2024 (3) TMI 950 - HC - Income Tax

Refund of the amount as deposited by the assesse towards part payment of demand raised - Justification for retention of the amounts of which refund is sought - Time limit for completion of assessment, reassessment and recomputation - petitioner asserts AO has failed to frame a final order of assessment on or before 31 March 2017, there exists no justification for the respondents to retain the amounts which had been deposited by the petitioner pending finalization of the assessment proceedings HELD THAT - As would be evident from a reading of Section 153(5) of the Act, the same deals with contingencies where the matter may have been remitted by the ITAT to other authorities, including the TPO wholly or in part, for the purposes of making a fresh assessment. Dealing with such a contingency, sub-section (5) of Section 153 of the Act provides that effect to such an order of the ITAT would have to be given within a period of three months from the end of the month in which that order is received. However, and insofar as the present case is concerned, it would clearly be governed by sub-section (7) of Section 153 of the Act since the matter itself relates to an order passed by the authority prior to 1 June 2016. Since the remit ordered by the ITAT, admittedly, was rendered prior to 1 June 2016, it was incumbent upon the AO to have framed a final order of assessment on or before 31 March 2017. Having failed to do so, there would exist no justification for the respondent to retain the amounts which had been deposited by the petitioner. We further take note of the submission of respondent, who draws our attention to the pendency of appeals preferred by the petitioner against the orders of the ITAT. In our considerate opinion, the mere pendency of those appeals would clearly not detract from the right of the writ petitioner to claim refunds since those appeals have in any case been rendered infructuous consequent to the period of limitation of framing an order of assessment itself having come to an end. We according allow the instant writ petition and direct the respondents to refund the amounts along with the interest as may be statutorily payable.

Summary

Issues involved:
The issues involved in the judgment are the refund of deposited amounts by the petitioner towards part payment of demand raised in assessment orders for two assessment years, and the delay in finalizing the assessment proceedings leading to the refund claim.

Refund of Deposited Amounts:
The petitioner sought a refund of amounts deposited towards demand raised in assessment orders for two assessment years, along with interest. The refund was requested based on orders of the Income Tax Appellate Tribunal remitting certain aspects to the Transfer Pricing Officer. Despite the remit orders in 2013 and 2014, the Assessing Officer failed to frame a final assessment order by the specified deadline, justifying the refund claim by the petitioner. The court noted the provisions of Section 153 of the Income Tax Act, particularly sub-sections (5), (7), and (8), and ruled in favor of the petitioner, directing the respondents to refund the amounts with interest.

Delay in Finalizing Assessment Proceedings:
The court observed that the Assessing Officer did not finalize the assessment orders by the deadline, leading to the petitioner's claim for a refund. The court highlighted the provisions of Section 153(5) and (7) of the Income Tax Act, emphasizing the timeline for giving effect to orders of remit by the ITAT. Since the remit orders were issued before 1 June 2016, the Assessing Officer was required to finalize the assessment by 31 March 2017. The court found no justification for the respondents to retain the deposited amounts, considering the failure to frame a final assessment order within the stipulated timeline. The court allowed the writ petition, directing the respondents to refund the amounts claimed by the petitioner along with applicable interest.

Separate Judgment by Judges:
The judgment was delivered by Hon'ble Mr. Justice Yashwant Varma and Hon'ble Mr. Justice Purushaindra Kumar Kaurav of the Delhi High Court.