether the transaction is a device to avoid tax, and whether the transaction is such that the judicial process may accord its approval to it.A hint of this approach is to be found in the judgment of Desai, J. in Wood Polymer Ltd. v. Bengal Hotels Limited(1) where the learned judge ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability to pay tax arises on the total income which 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, until it is disturbed by any further regular assessment, it remains as tax levied and collected in accordance with law. Having considered all aspects of the matter the Full Bench concluded :- We are, therefore, of the view that, on failure of a regular assessment being made within the time prescribed or in the event of annulment of the assessment order pursuant to which any further demand is required to be made under section 156, no consequence of refund of the entire tax collected according to the total income shown in the returns 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 265of the Constitution of India in respect of the tax so recovered on the basis of the total income shown by the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lified. Only because, there is an observation that the relevant year of assessment is 1993-1994 in view of Section 53-A of Transfer of Property Act, it will not confer any legal right on the assessee to claim refund. Admittedly, the income is assessable to tax and it was not assessed due to the statement made by the assessee that the transfer was not complete in terms of the sale agreement. The assessee cannot blow hot and cold or approbate and reprobate that what is not paid on due date cannot be assessed at all. It is true to state that there is no estoppel against law. In the judgment in Sail DSP Vr Employees Association Vs. Union Of India [(2003) 128 Taxman 704 (Cal) ] referring to CIT Vs. Bhaskar mitter [(1994) 73 Taxman 437 (Cal)], it has been held as under:- 17. The question of estoppel because of option exercised with eyes open to the subsequent modification cannot be sustained. What is not otherwise taxable cannot become taxable because of admission of the assessee. Nor there can be any waiver of the right otherwise admissible to the assessee in law. The chargeability is not dependent on the admission of or waiver by the assessee. Chargeability is dependent on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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