1980 (8) TMI 31 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the Agricultural Income-tax Officer's refusal to make a refund as directed by the Appellate Assistant Commissioner.
2. Applicability of Section 50 of the Agricultural Income-tax Act to a claim for refund.

Detailed Analysis:

1. Validity of the Agricultural Income-tax Officer's refusal to make a refund:
The petitioner, a charitable institution, was assessed for tax for the years 1959-60 and 1962-63 to 1965-66, amounting to Rs. 2,22,454.41, which was paid in full. The petitioner challenged these assessments, and the Appellate Assistant Commissioner (AAC) allowed the appeals, exempting the petitioner from tax and directing a refund of the paid amount. Despite this, the Agricultural Income-tax Officer (Agrl. ITO) refused the refund, citing a subsequent Supreme Court decision invalidating the reasoning of the appellate authority. The court held that the Agrl. ITO's refusal to carry out the AAC's directions was a denial of justice and destructive of the principles of administration of justice. The court emphasized that the Agrl. ITO is bound to follow the appellate authority's orders, and any refusal amounts to non-compliance with judicial hierarchy.

2. Applicability of Section 50 of the Agricultural Income-tax Act:
Section 50 of the Act prescribes a limitation period for claims for refunds, stating that no claim shall be allowed unless made within three years from the last day of the financial year after the income was received. The respondents argued that the petitioner's refund claim was barred by this limitation. However, the court clarified that Section 50 applies to initial claims for refunds, not to cases where a refund is directed by an appellate order. The court referenced the Allahabad High Court ruling in Sohan Pathak and Sons v. CIT, which held that when a refund becomes due as a result of an appellate order, the Income-tax Officer must refund the amount without the assessee needing to file a separate claim. Therefore, Section 50 was not applicable in this case.

Additional Considerations:
- The court also addressed the legality of subsequent assessments and the petitioner's right to adjust the refund against these demands. It was held that justice demands such adjustments to avoid coercion of payment.
- The court dismissed the relevance of the decisions in Suganmal v. State of Madhya Pradesh, D. Cawasji & Co. v. State of Mysore, and Geep Flashlight v. Union of India, as they did not pertain to the specific statutory provisions and facts of this case.
- The court recognized the petitioner's right under Article 19(1)(f) of the Constitution, affirming that the refund amount became the petitioner's property upon the appellate order.

Conclusion:
The court issued a writ of mandamus directing the assessing authority to pass the consequential order refunding the tax amount pursuant to the AAC's order. The proposal to review the appellate order under Section 34 of the Act was not implemented due to existing judicial precedents. The petition was allowed without any order as to costs. An oral application for a certificate to appeal to the Supreme Court was declined as the case did not involve any substantial question of law of general importance or constitutional interpretation.