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TMI Blog2015 (6) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... on the invalid return has to be refunded the same analogy applies to the interest portion also. - Decided in favour of the assessee - IT APPEAL NO. 683 OF 2009 - - - Dated:- 20-4-2015 - VINEET SARAN AND MRS. S. SUJATHA, JJ. For The Appellant : Sri A. Shankar, Adv. and Sri M. Lava, Advs. For The Respondent : Sri K.V. Aravind, Adv. JUDGMENT This case has a chequered history and relates to the assessment year 1992-93. The facts relevant for the purpose of the case are that for the aforesaid assessment year the appellant assessee filed his return on 31.8.1992 declaring his total income as ₹ 57,810/-. The admitted tax liability was ₹ 9,216/- plus interest of ₹ 302/-. As such, the total tax paid was ₹ 9,518/-. The return filed by the assessee was processed under S. 143(1) of the Income Tax Act, 1961 (the 'Act' for short) and the income as disclosed was accepted. Then on 30.12.1993, the appellant filed another return of income declaring an additional income of ₹ 2,50,000/- under the Immunity Scheme and ₹ 75,000/- as premium paid for the above amount i.e., an additional amount of ₹ 3,25,000/-. Thus, in the revised ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund of the excess tax paid over and above the tax payable on the returned income. 3. Then, in compliance of the order dated 3.12.2001 passed by the CIT (A), a notice under S.148 of the Act was issued to the assessee on 19.3.2002 which culminated in an assessment order dated 4.2.2003 passed under S.144 r/w S.147 of the Act. Challenging the said order, assessee filed an appeal before the CIT (A) who, by order dated 21.10.2003, allowed the appeal. During this period, on 7.7.2003 another order was passed by the Assistant Commissioner under S.154 of the Act wherein it was determined that an excess amount of tax i.e., ₹ 96,385/- was refunded to the assessee and the same would now be payable by him to the Department. 4. Challenging the order of the CIT(A) dated 3.12.2001, appellant filed an appeal before the Tribunal for quashing the direction issued for issuance of notice under S.148 of the Act to tax the escaped income. The Department also filed an appeal against the said order of the CIT (A) whereby the assessment was nullified as the revised return was held to be invalid under S.139(5) of the Act. By order dated 17.10.2003, the Tribunal held that the revised return was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w on the facts and circumstances of the case ? 6. We have heard Sri A. Shankar, learned counsel appearing for the appellant and Sri K V Aravind, learned Counsel appearing for the revenue. 7. Learned counsel Sri A. Shankar contended that the revised return filed by the assessee on 30.12.1993 was an invalid return as held by the authorities and confirmed by the Tribunal, as such, the invalid return was void ab initio and non-est in the eye of law and in view of the same, the authorities were required to refund the amount of ₹ 2,75,043/- paid by the assessee as per the revised return along with the interest under Proviso (b) to Section 240 of the Act. The learned counsel, in support of his contention, relied on the following judgments: 1. CIT v. Shelly Products and Another [2003] 261 ITR page 367 2. Nirmala L.Mehta v. A.Balasubramaniam, CIT and Others [2004] ITR 269 page 1 3. S.R.Koshti v. CIT (Gujarat) [2005] ITR 276 page 165 4. Saraya Sugar Mills Ltd. v. ITO And Others [1997] ITR 226 page 475 5. Ajit Jain v. Union of India And Others [2000] I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessment is set aside or cancelled and an order of fresh assessment is directed to be made, the refund, if any, shall become due only on the making of such fresh assessment; (b) the assessment is annulled, the refund shall become due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee. 11. The plain reading of the said provision makes it clear that in cases where the assessment is annulled, the assessee is entitled to the refund only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee. 12. The word 'return' is not defined under the Act. In general, 'return' is a declaration of income. Section 139 of the Act provides for furnishing return of income. 13. In the case of New-Delhi Municipal Committee v. Kalu Ram and another reported in AIR 1976 SC 1637, it is held as under : 'The word 'payable' is somewhat indefinite in import and its meaning must he gathered from the context in which it occurs. 