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Udhoji Shrikrishandas Bidi Mfrs. Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Jabalpur
Decided On
Judge
Reported in(1985)11ITD35Jab
AppellantUdhoji Shrikrishandas Bidi Mfrs.
Respondentincome-tax Officer
Excerpt:
.....commissioner (appeals), claiming that the ito was not justified in withholding the refund of taxes paid. the commissioner (appeals), however, did not accept the contentions of the assessee and dismissed the appeals of the assessee vide his order dated 24-10-1980. on further appeal, the tribunal upheld the order of the commissioner (appeals) vide its order dated 6-9-1983 in it appeal nos. 23 and 24 (jab.) of 1981. that order of the tribunal was, however, recalled vide order dated 2-12-1983 in m.a. no. 29 (jab.) of 1983.5. in the hearing before us, the same arguments, as placed before the lower authorities and before the tribunal, have been repeated. on careful consideration of the rival submissions in the light of the papers on our record, we are of the view that the claim of the assessee.....
Judgment:
1. These appeals of the assessee are directed against the order of the Commissioner (Appeals) and are relevant for the assessment years 1972-73 and 1974-75.

2. The assessee is a registered firm earning its income from manufacturing and sale of bidis. For the assessment year 1972-73, the assessee filed its return on 31-7-1972 while as per Circular No. 88 [F.No. 142/12/72-TPL], dated 19-6-1972 [Taxmann's Direct Taxes Circulars, Vol. 1, 1980 edn., p. 550] of the CBDT, the last date for filing of the return was 31-7-1972. The assessee also filed a revised return on 12-3-1975. At the time of the assessment, the addition proposed by the ITO, being more than Rs. 1,00,000, a draft order under Section 144B of the Income-tax Act, 1961 ('the Act'), was prepared and served on the assessee on 11-3-1976. The draft assessment order was forwarded to the IAC along with the objections and the IAC issued his direction to the ITO vide his letter dated 14-7-1976 which was received by the ITO on 21-7-1976. In pursuance to the direction, the ITO passed the order on the same day on 21-7-1976. Similarly, for the assessment year 1974-75, the assessee filed its return of income on 29-7-1974. The draft assessment order by the ITO was passed and served on the assessee under Section 144B on 31-3-1977. The IAC issued the directions on 27-9-1977 in pursuance to which the ITO passed the order on 28-9-1977.

3. Aggrieved by the said order, the assessee went in appeal before the Commissioner (Appeals) who annulled the assessment as time barred and directed that the taxes paid by it should be refunded. Consequent to this order, the ITO revised the assessment vide Form ITNS-150 dated 11-6-1979. According to that order for the assessment year 1972-73, the total income was treated as nil and the tax payable also was calculated at nil. After giving credit for the payment made by the assessee in the form of advance tax, etc., the ITO withheld refund of Rs. 1,52,080 in the light of the Commissioner's direction dated 6-4-1979. Similarly, for the assessment year 1974-75, no part of the tax paid was held to be refundable.

4. The assessee came up in appeal before the Commissioner (Appeals), claiming that the ITO was not justified in withholding the refund of taxes paid. The Commissioner (Appeals), however, did not accept the contentions of the assessee and dismissed the appeals of the assessee vide his order dated 24-10-1980. On further appeal, the Tribunal upheld the order of the Commissioner (Appeals) vide its order dated 6-9-1983 in IT Appeal Nos. 23 and 24 (Jab.) of 1981. That order of the Tribunal was, however, recalled vide order dated 2-12-1983 in M.A. No. 29 (Jab.) of 1983.

