2014 (12) TMI 684 - HC - Income Tax

Assessee seeks direction to be made to the revenue to refund the excess amount of tax paid AY 2000-2001, together with interest - Assessment for the AY 2000-2001 completed or not by Revenue - Held that - Where the return indicated that a refund was due to the assessee on account of advance taxes paid by him, which were not actually payable in so far as the receipt was a capital receipt that was not liable to tax under the Income Tax Act, the AO ought to have dealt with the return and determined whether the refund claimed in the return was actually payable to the assessee or not - no such action appears to have been taken by the AO on the ground that the return itself was never received in the office - in cases covered by Sections 237 to 245, the correctness of an assessment cannot be gone into by the officer concerned while determining the issue as to whether refund is due to the assessee or not - It follows that the procedure can be followed only in cases where there is already an assessment and the assessee approaches the Department for a refund that is due to him in terms of the assessment order. What is to be done with regard to the excess payments made by the assessee, by way of advance tax for the AY in question Held that - The payments were in fact made, which is not disputed by the Department, and the payments relate to amounts that were not payable by way of tax as decided in Guffic Chem P. Ltd. v. CIT - 2011 (3) TMI 6 - Supreme Court it has been held that the amounts received under a non-compete agreement are not taxable under the Income Tax Act up to the AY 2003-2004 thus, the revenue is directed to refund the amount of ₹ 1865376/-, that was paid by petitioner in excess for the AY 2000-2001, to the assessee but the revenue would not be liable to pay any interest on the amount Decided in favour of assessee.

Issues:
1. Failure to complete assessment for the assessment year 2000-2001.
2. Dispute over the jurisdiction of filing the return.
3. Allegation of non-receipt of return by the department.
4. Disagreement on the appropriate procedure for claiming a refund.
5. Delay in approaching the department for refund.
6. Excess payments made by the assessee for the assessment year in question.

Issue 1: Failure to complete assessment for the assessment year 2000-2001:
The petitioner, an assessee, filed a return for the assessment year 2000-2001 claiming a refund of Rs. 18,65,376. Despite filing the return and follow-up representations, the department did not process the return or refund the excess tax paid by the petitioner. The court noted that the assessing officer failed to act on the return, which indicated a refund due to the petitioner. The failure to process the return led to the non-determination of the refund status.

Issue 2: Dispute over the jurisdiction of filing the return:
The respondents argued that the petitioner filed the return with the wrong Income Tax Officer, making the return invalid. However, the court found that the petitioner filed the return with the appropriate office and provided evidence of acknowledgment similar to that of the petitioner's brother, which was accepted by the department. The court held that the return was validly filed, and the department's argument lacked merit.

Issue 3: Allegation of non-receipt of return by the department:
The department claimed that the return was not received due to filing in the wrong office. However, the court found evidence of acknowledgment and processing of a similar return filed by the petitioner's brother, indicating that the return was indeed submitted. The failure to act on the return led to the non-determination of the refund status.

Issue 4: Disagreement on the appropriate procedure for claiming a refund:
The department contended that the petitioner should have followed procedures under Sections 237 to 245 of the Income Tax Act for claiming a refund, instead of approaching the court. The court disagreed, stating that those procedures apply after assessment, which was not conducted in this case. The court emphasized the duty of the assessing officer to act on the return filed by the assessee.

Issue 5: Delay in approaching the department for refund:
The court noted a delay of almost six years by the petitioner in approaching the department for the refund. Both the petitioner and the department were held responsible for the non-completion of the assessment for the assessment year 2000-2001.

Issue 6: Excess payments made by the assessee for the assessment year in question:
The court directed the respondent to refund the excess amount of Rs. 18,65,376 paid by the petitioner within three months. The court considered the conduct of the petitioner in delaying the claim and decided not to award any interest on the refunded amount. The court held both parties responsible for the delay in resolving the refund issue.

In conclusion, the court allowed the writ petition, directing the respondent to refund the excess tax paid by the petitioner for the assessment year 2000-2001, emphasizing the duty of the assessing officer to act on filed returns promptly.

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