TMI Blog1995 (11) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... asked to pay the demand raised pursuant to the assessment within 30 days from the date of service of the said demand notice. The period of 30 days was to expire on 11th May, 1989. But before the assessee could pay up the demand within the said 30 days' period, pursuant to the demand notice, the Assessing Officer came to know that a sum of Rs. 1,74,90,378 was due and payable to it by the Chief Commissioner of Income-tax (Technical), West Bengal, Calcutta, towards consideration money for acquisition of the assessee's immovable property under Chapter XXC of the Income-tax Act, 1961. The Assessing Officer, therefore, by virtue of the powers vested in him under sub-section (3) of section 266 of the Act, demanded the said sum of Rs. 1,70,97,378 from the Chief Commissioner of Income-tax. The Chief Commissioner of Income-tax paid to the Assessing Officer on 27-4-1989 the said sum of Rs. 1,70,97,378 in obedience to his notice issued under sub-section (3) of section 226 of the Act. After receipt of the garnishee amount from the Chief Commissioner of Income-tax, West Bengal, the Assessing Officer as per his Memo No. DC/SPL.R-12/89-90/16, dated 27-4-1989 to the assessee, confirmed that he had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee himself is treated as payment of taxes and the assessee is given a credit of such collection against the regular demand raised on subsequent modification of the demand in pursuance of any appeal or any other proceedings of the Act the amount collected may be refunded to the assessee but the question of payment of interest under section 244(1A) on any delayed payment of such refund could no arise on the ground that the assessee had failed on its own to pay the tax demanded but instead the department had collected the dues through other modes of recovery. (ii) Since it requires the interpretation of the specific clause of section 144(1A) insofar as the word 'any amount having been paid by him in pursuance to any order of assessment or penalty' is considered. To put it in other words, it is quite debatable as to whether the collection of regular tax or penalty demanded by the department through various modes of recovery towards the regular demand can also be considered as amounts paid by the assessee himself or itself in pursuance of the said assessment order or penalty order as contemplated under section 244(1A). " 5. Being unsuccessful with the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d III Schedule to the Income-tax Act, 1961. Under the provisions of the Income-tax Act, a refund can arise only when tax has been paid earlier by an assessee in excess of what is due and payable legitimately. Any mode of payment, whether by actual tender or by way of adjustment or otherwise through garnishee proceeding or coercive recovery measure would be sufficient for the purpose of entitling an assessee to claim the excess, if any, resulting from such tax, inclusive of interest payable thereon, as provided in law. There cannot be possibly two views in this regard, as has been erroneously imagined by the Assessing Officer. 7. If there is an omission on the part of the Assessing Officer to compute and pay interest alongwith the principal amount of refund, then it can correctly be said that a mistake has been committed by the Assessing officer being amenable for rectification, as provided in section 154 of the Act. The Central Board of Direct Taxes (Board, for short) in its Circular No. 209, dated 11-1-1977 have clarified as under : " Reference may be made to the decision of the Delhi High Court in the case of National Agricultural Co-operative Marketing Federation of India Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h payment was in pursuance of any order of assessment, the resultant finding of excess arising from an order of appeal against assessment, then the assessee gets a vested legal right to receive interest on such excess amount. It is the cause of payment and not the mode of payment that sets section 244(1A) in motion at once as a result of the consequential modification order passed in order to give effect to the appellate direction and in giving such effect, if excess is found as paid by the assessee or recovered by the Assessing Officer through other modes, then not only the excess amount but even interest is payable to the assessee as being his vested right and entitlement. In our view, the mode of payment is wholly immaterial. It is the nature of payment and not the mode of payment that is the determination factor. After all, an assessee makes payment in various ways and towards various items of liability, that is to say, under section 210, 140A and so on and so forth. The payment that is envisaged in section 244(1A) is the payment in compliance to a demand notice issued under section 156 pursuant to an order of assessment passed either under section 143(3) or under section 144 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered as a payment made by him on behalf of the assessee-company. This satisfies the test laid down as per the clear language used in section 237 of the Act. 10. There can be no doubt that the excess amount has to be refunded to the taxpayer regardless of the fact as to how the payment was made or effected or how and in what manner and mode the tax imposed on the taxpayer came to the account of the Treasury. The money might have been paid directly by the taxpayer/assessee or it might have been paid on behalf of the assessee by somebody else or the payment/collection was such as provided in the garnishee provision of the enactment and in an such cases it will have to be treated as amount paid by the taxpayer only. We repeat, any other interpretation on the language of section 237 and section 244(1A) will frustrate the purpose and presence of those provisions itself. The Assessing Officer restricted his attention only to a few words appearing in section 244(1A) and did not read it conjointly with the threshold provisions contained in section 237 of the Act in the Chapter relating to refund. The entire scheme of refund, as contained in Chapter XIX envisaged different situati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est under section 244(1A) is payable only in case of deposit of payments of tax by the taxpayer himself is outside the scheme of collection, recovery and refund. There is only one condition for payment of such interest and that is that there should be excess payment of tax in pursuance to a demand raised under section 156, which is again pursuant to an order of assessment. Where this condition operates, payment of interest to the assessee by the revenue authorities becomes mandatory. 14. The assessee-company in this case is, therefore, in our view clearly entitled to interest as provided under section 244(1A) of the Act in respect of the excess amount from the date on which the amount from the date on which the amount was collected by the Assessing Officer by action under section 226(3) of the Act to the date on which the refund was granted. The Assessing Officer was, therefore, rightly directed and ordered by the A/C to compute the interest under section 244(1A) of the Act and pay the same to the assessee. From the record it is not known that the excess amount of tax has already been refunded but it is only the interest under section 244(1A), as discussed hereunder, which remain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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