2014 (8) TMI 204 - HC - Income Tax

Refusal to grant refund u/s 240(a) Whether the refund could be granted on fresh assessment only Held that - Assessee is not seeking refund of the tax payable on the basis of the returned income but seeking refund of the tax and interest paid in excess of that payable on the returned income Relying upon Bharti Engineering Corporation vs. Union of India and ors. 2006 (5) TMI 52 - PUNJAB AND HARYANA HIGH COURT - revenue is bound to refund the amount in excess of the tax payable of the return - If the argument of the revenue is accepted, it would mean that the assessee will not be able to get their refund even if an assessment is set aside and the matter is sent back for redetermination and the AO is under legal bar to pass a fresh order because of the expiry of the period permitted under law for the purpose - assessee cannot be made to suffer on account of lapse on the part of the AO or any other officer of the Department revenue is directed to grant refund of the amount along with interest in accordance with law after due verification Decided in favour of Assessee.

Summary

Issues:
Challenges to common order refusing refund for Assessment years 1986-87 and 1987-88 under Article 226 of the Constitution of India.

Analysis:
1. The petitions challenge a common order refusing refund based on proviso (a) to Section 240 of the Income Tax Act, as fresh assessment was not made.
2. The facts of both petitions are similar, with the petitioner seeking refund for Assessment Year 1987-88 due to excess tax payment.
3. The CIT(A) set aside the assessment order for 1987-88, but no reassessment was done by the Assessing Officer by the deadline.
4. The petitioner requested refund, citing failure to pass a new assessment order and the excess tax paid.
5. The petitioner argued that the Revenue was unlawfully retaining their property without legal authority.
6. The Revenue contended that without a new assessment order, no refund could be granted as per Section 240 proviso (a).
7. The court analyzed Section 240 and noted that refund is due without a claim post-appeal, with provisos for fresh assessments and excess tax payments.
8. Referring to the Supreme Court decision in CIT v. Shelly Products, the court emphasized that failure to make a fresh assessment deems acceptance of the return and requires refund of excess tax paid.
9. The court rejected the Revenue's argument of non-receipt of the CIT(A) order, stating the Assessing Officer could have obtained it and must follow the remand directions.
10. Citing a similar Punjab & Haryana High Court case, the court emphasized that the Revenue must refund excess tax paid even if a new assessment is barred due to time limitations.
11. Consequently, both petitions were allowed, directing the respondents to refund the excess tax paid for the respective assessment years along with interest.

This detailed analysis of the judgment addresses the issues involved, the arguments presented by both parties, and the court's interpretation of the relevant legal provisions to reach the decision in favor of the petitioner.