TMI Blog1981 (11) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... 1972, P-2, dated March 16, 1972, and P-3, dated March 19, 1973, which, respectively, are the original orders of assessment for the years 1968-69, 1969-70 and 1970-71. The assessee filed appeals against the orders of assessment. By Exs. P-4 and P-5, dated September 15, 1972, and October 24, 1975, respectively, the AAC accepted the assessee's contention that no proper enquiry had been conducted by the ITO. The appellate authority accordingly quashed Exs. P-1 to P-3 orders of assessment and remanded the matter to the ITO for fresh consideration of the various contentions of the assessee and for fresh computation of the tax due. Thereupon, the ITO passed fresh orders of assessments, Exs. P-6 to P-8 dated November 12, 1976, for the three years i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r referred to in section 240 and the Income-tax Officer does not grant the refund within a period of three months from the end of the month in which such order is passed, the Central Government shall pay to the assessee simple interest at twelve per cent per annum on the amount of refund due from the date immediately following the expiry of the period of three months aforesaid to the date on which the refund is granted. " (emphasis supplied) Section 240 postulates a refund consequent upon an order passed in appeal or other proceeding under the Act. If, as a result of an order passed in appeal, refund becomes due, then, s. 240 says, such refund shall be made without the assessee having to make a claim for it. Where s. 240 applies, s. 244 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the claim of the assessee and reduced the tax. This is what he said (p. 544): " In fact section 31(3)(a) contemplates an annulment of the original assessment order itself; the demand under section 29 or section 45 is not annulled directly by it. " The Supreme Court held that although the demand as such was not annulled, the assessment stood annulled. Relying on this principle, counsel contends that where there is an annulment of the assessment, the demand also becomes totally ineffective as a result of which whatever is collected on the basis of the demand becomes a sum repayable to the assessee. That is an amount, counsel says, which is refundable as per s. 240. If that argument is correct, then s. 244 is automatically attracted. Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeding may be continued in relation to the amount so reduced from the stage at which such proceedings stood immediately before such disposal; (c) no proceedings in relation to such Government dues (including the imposition of penalty or charging of interest) shall be invalid by reason only that no fresh notice of demand was served upon the assessee after the disposal of such appeal or proceeding or that such Government dues have been enhanced or reduced in such appeal or proceeding......" By this amendment the need for a fresh notice of demand where the tax has been reduced in appeal is dispensed with. The legislative intent is that a reduction of tax by an appellate authority shall not affect the original demand, but the original de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th cases. The notice of demand remains valid and effective to the extent that the tax is finally determined to be due and payable by the assessee. This, I think, is the natural and logical result of the amendment introduced by the Validation Act just as in the case of reduction, so in the case of a remand, the enforceability of the notice of demand is qualified by and subject to the fresh determination of the liability. If this is the correct interpretation of the law, which, as far as 1 can see, it is, then no amount is refundable upon remand. What is required by an order of remand is not to refund the money collected as per the original orders, but to recompute the amount of tax that is payable by the assessee. The original assessment i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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