1984 (8) TMI 137 - AT - Income Tax

Summary

Issues:
1. Assessment years 1972-73 and 1974-75 - Refund of taxes withheld by the Income Tax Officer (ITO).
2. Validity of appeal regarding the withholding of tax refund.
3. Refund of advance tax, tax deducted at source (TDS), and self-assessment tax on annulment of assessment.

Analysis:

Issue 1:
The appeals by the assessee were against the order of the Commissioner (Appeals) for the assessment years 1972-73 and 1974-75, where the assessment was annulled as time-barred, and the taxes paid were directed to be refunded. The Income Tax Officer (ITO) withheld the refund based on the Commissioner's direction under section 241 of the Income-tax Act, 1961, to prevent adverse revenue impact. The Tribunal upheld the ITO's decision to withhold the refund until the appeals were disposed of. However, after the Tribunal dismissed the revenue's appeals, the ITO was bound to issue the refund as per the Tribunal's order, superseding the Commissioner's direction.

Issue 2:
Regarding the validity of the appeal, the Tribunal referenced a decision of the Madhya Pradesh High Court, stating that the ITO's obligation to refund without a claim under section 240 does not deprive the assessee of the right to appeal under section 246. The court held that the appeal was competent, and the assessee was entitled to the refund without making a separate claim.

Issue 3:
The Tribunal considered the refund of advance tax, TDS, and self-assessment tax on annulment of the assessment. Referring to a Supreme Court decision, it was established that provisional assessments do not bind the assessee or the department, and the taxes paid are liable to be adjusted based on the final assessment. The Tribunal allowed the appeals, confirming the assessee's entitlement to the refund of advance tax, TDS, and self-assessment tax.

In conclusion, the Tribunal ruled in favor of the assessee, directing the ITO to issue the withheld tax refunds and refund the advance tax, TDS, and self-assessment tax. The decision was based on legal provisions, court precedents, and the specific circumstances of the case.