2016 (9) TMI 608 - HC - Income Tax

Refund of excess taxes paid - Condonation of delay - rectification of mistake - revision petition - Held that - Even without the service of intimation, the petitioner had sufficient knowledge about the acceptance of return as far back as in May 2005. The first attempt to file revision petition, made in December 2008, was thus merely grossly belated. The only explanation that the petitioner offered was that since the intimation was served much later, there was no delay at all. However, if it was presumed that the limitation began to run from May 2005, what prevented the petitioner from filing the revision petition earlier, there is no explanation at all. The petitioner merely referred to the power of the Commissioner to condone the delay for good and sufficient cause being shown, but did not elaborate, in the present case, what such good and sufficient cause was. The Commissioner in our opinion therefore, committed no error in holding that the petitioner had failed to show sufficient cause for condoning the delay. As during the period when under subsection( 1) of section 143, the Assessing Officer had the power of making prima facie adjustments, the legislature provided for an explanation that an intimation sent to the assessee under subsection( 1) would be deemed to be an order for the purposes of section 264 with effect from 1.6.1999. Such explanation has been deleted giving a clear indication that such deeming fiction would no longer apply. In other words, as long as the Assessing Officer had the power to make prima facie adjustments while processing the returns of the assessee under section 143(1) of the Act, by a deeming fiction, it was considered as an order for the purpose of section 264 of the Act and, therefore, revisable. Once with amendment of section 143, such powers were rescinded, it was thereafter, no longer necessary to provide for any refund against a mere intimation under section 143(1) and a corresponding change was therefore, made by deleting the explanation and withdrawing the deeming fiction. We therefore, accept the view of the Commissioner that against the intimation under section 143(1) of the Act, the revision petition was not maintainable. In terms of section 154 of the Act, it may have been possible for the assessee to seek rectification of intimation under section 143(1) of the Act but when the assessee rather belatedly sought revision which was not maintainable, it cannot maintain the claim for refund dehors such proceedings. There is an additional reason why we cannot accept the stand of the petitioner and it is this. In the return filed, the assessee offered to tax a sum of ₹ 1.18 crores by putting a note that The same has been disallowed and will be claimed when actual payment with necessary documents will be made as the company is still in the process of negotiating the same. The claim of expenditure putforth by the Assessing Officer would be open to verification by Assessing Officer during the assessment before the same can be granted in terms of section 37 of the Act. If the assessee was following mercantile system of accounting, such claim could be processed on the basis of accrual. These aspects had to be examined before such claim could have been allowed. The assessee itself harbored an opinion that since the expenditure is still under the process of negotiation, the liability had not accrued during the previous year relevant to the assessment year 2003-2004. All these aspects had to be examined before it could be held that the claim of deduction of expenditure was required to be granted. This is therefore, not a case where an apparent clear cut error of airthematical, typographical or clerical nature has crept in which has robbed the assessee of a rightful claim. This is a case where the assessee wanted to shift its stand from the liability not having accrued to having crystalized. Not allowing refund under such circumstances would not shake the credibility of the department.

Summary

Issues Involved:
1. Whether the Commissioner committed an error in dismissing the revision petition on the ground of unexplained delay?
2. Whether the Commissioner was correct in holding that against the intimation under section 143(1) of the Act, revision under section 264 of the Act was not maintainable?
3. Whether the petitioner is still entitled to a refund of the tax which the petitioner claims to have paid in excess?

Detailed Analysis:

Issue 1: Unexplained Delay in Filing the Revision Petition
The petitioner filed a return for the assessment year 2003-2004 without claiming a deduction for certain expenditures. The return was accepted under section 143(1) without scrutiny, and a refund was issued. The petitioner later realized the error and filed a revision petition under section 264 on 29.12.2008, which was rejected due to delay. The High Court had previously directed the Commissioner to reconsider the delay issue after giving the petitioner an opportunity to explain.

The Commissioner found that the petitioner had received the refund order and intimation under section 143(1) by 11.5.2005, but the revision petition was filed only on 29.12.2008. The petitioner claimed that the intimation was received only on 27.3.2009, but the Commissioner found this explanation unsatisfactory. The court agreed with the Commissioner, noting that the petitioner failed to show sufficient cause for the delay. The court emphasized that the petitioner had sufficient knowledge about the acceptance of the return by May 2005 and made no attempt to file the revision petition earlier.

Issue 2: Maintainability of the Revision Petition under Section 264
The Commissioner held that an intimation under section 143(1) is not a revisable order under section 264. The court examined the nature of the intimation under section 143(1) and noted that it is not an order of assessment but a mere administrative action. The court referred to several precedents, including decisions from the Kerala High Court and the Supreme Court, which supported the view that an intimation under section 143(1) is not an order of assessment.

The court also noted that an explanation deeming intimation under section 143(1) as an order for the purpose of section 264 was deleted with effect from 1.6.1999, indicating that such intimation is no longer revisable. The court concluded that the Commissioner was correct in holding that the revision petition was not maintainable against the intimation under section 143(1).

Issue 3: Entitlement to Refund of Excess Tax Paid
The petitioner argued that the department cannot retain tax not due to it, relying on section 237 of the Act and a decision from the Bombay High Court. The court acknowledged that section 237 provides for a refund if the tax paid exceeds the amount chargeable under the Act. However, the court emphasized that such claims must go through the proper statutory processes, including rectification, revision, or appeal.

The court noted that the petitioner had an opportunity to seek rectification under section 154 but did not do so timely. The court also pointed out that the petitioner's claim involved a change in the assessment of tax liability, which required proper verification by the Assessing Officer. The court concluded that the petitioner's claim for a refund could not be maintained without revising or setting aside the assessment order.

Conclusion:
The court dismissed the petition, concluding that the Commissioner did not err in dismissing the revision petition on the grounds of unexplained delay and maintainability. The court also held that the petitioner was not entitled to a refund of the excess tax paid without following the proper statutory procedures.