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Universal Generics (P.) Ltd. Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Mumbai
Decided On
Judge
Reported in(1989)31ITD369(Mum.)
AppellantUniversal Generics (P.) Ltd.
Respondentincome-tax Officer
Excerpt:
1. in this appeal the assessee is contesting the action of the commissioner of income-tax (appeals) in not granting refund of the entire tax paid by it.2. the assessee is a private limited company. the assessment year is 1978-79 and the relevant previous year ended on 30-6-1977.3. as the facts are narrated, it would be seen that the case has a chequered history. the facts in chronological order are as under: (a) during the relevant financial year the assessee had paid advance tax of rs. 88,080. further, rs. 27,887 was the tax deducted at source. in other words, rs. 1,15,967 was paid by the assessee by way of advance tax/t.d.s. (b) on 27-7-1978 the assessee filed the return of income declaring total income of rs. 1,16,920. the tax payable thereon was rs. 67,521. (c) on 23-11-1978 the.....
Judgment:
1. In this appeal the assessee is contesting the action of the Commissioner of Income-tax (Appeals) in not granting refund of the entire tax paid by it.

2. The assessee is a private limited company. The assessment year is 1978-79 and the relevant previous year ended on 30-6-1977.

3. As the facts are narrated, it would be seen that the case has a chequered history. The facts in chronological order are as under: (a) During the relevant financial year the assessee had paid advance tax of Rs. 88,080. Further, Rs. 27,887 was the tax deducted at source. In other words, Rs. 1,15,967 was paid by the assessee by way of advance tax/T.D.S. (b) On 27-7-1978 the assessee filed the Return of Income declaring total income of Rs. 1,16,920. The tax payable thereon was Rs. 67,521.

(c) On 23-11-1978 the I.T.O., at the instance of the assessee, framed provisional assessment under Section 141A of the Act on a total income of Rs. 1,16,920 as declared by the assessee in its Return. The assessee was accordingly granted refund for the excess tax paid by it, by way of advance tax/T.D.S. (d) On 28-8-1981, the I.T.O. framed assessment Under Section !43(3)/144B of the Act, on a total income of Rs. 15,93,020. In doing so the I.T.O. had made an addition of Rs. 12,32,000 on account of unexplained investment in factory building.

(e) Against the aforesaid order of the I.T.O. dated 28-8-1981, the assessee preferred an appeal before the C.I.T.(A), wherein it had challenged the action of the I.T.O. in framing assessment Under Section !43(3) 144B of the Act on the ground that the same was framed beyond the time prescribed under the relevant provisions of the Act. The assessee had also disputed the addition of Rs. 12,32,000 made by the I.T.O in respect of factory building. Ira his appellate order dated 18-2-1982 the C.I.T.(A) did not accept the assessee's contention challenging the assessment being time barred.

However, in respect of the addition made in the factory building the C.I.T.A) restored the matter back to the file of the I.T.O, for framing the assessment afresh. Against the said order of the C.I.T. (A) the assessee had preferred an appeal before the Tribunal.

(f) On 30-3-1984 the Inspecting Asstt. Commissioner (Asst.) framed the assessment once again in compliance with the aforesaid order of the C.I.T.(A) dated 18-2-1982 wherein he had determined the total income of the assessee at Rs. 4,58,000.

(g) On 22-8-1984 the Tribunal passed the order in I.T.A. No. 1629/Bom/1982 wherein it had cancelled the assessment framed by the I.T.O on 28-8-1981 as being barred by limitation.

(h) Against the fresh order passed by the I.A.C. (Asst.) on 30-3-1984, the assessee had preferred an appeal before the C.I.T.(A) urging that once the Tribunal had held that the original assessment framed by the I.T.O. was invalid in law, the subsequent order dated 30-3-1984 passed by the I.T.O. cannot stand. Accepting the stand taken on behalf of the assessee the C.I.T.(A), in his order dated 11-9-1984, vacated the order passed by the I.A.C. on 30-3-1984.

(i) On 2-11-1984, the I.A.C. (Asst.) gave effect to the order of the C.I.T.(A) dated 11-9-1984.

(j) On 14-10-1985, the I.A.C.(Asst.) gave effect to the order of the Tribunal dated 22-8-1984.

(k) Against the order of the C.I.T.(A) dated 11-9-1984 the Revenue had come up in appeal before the Tribunal and the Tribunal vide its order dated 2-12-1987 in I.T.A. No. 6677/Bom/1984, dismissed the appeal filed by the Revenue.

