Research › Search › Judgment

Punjab High Court · body

2004 DIGILAW 547 (PNJ)

Kamal Kishore Gupta v. Income Tax Officer

2004-05-12

M.M.KUMAR

body2004
Judgment M.M.Kumar, J. 1. The short question of law raised in this petition filed under Article 226 of the Constitution is whether, in the facts and circumstances of the case and in view of the provisions of Section 194C of the IT Act, 1961 (for brevity, the Act) r/w Art. 265 of the Constitution, are the respondents bound in law to make the refund of amount of Rs. 8,252 which has been paid by the petitioner by way of advance payment of tax inter alia under Section 210 of the Act for the asst. yr. 1981-82 for which no regular assessment was made and the same was allowed to become time-barred by the ITO. 2. Brief facts of the case are that the petitioner filed his income-tax return under Section 139(1) of the Act on 21st July, 1981 for the asst. yr. 1981-82 relevant to the accounting year ending on 31st March, 1981. He declared his taxable income to be Rs. 33,609. The tax payable on the basis of return came to be Rs. 6,758 only and a sum of Rs. 15,010 had already been deducted at source during the accounting year 1980-81 by the executive engineer, construction division, Palwal under Section 194C of the Act. Therefore, an excess amount of Rs. 8,252 came to be paid by way of tax. The petitioner filed an application under Section 141A of the Act for refund of the excess amount along with the return of income on 21st July, 1981. On 24th April, 1982, the ITO acceded to the request of the petitioner and made him payment of Rs. 8,250 under Section 141A of the Act. Thereafter, a notice dt. 18th July, 1983 was issued under Section 154 of the Act from the ITO for rectification of the error which has crept in calculation and on that basis order dt. 24th April, 1982 refunding the amount of Rs. 8,250 was required to be amended. The petitioner appeared before the ITO and did not raise any objection to the proposed rectification. Consequently, on 2nd Dec., 1983, the ITO raised a demand of Rs. 2,638 against the petitioner by amending the order passed on 24th April, 1982. Accordingly, the petitioner deposited Rs. 2,684 on 12th June, 1984. Thus, the total amount deposited by the petitioner was Rs. 9,398 (Rs. 6,760 + Rs. 2,638) as tax for the asst. yr. 1981-82. 3. Consequently, on 2nd Dec., 1983, the ITO raised a demand of Rs. 2,638 against the petitioner by amending the order passed on 24th April, 1982. Accordingly, the petitioner deposited Rs. 2,684 on 12th June, 1984. Thus, the total amount deposited by the petitioner was Rs. 9,398 (Rs. 6,760 + Rs. 2,638) as tax for the asst. yr. 1981-82. 3. It is admitted case of the parties that no assessment order has been passed by the ITO on the basis of the return filed by the petitioner within the stipulated period of two years as envisaged by the provisions of Section 153 of the Act. As a result, the petitioner had made a claim of refund of Rs. 9,398 which he had deposited as advance tax. The writ petition was filed primarily placing reliance on a judgment of this Court in the case of Deep Chand Jain v. ITO (1984) 145 ITR 676 (P&H) because in that case the regular assessment had become time barred and the provisions of Article 265 were interpreted to mean that such payment of tax would not be authorised by law as the collection of tax also involves computation and assessment by passing assessment order. 4. After hearing learned counsel for the parties and in view of the fact that the view taken by this Court in Deep Chand Jains case (supra) has now been overruled by the Supreme Court in the case of CIT v. Shelly Products and Anr. (2003) 5 SCC 461, the petition has to be dismissed. According to the judgment in the case of Shelly Products case (supra) the failure or inability of the Department to frame the assessment would not place the assessee in a more disadvantageous position than in what he was in a fresh assessment made. It has further been held that if an assessee chooses to pay advance tax or self-assessment tax which is in excess of liability on the basis of return furnished or there is any arithmetic error or inaccuracy, then it would amount to admission of the liability to pay tax. The view of their Lordships expressed in Shelly Products case (supra) reads as under : "We find considerable force in the submission of the Revenue and it must be upheld. We have earlier noticed the scheme of the Act. The view of their Lordships expressed in Shelly Products case (supra) reads as under : "We find considerable force in the submission of the Revenue and it must be upheld. We have earlier noticed the scheme of the Act. Section 4 of the Act creates the charge and provides, inter alia, for payment of tax in advance or deduction of tax at source. The Act provides for the manner in which advance tax is to be paid and penalises any assessee who makes a default or delays payment thereof. Similarly, the deduction of tax at source is also provided for in the Act and failure to comply with the provisions attracts the penal provisions against the person responsible for making the payment. It is, therefore, quite apparent that the Act itself provides for payment of tax in this manner by the assessee. The Act also enjoins upon the assessee the duty to file a return of income disclosing his true income. On the basis of the income so disclosed, the assessee is required to make a self-assessment and to compute the tax payable on such income and to pay the same in the manner provided by the Act. Thus, the filing of return and the payment of tax thereon computed at the prescribed rates amounts to an admission of tax liability which the assessee admits to have incurred in accordance with the provisions of the Finance Act and the IT Act. Both the quantum of tax payable and its mode of recovery are authorised by law. The liability to pay income tax chargeable under Section 4(1) of the Act, thus, does not depend on the assessment being made. As soon as the Finance Act prescribes the rate or rates for any assessment year, the liability to pay the tax arises. The assessee is himself required to compute his total income and pay the income tax thereon which involves a process of self-assessment. Since all this is done under authority of law, there is no scope for contending that Article 265 is violated. What then is the effect of the failure to make an order of assessment, after the earlier assessment made is set aside or nullified in appropriate proceedings ? If the assessing authority cannot make a fresh assessment in accordance with the provisions of the Act, it amounts to deemed acceptance of the return furnished by the assessee. What then is the effect of the failure to make an order of assessment, after the earlier assessment made is set aside or nullified in appropriate proceedings ? If the assessing authority cannot make a fresh assessment in accordance with the provisions of the Act, it amounts to deemed acceptance of the return furnished by the assessee. In such a case the assessing authority is denuded of its authority to verify the correctness and completeness of the return, which authority it has while framing a regular assessment. It must accept the return as furnished and shall not in any event raise a demand for payment of further taxes. Accepting the income as disclosed in the return of income furnished by the assessee, it must refund to the assessee any tax paid in excess of the liability incurred by him on the basis of income disclosed. Even if the tax paid is found to be less than that payable, no further demand can be made for recovery of the balance amount since a fresh assessment is barred. In other words, the tax paid by the assessee must be accepted as it is, and in the event of the tax paid being in excess of the tax liability duly computed on the basis of return furnished and the rates applicable, the excess shall be refunded to the assessee, since its retention may offend Article 265 of the Constitution." 5. In view of the above, the writ petition has to be dismissed as per the law laid down by the Supreme Court in Shelly Products case (supra). 6. For the reasons recorded above, this petition fails and the same is dismissed.