1973 (1) TMI 6 - HC - Income Tax

Refund of the amount paid under provisional assessment - regular assessment is held to be void - assessee will not be entitled to refund of the amount paid under section 23B

Summary

Issues:
1. Validity of refund claim for tax paid under section 23B of the Indian Income-tax Act, 1922.

Analysis:
The case involved the assessment of income tax for the assessment year 1954-55 by M/s. Jagannath Rameshwar Prasad, a Hindu undivided family. The Income-tax Officer made a provisional assessment under section 23B of the Act and determined the tax payable. Subsequently, a regular assessment was initiated, but the assessment order was quashed by the court as the assessee had filed a voluntary return, making the notice under section 22(4) invalid. The Income-tax Officer then resumed the assessment proceedings and issued a notice under section 23(2). The assessee contended that the assessment proceedings were barred by limitation and sought a refund of the tax paid under section 23B. The objections were initially overruled but later quashed by the court, holding the assessment proceeding as barred by limitation.

The primary issue for consideration was whether the appellant was entitled to a refund of the tax paid under section 23B. The appellant argued that the provisional assessment under section 23B is a step towards a regular assessment and if the regular assessment is found invalid, the tax paid under section 23B should be refunded. However, the court held that the provisional assessment is a distinct proceeding and does not merge with the final assessment. If the regular assessment is void, the tax paid under the provisional assessment retains its character. In this case, as the regular assessment was held to be without jurisdiction and a nullity, the tax paid under section 23B remained valid, and the appellant was not entitled to a refund.

The court emphasized that the provisions of section 23B(7) do not apply when no valid regular assessment is made. The amount paid under the provisional assessment retains its character, and the order under section 23B(1) remains valid. Consequently, the appellant's claim for a refund was denied, and the appeal was dismissed with costs.