J.S. Verma, J.
1. This judgment shall also dispose of Misc. Civil Case No. 2 of 1981 (Smt. Mainabai v. Commissioner of Income-tax).
2. In both these references made to this court as a consequence of the direction given under Section 256(2) of the I.T. Act, 1961, the question of law referred for decision of this court is the same, which is as under I
' Whether, in the facts and circumstances of the case, the appeal filed by the applicant before the Appellate Assistant Commissioner of Income-tax was maintainable under Section 246 '
3. Material facts are these. The assessee in both these cases was Badri Prasad Gour. For the assessment year 1962-63, for which the previous year ended on Diwali 1961, the assessee, Badri Prasad Gour, filed a return on March 4, 1964, showing Rs. 68,272 as the taxable income. Provisional assessment under Section 141 was made on that basis the same day and the tax payable thereon was determined at Rs. 28,247, which was deposited by the assessee. Similarly, for the assessment year 1963-64, for which the previous year ended on Diwali 1962, the taxable income shown in the return filed by the assessee was Rs. 55,617 and Rs. 23,566 was the tax determined under Section 141 in the provisional assessment, which was deposited by the assessee. Thereafter, the assessee, Badri Prasad Gour, died on November 7, 1964. Regular assessment by the ITO was then made under Section 143(1) of the Act. The assessee's legal representatives then preferred an appeal to the AAC against the regular assessment for both the assessment years. The AAC reduced the taxable income but did not set aside the regular assessment. On further appeal, the Tribunal cancelled the regular assessment for both the years on the ground that the legal representatives were not noticed by the ITO before making the regular assessment after the death of the assessee, Badri Prasad Gour. The ITO then made a consequential order for both the assessment years showing therein the revised income as nil. However, a note was also appended to this order passed by the ITO, in which it was stated that the amounts deposited by the assessee, as a result of the provisional assessment during his lifetime, is not to be refunded.
4. For both these assessment years, the legal representatives of the assessee preferred an appeal to the AAC under Section 246 of the Act, aggrieved by the ITO's direction that the amount of Rs. 28,247 and Rs. 23,566 for assessment years 1962-63 and 1963-64, respectively, deposited as a result of the provisional assessment, is not to be refunded. It was claimed that the ITO having said in the revised assessment order that the revised total income was nil, this amount deposited as tax ought to have been refunded. The AAC held that the appeal was not maintainable and, accordingly, the same was dismissed. The Tribunal has affirmed this view and a reference to this court having been refused, an application was filed in this court under Section 256(2) of the Act, which was allowed and the Tribunal was directed to state a case and refer the aforesaid question of law, which arises in respect of both the aforesaid assessment years. This is how the reference arises.
5. The contention of Shri Nema, learned counsel for the assessee, is that the appeal was maintainable, by virtue of Clause (n) of Section 246, which provides for an appeal against ' an order under Section 237 '. He argues that Section 237 has to be read along with Section 240 and if that is done, the ITO's direction not to refund the tax deposited as a result of the provisional assessment in spite of the revised income being assessed as nil by the ITO after cancellation of the regular assessment by the Tribunal's order, is clearly appealable. In reply, Shri Rawat, learned counsel for the Revenue, contends that an appeal is a creature of the statute and, therefore, no appeal would He in the present case, unless the impugned order of the ITO is specified as an appealable order in Section 246. He argues that Clause (n) in Section 246 provides for an appeal against an order under Section 237, which requires the procedure laid down in Section 239 to be followed for claiming refund, which was admittedly not adopted in the present case. According to him, Section 240 is a distinct provision which may raise an obligation on the ITO for giving refund enforceable by a writ of mandamus, but no appeal can lie against such an order.
6. Chapter XIX consists of Sections 237 to 245 and relates to ' refunds '. Section 237 provides for refund of the excess amount of tax paid by the assessee for any assessment year. Section 238 specifies the persons entitled to claim refund in certain cases. Section 239 provides for the claiming of refund as well as limitation for it. Section 240 lays down that where refund of any amount becomes due to the assessee as a result of any order passed in appeal or other proceeding under this Act, the ITO shall refund the amount to the assessee without his having to make any claim in that behalf. The remaining sections contained in this Chapter are not relevant for our purpose.