(1) It may be mentioned that on 14-1-1986 the assessee had requested the I.A.C.(Asst.) to refund the entire tax of Rs. 1,15,118 paid by it.

4. On the aforesaid facts the assessee had preferred an appeal against the order of the I.A.C.(Asst.) dated 14-10-1985 giving effect to the order of the Tribunal dated 22-8-1984. It was urged on behalf of the assessee that the entire tax of Rs. 1,15,967 ought to have been refunded by the I.A.C.(Asst.) in view of the fact that the Tribunal had cancelled the assessment "as being time barred". In his order under appeal the C.I.T.(A) had not accepted the assessee's claim for the refund of the entire amount of Rs. 1,15,967. However, he has directed the I.A.C.(Asst.) to refund a further sum of Rs. 16,265 in the following manner: 2. The appellant has given, without prejudice, a working of the tax refundable, as extracted below, which is due to it after the order of the I.T.A.T. cancelling the assessment order.Taxes paid: Advance tax paid Rs. 88,080 T.D.S. Rs. 27,887 Rs. 1,15,967Income returned Rs. 1,16,920Tax @ 55% + S.C. @ 5% on 1,16,920 Rs. 67,521Refund Due (Rs. 1,15,967 less 67,521) Rs. 47,597Less: Amount already refunded Rs. 22,728 Rs. 24,869Less: Demand of 1976-77 adjusted Rs. 8,604Refund Due Rs. 16,265 3. The appellant has contended that since the assessment has been cancelled by the I.T.A.T. as being barred by limitation, the entire sum of tax paid by way of advance tax and tax deducted at source amounting to Rs. 1,15,967 becomes refundable. It is pointed out that a sum of Rs. 22,728 has already been refunded and therefore the amount of refund yet due to the appellant is Rs. 93,239 (Rs. 1,15,967 less Rs. 22,728).

4. However, I find it difficult to accept the appellant's contention that once the regular assessment is cancelled, the entire amount of advance tax paid as well as the tax deducted at source becomes refundable. In this connection it is to be noted that the tax due on the returned income of Rs. 1,16,920 works out to Rs. 67,521 and the appellant paid Rs. 88,080 by way of advance tax and Rs. 27,887 was deducted at source. Even before an assessment is made Under Section 143(3)7144, the income earned by the appellant, in this case the returned income, becomes liable to tax because the charging section is automatically attracted. The finding of the I.T.A.T. that the assessment made by the I.A.C. has become barred by limitation affects only additional demand raised as a result of regular assessment over and above what was admitted by the appellant on the basis of the returned income. In the scheme of the Act, the income becomes liable to tax as soon as the charging section is attracted in the case of a person liable to pay tax under the Act. In view of this matter I find it difficult to agree with the contention of the appellant that the entire sum of Rs. 1,15,967 becomes refundable.

However, there is considerable merit in the appellant's contention that at least Rs. 16,265, as indicated earlier, is still due to the appellant. Subject to the verification of the calculation, the I. A.C. is directed to refund Rs. 16,265 for the year under consideration.

5. Being aggrieved by the order of the C.I.T.(A), the assessee has come up in appeal before the Tribunal. The learned representative for the assessee vehemently argued that once the assessment has been cancelled by the Tribunal "as being time barred", the income-tax authorities ought to have refunded the entire amount of Rs. 1,15,967 as claimed by the assessee. Inviting our attention to Section 237 of the Act, the learned representative for the assessee urged that since the assessee was not given the entire refund of tax paid by it, it was entitled to file an appeal and agitate the same before the C.I.T.(A) and thereafter, before the Tribunal. He relied on the decisions in the cases of R. Gopal Ramnarayan v. Third ITO [1980] 126 ITR 369 (Kar.), Deep Chand Jain v. ITO [1984] 145 ITR 676 (Punj. & Har.), CIT v. Trichy United Bank Ltd. [1984] 146 ITR 85 (Mad.), Smt. Shanti Bai v. CIT [1984] 148 ITR 49/19 Taxman 184 (MP), CIT v. Warner Hindustan Ltd. [1987] 165 ITR 403 (AP), Leader Valves (P.) Ltd. v. CIT [1987] 167 ITR 542/33 Taxman 110 (Punj. & Har.), Suri Sons v. OT[1988] 169 ITR 320 (Punj. & Har.), CIT v. Warner Hindustan Ltd. [1979] 117 ITR 15 (AP) as well as the order of the Tribunal (Jabalpur Bench) in the case of Udhoji Shri Krishandas Bidi Mfrs. v. ITO [1985] 11 ITD 35.

