2003 (9) TMI 73 - HC - Income Tax

This writ petition has been filed for a mandamus directing the respondents to refund a sum of Rs. 3, 23, 226 with interest from April 1 1986 till the date of actual refund in relation to the assessment year 1984-85. - Since the assessment order was set aside by the Commissioner of Income-tax (Appeals) by his order dated March 21 1988 a fresh assessment could have been made latest by March 31 1990 vide section 153(2A) of the Income-tax Act but no fresh order was made by that date and hence the petitioner is right in saying that the same has become time-barred Held that assessee is entitled to refund with interest from April 1 1986 till the date of actual refund in relation to the assessment year 1984-85

Summary

Issues:
1. Refund of tax amount with interest for assessment year 1984-85 due to time-barred assessment proceedings.

Analysis:
The petition was filed seeking a mandamus for the refund of a specific sum with interest related to the assessment year 1984-85. The petitioner was initially assessed as an association of persons with tax charged at the maximum marginal rate. Subsequently, appeals were filed resulting in directions for a fresh assessment order. However, the Income-tax Officer failed to pass a new order within the stipulated time frame, rendering the assessment time-barred.

The counter-affidavit revealed that the original return was for a trust, later revised to declare a higher income due to surrendered deposits. The Income-tax Officer added various amounts to the income, framing a protective assessment in the status of association of persons. The Commissioner of Income-tax (Appeals) and the Tribunal differed on the assessment approach, with the Tribunal emphasizing assessment in the name of the real owner of the income.

The judgment cited precedents where courts ruled in favor of refunding amounts deposited due to set-aside assessment orders. Notably, the court highlighted the entitlement to interest if refunds are not processed within a specified period post-appellate orders. Following these decisions, the court granted the petition, ordering the respondent to refund the amount with 12% interest per annum from the date of deposit to the refund date, to be completed within two months.

In conclusion, the court's decision emphasized the importance of timely assessment procedures and the obligation to refund amounts when assessment orders are set aside. The judgment underscored the legal precedent for refunding deposited amounts and the applicability of interest in cases of delayed refunds, ensuring adherence to statutory provisions and fair treatment of taxpayers.