2006 (5) TMI 52 - HC - Income Tax

In absence of any other order passed within the period prescribed for the purpose u/s 153(2A), revenue has to refund the advance tax which is in excess of any amount determined to be payable by the assessee refund allowed with statutory interest

Summary

Issues:
1. Writ petition for quashing impugned order and claiming refund for Assessment Year 1989-90.

Analysis:
The petitioner, a partnership firm in the business of manufacturing and selling diesel engines, filed its income return for the assessment year 1989-90. The Assessing Officer assessed the income at a higher amount than declared by the petitioner. The petitioner appealed to the Commissioner of Income Tax (Appeals), who accepted the appeal and directed the Assessing Officer to redetermine the liability after providing a hearing. Subsequent appeals and orders followed, leading to a situation where the Assessing Officer failed to pass a fresh order within the prescribed time frame, resulting in the petitioner being denied a refund despite requesting it multiple times.

The respondents argued that the petitioner could seek relief under Section 119 of the Income Tax Act for waiver of conditions hindering the refund. However, the court found that the Assessing Officer's failure to pass a fresh order within the specified time rendered the petitioner entitled to the refund. The court highlighted the provisions of Section 153(2A) of the Act, emphasizing that the expiration of the time limit for passing a fresh order barred the Assessing Officer from doing so. Referring to Section 240 proviso (a), the court noted that the refund becomes due only upon the making of a fresh assessment, which was not possible in this case due to the time limitation.

The court further cited a previous judgment to support its decision, stating that until the tax amount is determined as per legal procedures, the Revenue cannot retain the tax. As no assessment order was passed within the specified time frame, the court held that the Revenue had no authority to withhold the excess tax paid by the petitioner. Consequently, the court allowed the writ petition, directing the respondents to refund the excess amount collected from the petitioner along with statutory interest within a specified timeframe.