6. The learned representative for the department, on the other hand, submitted that since the I.T.O./I.A.C. had not passed any order in respect of the refund due to the assessee, the assessee could not have filed any appeal before the CIT(A). Relying on the decision of the Hon'ble Supreme Court in the case of Salonah Tea Co. Ltd. v.Superintendent of Taxes [1988] 173 ITR 42, he submitted that at best the assessee could have filed a suit against the Revenue for recovering the tax paid by it. Inviting our attention to Section 237 of the Act, he submitted that since the income earned by the assessee was "chargeable" under the Act, the CIT(A) was fully justified in holding that the assessee was not entitled to refund of the entire sum of Rs. 1,15,967. Inviting our attention to the decision in the case of S.Sundaram v. ITO [1987] 163 ITR 662 (Kar.), the learned representative of the department pointed out that the court had depreciated the attempt of an assessee to make unjust enrichment on the ground that the assessment was not completed within time. According to him, the various reported decisions relied on behalf of the assessee are not of much help to the assessee, as in those cases the attention of the Hon'ble courts was not drawn to the scheme and ambit of various sections of the 1961 Act like self-assessment (Section 140A), assessment for refund (Section 141A) as well as the fact that the advance tax and the tax deducted at source, whereunder the authority of law passed by the Parliament. He, therefore, urged that we should upheld the order of the C.I.T.(A) under appeal.

7. We have carefully considered the rival submissions of the parties as well as the material on record. In our opinion, there is no infirmity in the order of the CIT(A) under appeal. It cannot be disputed that under Article 265 of the Constitution of India no tax can be levied or collected 'except by authority of law. Keeping this constitutional provision in mind, we have to consider the scheme of 1961 Act with a view to finding out whether the assessee would be entitled to refund of the entire tax paid by it (whether byway of advance tax, T.D.S., self-assessment, completion of assessment, etc., etc.) on the ground that the assessment framed under Section 143 of the Act has been cancelled as barred by limitation.

8. Section 4 of the Act is the charging section, the relevant provisions of which read as under: 4. Charge of income-tax (1) Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of this Act in respect of the total income of the previous year or previous years, as the case may be, of every person: Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income-tax shall be charged accordingly.

(2) In respect of income chargeable under Sub-section (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act.

9. It would be apparent from the above that the advance tax paid by the assessee or the tax deducted at source from certain income of the assessee cannot be said to be paid/deducted without authority of law.

Chapter XVII of the Act lays down elaborate procedure for collection and recovery of tax prior to the assessment framed under Section 143 or 144 of the Act. This chapter has been introduced for collection and recovery of tax without waiting for the completion of regular assessment. However, on completion of regular assessment, the assessee is required to pay tax if it exceeds the amount which has already been paid under Chapter XVII. If, on the other hand, the assessee has paid more tax under Chapter XVII than what was payable on completion of the regular assessment, he would be entitled to the refund of excess amount paid.

10. In the aforesaid background we have to consider what is the true meaning of "assessment" framed under the provisions of the Act. It is by now a well settled law that the liability to tax arises by virtue of the charging section alone and it arises not later than the close of the previous year, though quantification of the amount payable is postponed. The assessment only particularises the amount .payable and it does not create liability to pay. In other words, the assessment order only quantifies the liability which is already created by the charging section.

