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Issues involved:
The issue involved in this case is regarding the erroneous retention of tax on capital gains by the Assessing Officer (A.O.) despite the Tribunal's ruling quashing the addition made under "capital gains" for both years and allowing the appeal of the assessee. The grievance of the assessee is that the A.O. retained the tax on capital gains based on a wrong understanding of the order. Details of the Judgment: Issue 1: Erroneous Retention of Tax on Capital Gains The assessee contended that voluntary admission of capital gains should not be the basis for assessment as there was no estoppel in law, citing the decision of the Hon'ble jurisdictional High Court in the case of CIT v. DPF Textiles Ltd. The Tribunal had allowed the assessee's appeal, emphasizing that a voluntary return regularized by notice under Section 148 could not be the foundation for assessment. The legal effect of an assessee filing a return of income and seeking a refund based on appellate orders for tax paid on a voluntary return was clarified by the Hon'ble Apex Court in the case of CIT v. Shelly Products. The Court held that the liability to pay income tax arises as soon as the Finance Act prescribes the rates for any assessment year, and the assessing authority must accept the return as furnished by the assessee and refund any excess tax paid. The Tribunal found no mistake in its order warranting rectification under Section 254(2) of the Income-tax Act, stating that the relief sought by the assessee must be granted by the A.O. if brought to the assessing authority's notice and found justifiable. Decision: The Tribunal dismissed the Miscellaneous Petition filed by the assessee, as the appeal had already been allowed, and the rectification sought under Section 254(2) of the Act was deemed devoid of merits. The judgment was pronounced in the Court on 9th September 2011.
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