7. Sections 237, 239 and 240, which alone are relevant in this context for our purpose, read as under :
' 237. Refunds.--If any person satisfies the Income-tax Officer that the amount of tax paid by him or on his behalf or treated as paid by him or on his behalf for any assessment year exceeds the amount with which he is properly chargeable under this Act for that year, he shall be entitled to a refund of the excess.
239. Form of claim for refund and limitation.--(1) Every claim for refund under this Chapter shall be made in the prescribed form and verified in the prescribed manner.
(2) No such claim shall be allowed, unless it is made within the period specified hereunder, namely:
(a) where the claim is in respect of income which is assessable for any assessment year commencing on or before the 1st day of April, 1967, four years from the last day of such assessment year ;
(b) where the claim is in respect of income which is assessable for the assessment year commencing on the 1st day of April, 1968, three years from the last day of the assessment year ;
(c) where the claim is in respect of income which is assessable for any other assessment year, two years from the last day of such assessment year.
240. Refund on appeal, etc.--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. '
8. It is not disputed that as a consequence of the ITO's order of revised assessment passed pursuant to the Tribunal's order, cancelling the regular assessment, the revised income being assessed at nil, no tax for any of these assessment years was chargeable under the Act from the assessee. It follows that the amount deposited as tax for both these years by the assessee as a result of the provisional assessment was, therefore, refundable to the assessee since the assessment proceedings had ended for both these years with the making of the revised assessment order assessing the revised total income as nil for both the years. According to the learned counsel for the Revenue, the assessee's legal representatives were required to apply for refund in the manner provided in Section 239 of the Act on account of the entitlement for refund under Section 237 and only thereafter an appeal could have been filed under Section 246(n), if refund was not made. He contends that refund not having been claimed in the manner provided in Section 239, no appeal lay, as the case fell under Section 240 and not under Section 237. Learned counsel for the Revenue also contends that these amounts having become refundable to the assessee, the only remedies to enforce that right were by way of a civilsuit or a petition under Article 226 of the Constitution for a writ of mandamus but no appeal lies as the ITO's order directing that no refund is to be made, does not fall within the ambit of Section 237 of the I.T. Act, 1961.
9. In view of the stand taken by the Revenue, there is no dispute that the assessee is entitled to the refund of the aforesaid amounts as a result of cancellation of the regular assessments for both the assessment years and the assessment proceedings ending with the determination of the revised income nil by the ITO, pursuant to the Tribunal's decision cancelling the regular assessments. The only question is whether after determining the tax liability as nil the ITO's further direction refusing refund of the tax already deposited, which had become refundable, falls within the purview of Section 237, so as to be appealable under Clause (n) of Section 246 of the Act.
10. The scheme of the relevant provisions may now be examined. Section 237 lays down the entitlement for refund of the amount of tax which exceeds the amount with which the assessee is properly chargeable under the Act. This entitlement arises as a result of any amount in deposit being found in excess of the tax ultimately assessed as properly chargeable under the Act. Obviously a direction of the ITO for refund of the excess amount is contemplated to give effect to the assessee's right of getting back refund of the excess amount. Clause (n) of Section 246 of the Act confers a right of appeal on any assessee aggrieved by ' an order under Section 237 '. It is apparent that an assessee can be aggrieved only when the ITO declines to refund excess amount in deposit and not where such a refund has been directed by the ITO. This right of appeal to the assessee is, therefore, against an order of the ITO refusing to refund any amount which the assessee claims to be in excess of the tax properly chargeable from him under the Act. Any order of the ITO savouring of this character is, therefore, an order under Section 237 of the Act for the purpose of the right of appeal conferred on the assessee under Clause (n) of Section 246 of the Act. Section 239 merely prescribes the procedure for claiming refund and the limitation for it. Section 240, which follows Section 239, is in the nature of a proviso to Section 239, which carves out an exception from the general rule laid down in s, 239 requiring the making of a claim for refund in the prescribed manner and within the prescribed limitation. Section 240 lays down that where refund of any amount becomes due to the assessee as a result of any order passed in appeal or other proceeding under this Act, except as otherwise provided in this Act, the ITO shall refund the amount to the assessee without his having to make any claim in that behalf. The result is that where the entitlement to refund is the result of any order passed in appeal or other proceeding under the Act, the procedure prescribed in Section 239 for claiming refund is not required to be adopted by the assessee and it is incumbenton the ITO to refund that amount without any such claim being made by the assessee. Sections 237, 239 and 240 have to be read together. Section 237 entitles the assessee to refund of the excess amount of tax and an order of the ITO, directing refund, is contemplated thereunder. An appeal under Section 246(n) is provided to the aggrieved assessee where the ITO refuses to refund the excess amount of tax deposited by the assessee. Section 239 requires the claim for refund to be made within the limitation period prescribed therein for claiming refund, but Section 240 provides an exception to that general rule by laying down that no such claim is required to be made where the entitlement to refund of the excess amount of tax is the consequence of an order passed in appeal or any other proceeding under the Act, which the ITO is required to follow automatically and no further satisfaction of the ITO is contemplated.
