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Refund of amount of tax representing excess over advance tax paid by assessee. - Income Tax - 1157/CBDTExtract INSTRUCTION NO. 1157/CBDT Dated : March 21, 1978 Section(s) Referred: 241 Statute: Income - Tax Act, 1961 Attention is drawn to para 6.14 of the 4th Report (1977-78) (printed below) of the P.A.C. in which action of the Department in granting refund of the amount of tax representing the excess over advance tax paid by the assessee when the assessments were set aside but re-assessment proceedings were pending, came in for criticism. 2. An assessment is normally set aside by an appellate authority when in its view an addition is made without giving a proper opportunity to the assessee or when the facts relied upon by the Income-tax Officer are disputed. The very fact that the addition made is not deleted by the appellate authority shows that but for the defects pointed out above, the same might have been sustained wholly or substantially. It is, therefore, reasonable to infer that subject to the information forthcoming as a result of fresh opportunity given to the assessee, there is a likelihood of the addition or at least a substantial part thereof being added on re-assessment resulting in the creation of a sizeable tax demand. Issue of refund in such cases as a result of the original assessment being set aside may possibly jeopardise the recovery of tax demand created on re-assessment, particularly in cases involving large additions. In such cases it is desirable that the Income-tax Officer before actually granting the refund, examines the question whether the grant of the refund is likely to adversely affect the revenue. In case he is of the opinion that the grant of refund is prejudicial to revenue he may refer the matter to the Commissioner of Income tax seeking his approval to withhold the refund under section 241 of the Income-tax Act, 1961. In case refund is withheld, the re-assessment should be completed without any undue delay so that such refund could be adjusted against the resultant tax demand and unnecessary payment of interest is avoided.
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