11. In this connection, it would be necessary to advert to certain decisions of the Hon'ble Supreme Court.

In Chatturam Horilram Ltd. v. CIT [1955] 27 ITR 709, the Hon'ble Supreme Court had an occasion to deal with the charging section of the Indian Income-tax Act, 1922 vis-a-vis the relevant Finance Act. The Hon'ble Supreme Court dealt with this aspect at pages 716 and 717 of the report. The relevant portion of which is reproduced below: It is by virtue of this section that the actual levy of the tax and the rates at which the tax has to be computed is determined each year by the annual Finance Acts. Thus, under the scheme of the Income-tax Act, the income of an assessee attracts the quality of taxability with reference to the standing provisions of the Act but the payability and the quantification of the tax depend on the passing and the application of the annual Finance Act. Thus, income is chargeable to tax independent of the passing of the Finance Act but until the Finance Act is passed no tax can be actually levied. A comparison of sections 3 and 6 of the Act shows that the Act recognizes the distinction between chargeabitity and the actual operation of the charge. Section 6 says "save as otherwise provided by this Act, the following heads of income, profits and gains shall be chargeable to income-tax in the manner hereinafter appearing, etc." While Section 3, as already quoted above, says that "where any Central Act enacts that income-tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year, etc." Though, no doubt, sections 3 and 4 are the charging sections in the Act as pointed out in Chatturam v. Commissioner of Income-tax, Bihar at page 125, the wording of Section 3 assumes the pre-existence of chargeable income as indicated in Section 6. Hence, according to the scheme of the Act the quality of chargeability of any income is independent of the passing of the Finance Act. In this view, therefore, though, as a fact, on account of the Finance Act not having been extended to the relevant area during the year 1939-40, legal authority was then lacking for the quantification of the tax and imposition of the liability therefor, the income of the assessee for the relevant year was nonetheless chargeable to tax at the time, in the sense explained above. Indeed, it can also be said that the very fact of Regulation IV of 1942, having brought the Finance Act of 1939 into operation retrospectively, in this area, has factually brought about, in any case, the chargeability of the tax during that very year. The relevant portion of the Regulation says that "the Indian Finance Act of 1939 shall be deemed to have come into force in the area to which this Regulation extends on the 30th day of March, 1939". By virtue of this deeming provision the Indian Finance Act of 1939 must be assumed even factually to have come into operation on the date specified and the tax must be taken to have become chargeable in that very year, though the actual liability for payment could not arise until proper and valid steps are taken for quantification of the tax. The contention, therefore, of the appellant that the income was not chargeable to tax in the year 1939-40 cannot be accepted.

In Neptune Assurance Co. Ltd. v. L/C [1963] 48 ITR 144 the Hon'ble Supreme Court was concerned with the date on which the said company had a right to receive refund of tax. In this connection at page 149 of the report the Hon'ble Supreme Court observed as under: Now as to the first part of this question it seems to us plain that the right to the refund existed on September 1,1956. It is no doubt true that the amounts of the refund had been ascertained till the orders of assessment had been made and these had been made later than September 1,1956. But that does not affect the question. It is well established that under the income-tax law the liability to be charged to tax, if any, exists all along. The amount of the liability depends on the Finance Act of the year concerned. That is the effect of Section 3 of the Income-tax Act which says that the tax at the rates mentioned in the Finance Act shall be charged for the year specified in that Act. So it was said in Chatturam Horilram Ltd. v. Commissioner of Income-tax 'The Income-tax Act is a standing piece of legislation which provides the entire machinery for the levy of income-tax. The Finance Act of each year imposes the obligation for the payment of a determinate sum for each such year calculated with reference to that machinery.

In Kesoram Industries & Cotton Mills Ltd. v. CWT [1966] 59 ITR 767, the Hon'ble Supreme Court was concerned with the issue as to when the liability to tax arose. In this connection, at pages 780 and 781 the Hon'ble Supreme Court observed as under: The first question is whether Section 3 of the Indian Income-tax Act, 1922; or Section 2 of the Finance (No. 2) Act, 1957, is the charging section. The revenue contends that the Finance Act is the charging section and that, therefore, the liability accrued only on the first day of April, 1957. While the assessee says that Section 3 of the Income-tax Act is the charging section and that the Finance Act only prescribed the rate of tax payable.

Uninfluenced by judicial decisions, let us at the outset look at the relevant provisions of the two Acts. Under Section 3 of the Income-tax Act, where any Central Act enacts that income-tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, the said Act. The expression "charged" is used both in the case of the Central Act, i.e., the Finance Act, and the Income-tax Act. It could not have been the intention of the Legislature to charge the income to income-tax under two Acts.

Necessarily, therefore, they are used in two different senses. The tax is to be charged for that year in accordance with, and subject to, the provisions of the Income-tax Act, but the said charge will be in accordance with the rates prescribed under the Finance Act.