11. On the above construction made by us of the aforesaid relevant provisions of the I.T. Act, 1961, it is clear that the order of the ITO in both these references, refusing to refund the amounts of tax deposited by the assessee, which became refundable on assessment of the income as nil by the ITO, after the Tribunal's order cancelling the regular assessments, is, in substance, an order made under Section 237 of the Act. The ITO, by virtue of Section 240, was required to make that refund and the assessee was not required to prefer any claim for refund in the manner prescribed in Section 239. The appeal preferred by the assessee to the AAC was, therefore, an appeal which fell within the ambit of Clause (n) of Section 246 of the Act, as the order of the ITO, refusing to refund the amount for both the assessment years, which was in excess of his tax liability determined for these years, was an order under Section 237 of the Act.
12. The mere fact that the obligation imposed by Section 240 of the Act upon the ITO to refund the amount to the assessee without his having to make any claim in that behalf, can be enforced even by a writ of mandamus under art. 226 of the Constitution or even by a civil suit, does not deprive the assessee of the right of appeal available to him by virtue of Clause (n) of Section 246. Just as an appeal being a creature of the statute would not lie, unless it is provided by the statute, the right so conferred cannot be taken away merely because some other remedy may also be available to the assessees. It is, therefore, not necessary to refer to any decision cited by learned counsel for the Revenue wherein such an obligation was enforced by a writ of mandamus issued under art. 226 of the Constitution.
13. Learned counsel for the Revenue also referred to a Full Bench decision of the Punjab and Haryana High Court in R.A. Boga v. AAC of Income-tax . That decision is distinguishable and does not assist the Revenue. That was a case of remand to the ITO, after setting aside theregular assessment for making fresh assessment. It was in that context that the question of refund of the amount paid under the provisional assessment arose for consideration. The view taken was that the refund of the amount pending reassessment proceeding which had not concluded, was a mistake. Obviously, till the reassessment proceeding was completed and it was found that the amount of tax paid under the provisional assessment was in excess of the tax liability of the assessee, the question of making refund would not arise. The present case is not of that kind. Here, the Revenue does not dispute the fact that the assessment proceeding has ended and the tax liability of the assessee in consequence of cancellation of the regular assessment by the Tribunal has been determined as nil by the ITO so that Section 240 of the Act has been attracted, imposing an obligation on the ITO to make the refund. As already held, the ultimate order of the ITO containing the direction relating to refund of the amount falls within the ambit of Section 237 of the Act.
14. We may, in this connection, also refer to the decision in Jaipur Udyog Ltd. v. CIT : 71ITR799(SC) , wherein the Supreme Court clearly pointed out that a provisional assessment does not bind the assessee or the Department. The quantum of tax computed and the levy thereof are not binding upon the assessee and the Revenue. Tax paid pursuant to provisional assessment is liable to be adjusted in the light of the final order in the regular assessment. We may also refer to Sub-section (7) of Section 141, applicable at the relevant time, which has been deleted with effect from April 1, 1971, which prohibited any appeal against a provisional assessment made under Sub-section (1) of Section 141. The reason for prohibiting such an appeal obviously was that such provisional assessment did not bind either the assessee or the Revenue and an appeal is provided against the regular assessment at the end of the assessment proceeding. The prohibition contained in Section 141(7) did not apply to the present case, because the appeal preferred was not against the provisional assessment but against the order of the ITO at the end of the assessment proceeding, refusing to refund the amount in deposit in excess of the tax liability determined in the assessment proceeding.
15. As a result of the aforesaid discussion, it follows that both these references must be answered in the affirmative, in favour of the assessee and against the Revenue as under :
'In the facts and circumstances of the case, the appeal filed by the applicant before the Appellate Assistant Commissioner of Income-tax was maintainable under section 246 of the Income-tax Act, 1961.'
16. Parties will bear their own costs.