5. In the hearing before us, the same arguments, as placed before the lower authorities and before the Tribunal, have been repeated. On careful consideration of the rival submissions in the light of the papers on our record, we are of the view that the claim of the assessee has not been dealt with by the authorities below in the proper perspective. Section 240 of the Act provides for refund of the amount to the assessee as a result of any order passed in appeal. Section 241 of the Act, however, gives power to the ITO to withhold refund of the amount if he was of the opinion that the grant of the refund was likely to adversely affect the revenue. Such power, however, is to be exercised only with the previous approval of the Commissioner. In this particular case, the ITO while passing his order under Section 240 vide Form ITNS-150 dated 6-4-1979 rightly calculated total income and tax payable as nil. However, the ITO, in exercise of the power under Section 241, withheld the refund in accordance with the direction of the Commissioner, dated 5-6-1979, which runs as follows: The above named applicant has seen the Commissioner and submitted a copy of his petition, dated 10th April, 1979. After going through the application, copy of the order of the Commissioner (Appeals), the Commissioner (Appeals) has observed as under: '1972-73 and 1974-75 assessments of the firm - The tax as per provisional assessment to be retained, i.e., tax of Rs. 75,627 in the 1972-73 assessment and tax of Rs. 92,896 in the 1974-75 assessment (These figures are subject to verification). Payments made in excess of these sums to be refunded.

Partner's assessments for the assessment years 1972-73 and 1974-75 - The tax in respect of partner's individual assets will be recomputed by taking share income of each partner from the firm as returned.

The tax computed in this manner will be retained and the excess payment, if any, will be refunded. Interest, if any, due under Section 244(1) to be paid in accordance with law.' This power under Section 241 is exercisable only in cases where an order giving rise to a refund is the subject-matter of an appeal or further proceeding or where any other proceeding under this Act is pending. In this particular case, the order of the Commissioner (Appeals) holding the assessment in question as time barred being a subject-matter of appeal before the Tribunal, the order of the ITO under Section 241 with the previous approval of the Commissioner cannot be questioned. That being the position, we have to hold that the ITO was justified in withholding the refund till the disposal of the appeals before the Tribunal. To that extent, we have to hold that there is no justification for the assessee to object to the order of the ITO withholding the refund for the above two years vide his order dated 6-4-1979.

6. However, that is not the end of the matter. The appeals filed by the revenue against the order of the Commissioner (Appeals) in the quantum assessment before the Tribunal for the above two years were dismissed by the Tribunal on 19-3-1980 in IT Appeal No. 80 (Jab.) of 1979 and IT Appeal No. 486 (Jab.) of 1979 and Cross Appeal Nos. 28 and 29 (Jab.) of 1979. After the order of the Tribunal, the department has not gone in reference and the matter stands concluded by the order of the Tribunal.

In that view of the matter, there is no reasonable ground for further withholding refund of the amount to the assessee. Since the direction of the Commissioner and the order of the ITO in consequence to the direction under Section 241 stands automatically superseded by the order of the Tribunal dated 19-3-1980, the ITO is bound to give effect to the order of the Tribunal and issue refund to the assessee in the light of Section 240, read with Section 244(1) of the Act, as per the conditions stipulated by the Commissioner in his order dated 5-6-1979.

7. With regard to the legal issue regarding the validity of the appeal, we are inclined to observe that the present controversy is well settled by the decision of the Hon'ble Madhya Pradesh High Court in the case of Smt. Shantibai v. CIT [1984] 148 ITR 49. In that case, it has been held: ...(i) that the order of the ITO refusing to refund the amount 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. 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.

(ii) That 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 Article 226 of the Constitution or even by a civil suit, does not deprive the assessee of the right of appeal under 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 is also available to the assessee.

Since the present case is within the jurisdiction of the Hon'ble Madhya Pradesh High Court, the assessee is to succeed and the appeal is to be treated as competent in the light of the above decision, which is squarely applicable to the facts of the present case.

8. With regard to the next controversy whether the advance tax paid and tax paid on self-assessment as also TDS is to be refunded on annulment of the assessment, their Lordships held in that case as follows: We may, in this connection, also refer to the decision in Jaipur Udyog Ltd. v. CIT [1969] 71 ITR 799 (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.

That being the case, the assessee is entitled to refund of the amount paid either by way of advance tax, TDS and self-assessment. The appeals are allowed.


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