'Payable' generally means that which should be paid. If the person in arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y could later seek assignment or had taken the lands on lease from persons whom they bona fide believed to be competent to grant such leases or had come into possession with the intention of attorning to the lawful owners or on the basis of arrangements like varam etc. which were only in the nature of licences and fell short of a leasehold right. It was not within the contemplation of the legislature to confer the benefit of protection on persons who had wilfully trespassed upon lands belonging to others and whose occupation was unlawful in its origin. The expression in occupation occurring in Section 7D must be construed as meaning in lawful occupation. ' 15. In the case of State of Kerala Ors. v. V.R. Kalliyanikutty Anr. Reported in AIR 1999 SC 1305, it is held as under: There is no question, however, in the present case of any payment voluntarily made by a debtor being adjusted by his creditor against a time-barred debt. The provisions in the present case are statutory provisions for coercive recovery of amounts due . Although the necessity of filing a suit by a creditor is avoided, the extent of the claim which is legally recoverable is not thereby enlarged. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employed in this provision includes both valid as well as invalid return, is not justifiable. If such an interpretation is given to the word 'return', it would defeat the intent of the provision itself. It is clear from the said provision that the assessee is entitled to the tax paid in excess of the tax chargeable on the total income declared by the assessee in his return. No tax shall be levied or collected except with authority of law, as enjoined by Article 265 of Constitution of India. If the return itself is declared to be invalid by the authorities as well as by the Tribunal, such return does not exist. i.e., it is void ab initio and non est in the eye of law which has no legal sanctity. If that is so, then the invalid return has to be ignored and we have to examine the refund to be payable by the department under the proviso (b) to Section 240 of the Act on the basis of the valid return i.e, the original return filed by the assessee on 31.8.1992 declaring his total income of ₹ 57,810/-. For whatever reasons, if the authorities were barred from framing the assessment/not amenable to self assessment, then the department is precluded from withholding the tax and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t accept the return as furnished and shall not in any event raise a demand for payment of further taxes. Accepting the income as disclosed in the return of income furnished by the assessee, it must refund to the assessee any tax paid in excess of the liability incurred by him on the basis of income disclosed. Even if the tax paid is found to be less than that payable, no further demand can be made for recovery of the balance amount since a fresh assessment is barred. In other words, the tax paid by the assessee must be accepted as it is, and in the event of the tax paid being in excess of the tax liability duly computed on the basis of the return furnished and the rates applicable, the excess shall be refunded to the assessee, since its retention may offend article 265 of the Constitution . 21. In the aforesaid case, the Apex Court was considering the case of a valid return. In that context it is held that even if the tax paid is found to be less than that payable, no further demand can be made for recovery of the balance amount since, a fresh assessment is barred and if in the event of the tax paid being in excess of the tax liability duly computed on the basis of the return fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decisions, including Ramlal v. Rewa Coalfields Ltd. AIR 1962 SC 361; State of West Bengal v. Administrator, Howrah Municipality, AIR 1972 SC 749, and Babhutmal Raichand Oswal v. Laxmibal R.Tarte AIR 1975 SC 1297, that the State authorities should not raise technical pleas if the citizens have, a lawful right and the lawful right is being denied to them merely on technical grounds. The State authorities cannot adopt the attitude which private litigants might adopt. 24. In the light of said judgments, if we examine the proviso (b) to Section 240 of the Act, it is axiomatic that the return contemplated in the said Section has to be a valid return, and an illegal/invalid return has no sanctity in the eye of law and would have no application. 25. Learned counsel appearing for the revenue also relied up on the judgment of Shelly Products (supra). He drew our attention to Section 156 of the Act to take support of Shelly Products Case (supra) in favour of the revenue. Section 156 of the Act deals with the notice of demand. When any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under the Act, the Assessing Officer, serve upon the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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