This construction will harmonise the apparent conflict between the two Acts. When you look at Section 2 of the Finance Act, it shows that income-tax shall be charged at the rates specified in Part I of the First Schedule, and super-tax, for purposes of Section 55 of the Income-tax Act, 1922, shall be charged at the rates specified in Part II of the First Schedule. The primary object of the Finance Act is only to prescribe the rates so that the tax can be charged under the Income-tax Act. The Income-tax Act is a permanent Act, whereas the Finance Act is passed every year and its main purpose is to fix the rates to be charged under the Income-tax Act for that year. That should be the construction is also made clear by Section 55 of the Income-tax Act, whereunder super-tax shall be charged for any year in respect of the total income of the previous year of any individual, Hindu undivided family, company, etc., at the rate or rates laid down for that year by a Central Act. This section brings out the distinction between a tax charged and the rate at which it is charged. This construction is also emphasized by Section 67B of the Income-tax Act, whereunder if, on the 1st day of April in any year, provision has not yet been made by a Central Act for the charging of income-tax for that year, the Income-tax Act shall nevertheless have effect until such provision is so made as if the provision in force in the preceding year or the provision proposed hi the Bill then before Parliament, whichever is more favourable to the assessee, was actually in force. This shows that the charging section is only Section 3 of the Income-tax Act, and that Section 2 of the Finance Act only gives the rate for quantifying the tax for this section gives an alternative for quantification in the contingency of the Finance Act not having been made on the 1st day of April of that year. Even if such an Act was made, the charge under the Income-tax Act could be imposed and worked out only in terms of the provisions of the Income-tax Act. If that be the construction, the conclusion will flow that the tax liability at the latest will arise on the last day of the accounting year.Kalva Devadattam v. Union of India [1963] 49 ITR 165 the Hon'ble Supreme Court at page 171 of the report observed as under: Under the Indian Income-tax Act, 1922, liability to pay income-tax arises on the accrual of the income, and not from the computation made by the taxing authorities in the course of assessment proceedings; it arises at a point of time not later than the close of the accounting year.

12. Thus, it would be apparent from the above that the income earned by the assessee was chargeable to tax if not from the first day of the previous year then surely not later than the close of the previous year. In this background it is quite apparent that the assessment only particularises the amount payable by way of tax and it does not create the liability to pay tax.

13. In the aforesaid background it would be worthwhile to advert to Sections 140A and 141A of the Act. Section 140A- "self-assessment" reads as under: - 140A. (1) Where any tax is payable on the basis of any return required to be furnished under Section 139 or Section 148, after taking into account the amount of tax, if any already paid under any provision of this Act, the assessee shall be liable to pay such tax before furnishing the return and the return shall be accompanied by proof of payment of such tax.

(2) After regular assessment under Section 143 or Section 144 has been made, any amount paid under Sub-section (1) shall be deemed to have been paid towards such regular assessment.

141A. Provisional assessment for refund - (1) Where a return has been furnished under Section 139 and the assessee claims that the tax paid or deemed to have been paid under the provisions of Chapter XVII-B, or XVII-C, exceeds the tax payable on the basis of the return and the accounts and documents accompanying it, the Income-tax Officer, if he is of the opinion that the regular assessment of the assessee is not likely to be made within six months from the date of furnishing of the return, shall make in a summary manner within the said six months a provisional assessment of the sum refundable to the assessee, after making such adjustments to the income or loss declared in the return as are required to be made under Sub-section (2) with reference to such return, accounts and documents, and for the purposes of the adjustments referred to in Clause (iv) of Sub-section (2), also with reference to the records of the assessments, if any, of past years.

14. It would be seen from the above that an assessee is required to pay tax on self-assessment or is entitled to refund on provisional assessment on the quantification of the liability which is already definitely and finally created by the Charging Section.

15. Now if we turn to Section 143 of the Act, we find that under Sub-section (1) of the said Section the I.T.O. is empowered to frame the assessment without requiring the presence of the assessee or the production by him of any evidence in support of the return filed Under Section 139 of the Act, if he is satisfied that all the necessary particulars have been filed by the assessee. Under Sub-section (3) of the said Section, the I.T.O. has been given power to summon the assessee for producing evidence or such other material as he thinks fit, prior to finalisation of the assessment. In other words, the assessment framed Under Section 143 of the Act is nothing but the continuation of the assessment, if any, made Under Section 140A or 141A of the Act, as under each of Sections 140A, 141A and 143 the amount of tax payable by the assessee is adjusted/quantified.

We find from the reported decisions cited on behalf of the assessee that the attention of the Hon'ble High Courts and the Tribunal was not drawn to the aforesaid decisions by the Hon'ble Supreme Court dealing with charging provisions under the Act. In this view of the matter, we do not deem it fit to dwell upon any further on these decisions.

17. Chapter XIX of the Act contains the provisions for refund of tax.

Sections 237 and 240 are relevant for our purpose and they are reproduced below: - 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.

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.

It may be mentioned that an order passed under Section 237 is appealable by virtue of Section 246(1)() of the Act. However, no appeal is provided against an order passed Under Section 240 of the Act. In the instant case as could be seen from the above that the Inspecting Asstt. Commissioner (Assessment) passed an order on 14-10-1985 giving effect to the order of the Tribunal dated 22-8-1984.

