2017 (5) TMI 844 - HC - Income Tax

Revision u/s 264 in favor of assessee - Claim for refund of excess Tax paid/waiver of interest under Sections 234A, 234B and 234C denied - reason assigned for rejection was, the return was not voluntarily filed by the petitioner but consequent upon survey conducted under Section 133A - Held that - The respondent/Authorities are in agreement on one fact that belated returns cannot be revisited. But under Section 147 of the Act, the Assessing Officer is authorized to assess reasonable income escaping assessment within a period of four years of returns. That being so, the returns filed by the petitioner which was within the limitation of four years was within the propriety of Assessing Officer, which was overlooked by him. Then it follows that the Revisional Authority had every authority over the returns and revised returns of the petitioner, though was not assessed by the Assessing Officer. Instead of disposing off the revision petition on its merits, it is disposed with a sweeping remark that no order is passed by the Assessing Officer. This Court in the matter of A. Balakrishnan v. General Manager, Hindustan Machine Tools Ltd. 2007 (2) TMI 172 - KARNATAKA High Court held that the Income-tax authorities are duty bound to process a return claiming refund even though filed beyond the period prescribed under Sections 139(1) and 139(4) of the Income-tax Act, 1961, said finding was upheld by the Division Bench of this Court. In the matrix on hand, the revisional authority restrained from exercising its jurisdiction for the sole reason that there was no assessment of the returns/revised returns by the Assessing Officer and the same was not proper and it needs to be quashed and matter has to be considered on merits. Thus the petition is allowed

Issues:
1. Rejection of claim for refund of excess tax paid/waiver of interest under Sections 234A, 234B, and 234C of the Income-tax Act, 1961.
2. Authority's refusal based on delayed filing of original and revised returns.
3. Jurisdiction of Revisional Authority and Chief Commissioner of Income Tax.
4. Interpretation of Section 147 of the Income-tax Act.
5. Legal obligation to process a return claiming refund.
6. Applicability of precedents in refund cases.
7. Revisional powers of the Commissioner of Income Tax under Section 264 of the IT Act.

Analysis:

1. The petitioner, a Co-operative Society, challenged the rejection of its claim for refund of excess tax paid and waiver of interest under Sections 234A, 234B, and 234C of the Income-tax Act, 1961. The dispute arose from the delayed filing of original and revised returns, leading to the Assessing Officer's refusal to consider the claim. The petitioner argued that the tax withheld by the Revenue should be refunded as there was no valid assessment due to delayed returns.

2. The petitioner contended that the Assessing Officer's rejection of the refund claim based on delayed returns was erroneous. The petitioner emphasized that the tax paid was not self-assessment tax, and the interest calculation was incorrect. The Revisional Authority's failure to review the Assessing Officer's decision was deemed prejudicial to the petitioner's interests.

3. The respondents argued that the petitioner's delayed filing of returns hindered the assessment process, rendering the claim invalid. They maintained that the waiver of interest for non-existent proceedings was inappropriate. The respondents highlighted the petitioner's admission of tax liability through the filing of returns.

4. The High Court analyzed the legality of the orders passed by the Revisional Authority and Chief Commissioner of Income Tax. It noted that under Section 147 of the Income-tax Act, the Assessing Officer could assess reasonable income within four years of returns. The Court emphasized that the Revisional Authority had jurisdiction over the petitioner's returns, despite not being assessed by the Assessing Officer.

5. Referring to legal precedents, the Court underscored the obligation of Income-tax authorities to process refund claims, even if filed beyond the prescribed period. The Court cited cases where annulment of assessments led to refunds, emphasizing the authorities' duty when a refund is claimed.

6. The Court addressed the argument regarding the revisability of Annexure-D, emphasizing the Apex Court's stance on administrative orders and statutory duties. It referenced a case where the revisional powers of the CIT were restricted due to the absence of assessments, highlighting the need for a proper assessment before rejecting refund claims.

7. Ultimately, the Court allowed the petition, quashing the orders of the Revisional Authority and Chief Commissioner of Income Tax. It directed the second respondent to reconsider the petitioner's application in accordance with the law, emphasizing the need for a fair review process.

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