TMI Blog1983 (8) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... g the same as an application for the refund of the said advance tax. Thereafter, the assessee addressed a spate of letters and reminders to the IAC of Income-tax, CIT and the CBDT. Finally, he received a communication on September 21, 1976, annex. P-9, to the petition, informing him that no refund could be issued to the petitioner as the tax paid was on the basis of income return originally and the revised return could not be filed in view, of the provisions of 139(4). This led to the filing of the present petition claiming mandamus against the Department to make a refund. In the petition the assessee has asserted that he is entitled to the refund of the advance tax collected from him in pursuance of the order under s. 210 of the Act and demand notice issued under s. 156 of the Act with interest up to the date of the refund and that the amount of advance tax in question is being retained by the Department without any authority of law. In the return filed to the writ petition respondent No. 1 has taken the stand that no tax is refundable, firstly, for the reason that when the first return was filed by the assessee, a sum of Rs. 2,400 odd, on the basis of self-assessment under s. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order the assessee is not liable to pay any tax. It follows, therefore, that if an assessment order is set aside, the notice of demand becomes ineffective and the tax already paid under such a notice of demand becomes refundable. If a fresh assessment is made, the tax determined as a result of the fresh assessment order again becomes due and payable only after a fresh notice of demand is served upon the assessee." The Andhra Pradesh High Court too in Lakshminarayana v. CTO [1974] 33 STC 558 (AP), though in the context of sales tax legislation, enunciated the proposition that if there was no assessment order against the assessee, there was no amount of tax payable by him and, therefore, the assessee was entitled to refund of the whole of the amount paid by him. The facts of R. Gopal Ramnarayan's case [1980] 126 ITR 369 (Kar) were that an assessment order was set aside by the Income-tax Appellate Tribunal and thereafter no fresh assessment was made. The assessee claimed refund of the amounts collected from him by way of tax. His claim was rejected. That led him to file a petition in the High Court and the question that arose for consideration before the court was whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the process of taxation, viz., the levy properly so called and the determination of the amount of the tax. It appears to us that the words " levy " and " collection " are used in art. 265 of the Constitution in a comprehensive manner and that they are intended to include and envelop the entire process of taxation commencing from the taxing statute to the taking away of the money from the pocket of the citizen. And, what art. 265 enjoins is that every stage in this entire process must be authorised by the law. ' I am in most respectful agreement with the above enunciation of the law. Therefore, it is necessary for me to examine s. 240 of the Act which provides for the refund of tax, which is as follows: 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 Income-tax 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. As is apparent from the language of the section, it is very wide in its scope and application. There is a mandate on the Revenue to make the refund even without a demand. That, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the revisional authority. The Revenue resisted the claim on the ground that s. 40 of that Act had application and the claim for refund being belated in terms of that section, the appellant therein was not entitled to refund. Negativing the contention, the Supreme Court first held that s. 40 of the Act had no application to the facts of that case at all and, therefore, the entire levy of excess excise duty on the appellant therein was one without jurisdiction and, therefore, without the authority of law, and in that circumstance, the Supreme Court laid down that since s. 40 of the Act did not apply to the facts, the respondent could not retain the excess duty except upon the authority of some other provisions of law. Similarly, in the instant case, unless the respondent-Revenue is able to show as to under what provision of the Act the Revenue can retain the tax paid without assessment being made or when the power to make the assessment afresh has ceased to be vested in the respondent by virtue of the operation of s. 153(1)(a)(iii) of the Act, inasmuch as more than two years have elapsed from the time the return was filed, the Revenue cannot retain the amount collected as tax. Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of the I.T. Act in respect of the total income of the given previous year of every person. Expression " total income " has been defined in s. 2(45) in the following words: " 'Total income' means the total amount of income referred to in section 5, computed in the manner laid down in this Act. " What is to be charged to income tax at the prescribed rate for a given previous year is the total income of the assessee computed in the manner laid down in the I.T. Act.It means that unless the computation has been done of the total income in terms of the provisions of the Act, one would not know as to what is the total income and what would be the income-tax payable thereon at the prescribed rate. Unless that is known obviously, no amount could be considered to be due by way of tax from an assessee which can be lawfully collected from him or retained if already collected under certain provision of the Act envisaging the collection in advance either by way of advance tax or deduction at source or on self-assessment, which ultimately has to be given credit at the time of regular assessment. It has been contended on behalf of the Revenue on the assumption that a second retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of April, 1969; or..." with the result that there being no assessment regarding the given previous year and no assessment order specifying any given amount due from the assessee, the assessee is, therefore, not liable to pay any amount by way of tax for the given year and the amount of tax already collected from him by the Revenue earlier by way of advance tax is without authority of law and its retention is in violation of the provisions of art. 265 of the Constitution of India. Mr. Gupta, learned counsel for the assessee, in reply to the contention advanced on behalf of the Revenue that claim to refund was barred by limitation in view of the provisions of s. 239(2)(c) firstly urged that the refund provisions would not be attracted to a case of the present kind, as the collection of the tax was without the authority of law and thus de hors the Act and the Revenue was not entitled to retain the same as the retention of the same would be in violation of art. 265 of the Constitution of India. Secondly, Mr. Gupta canvassed that s. 240 of the Act would be applicable and not s. 239 of the Act and lastly he contended that even if the provisions of s. 239(2) were held to be applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment proceedings became time-barred, it became incumbent on the assessing authority to make an order for the refund of the given amount as envisaged under s. 240 on the assumption of the existence of an implied assessment order for the given year to the effect that the income of the assessee was not assessable to tax and no tax for that year fell due from the assessee. In any case, if the provisions of s. 239(2) were held to be applicable, then too the demand for refund made by the assessee would be held to be, as being within time, if as the Revenue asserted in the written statement that the return filed by the assessee on October 1, 1971, was the only valid return. Section 239(2), if it is to be read in consonance with the provisions of s. 240 as well, has to be read to mean that in a case as assessee on his own showing, that is on the basis of the return filed by him, was entitled to refund of tax, then he must claim refund thereof within the time prescribed which tallies with the time prescribed under s. 153 by way of limitation for passing the assessment order for a given previous year. When so viewed, then it is the first income-tax return filed by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial year during which it is payable by reason of the provisions of section 213, interest as aforesaid shall also be payable on that instalment from the date of its payment to the date of the regular assessment: Provided that in respect of any amount refunded on a provisional assessment under section 141 A, no interest shall be paid for any period after the date of such provisional assessment. (1A) Where on completion of the regular assessment the amount on which interest was paid under sub-section (1) has been reduced, the interest shall be reduced accordingly and the excess, if any, paid shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly. (2) On any portion of such amount which is refunded under this Chapter, interest shall be payable only up to the date on which the refund was made." " 243. Interest on delayed refunds.-(1) If the Income-tax Officer does not grant the refund, (a) in any case where the total income of the assessee does not consist solely of income from interest on securities or dividends, within three months from the end of the month in which the total income is determined under this Act, and (b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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