In other words, the order dt. 14-10-1985 can at best be treated as an order made Under Section 240 of the Act. On the receipt of the said order the assessee had addressed a letter on 14-1-1986 to the I.A.C.(Asst.) wherein it had requested the I.A.C. (Asst.) to refund the entire tax of Rs. 1,15,976. It appears that the I.A.C.(Asst.) has not taken any action on this letter till to-date. If he had done so, then he would have been required to pass an order Under Section 237 or 154 of the Act which would have been appealable. Therefore, we fail to appreciate how the A.A.C. entertained the appeal in the manner he did.

However, since the revenue has neither come in cross appeal nor filed cross-objection in this regard, nothing further need be discussed.

18. Under Section 237 of the Act, if any person satisfies the I.T.O.that the amount of tax paid by him or on his behalf exceeds the amount with which he is properly chargeable under this Act for that year, he shall be entitled to refund the excess. The expression used in this section is "amount with which he is properly chargeable under this Act" and not amount on which he is taxable or assessable or the amount which is found to be payable by him. Therefore, the test for considering the basic issue of refund under this section is the excess of tax over the amount which is properly chargeable under the Act. Can it be said in the present case that the assessee-company having earned income is not chargeable to tax under the Act.

19. The whole gamut of charging section, provisions of Chapter XVII and the scheme of the assessment under Section 143 of the Act, has already been discussed above. To recapitulate, an assessment under Section 143(3) is only a mode of determination of tax, a procedure laid down for computation of income and calculation of tax thereon. Such assessment cannot be equated with what is contemplated under Section 4 as charge of income-tax. Income becomes chargeable to income-tax at rates prescribed under the relevant Finance Act by virtue of the charging section, and the Act envisages situations where income-tax is collectable without the process of regular assessment. Therefore, the fact that the assessment has been annulled cannot be interpreted to mean that the income earned by the assessee and disclosed in the return of its income is not chargeable to tax and that tax on such returned income has to be refunded by the department merely because the assessment has been annulled by an appellate authority.

20. Whether the income is-properly chargeable or not is to be shown in the course of assessment. Unless there has been no assessment at all, as for instance when the assessee's income is below the taxable limit in such a case the assessee can claim refund Under Section 237 of the Act by proving that the income is not chargeable to tax. In our opinion, the decision in the case of R. Gopal Ramnarayan (supra) would not be of much help to the assessee, as in that case the Hon'ble High Court was concerned with the provisions of Section 240 and not of Section 237 of the Act.

21. Before we part with this issue, we would like to give a small illustration which Would clearly demonstrate that if we were to accept the submissions made on behalf of the assessee, then there is a possibility of substantial loss to the exchequer: Suppose an assessee files a return declaring total income of Rs. 1 crore and pays tax by way of advance tax, tax deducted at source and self-assessment Under Section 14A of the Act of Rs. 45 lakhs. The I.T.O. frames the assessment Under Section 143(3) of the Act, wherein he substantially accepts the assessee's computation of total income but makes certain token disallowances whereby he raised additional tax of Rs. 450. If the assessment so framed is found to be technically defective and is liable to be quashed can it be said that the assessee would be entitled to refund of Rs. 45 lakhs + Rs. 450 even though Rs. 45 lakhs was levied and collected by the authority of law. In our opinion, the assessee would be entitled to refund of Rs. 450 only in the event the assessment is held to be invalid. Otherwise the whole purpose of "self-assessment" would be frustrated on a technical lapse on the part of the I.T.O. Similar would be the position in respect of advance lax payment and tax deducted at source.

22. In the instant case, it is an undisputed fact that the assessee had paid tax of Rs. 1,15,976 by way of advance tax/TDS. Again it is an undisputed fact that at the instance of the assessee, the I.T.O. had framed provisional assessment Under Section 141 A of the Act, whereby he granted certain refund to the assessee. Till this stage it cannot be disputed that the tax collected from the assessee was under the authority of law. Therefore, according to our considered opinion, the effect of the order of the Tribunal dated 22-8-1984 is that any excess tax demanded by the I.T.O. by making additions/disallowances in the assessment framed Under Section 143(3)/144B of the Act on 20-8-1981 would be bad in law. It is only such excess of tax demanded by the I.T.O. which would be considered to be without the authority of law. In this view of the matter, we have no hesitation in upholding the order of the CIT(A).


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