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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 ..... n the revised return, the appellant disclosed a total income of Rs. 3,82,810/- i.e., Rs. 3,25,000/, plus Rs. 57,810/- as disclosed in the original return dated 31.8.1992. The assessee-appellant paid tax of Rs. 2,53,761/- on the said return. It may be relevant to mention that the assessee had declared this additional income only after the Department had detected the bogus transaction. On 10.2.1995, the assessment order was passed whereby after calculating the total tax to be paid as Rs. 2,75,043/-, the balance amount payable was found to be Rs. 20,704/- as the assessee had deposited Rs. 9,518/- as tax with the return filed on 31.8.1992 and a further amount of Rs. 2,53,761/- with the revised return filed on 30.12.1993. Challenging the said order dated 10.2.1995, the assessee filed an appeal before the CIT (A) which was allowed by order dated 3.12.2001, after holding that the return filed on 30.12.1993 could not be treated as a revised return under S. 139(5) of the Act as the revised return under S. 139(5) is based on the discovery by the Income Tax Department. It was further held that since the revised return was invalid under S. 139(5) of the Act, notice under S. 143(2) issued by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llary for the CIT (A) was to annul the assessment. The Tribunal further held that 'if the time for reopening of an assessment has lapsed under the provisions of law, the Assessing Officer is precluded from reopening the same. Therefore, the CIT(A), under such circumstances, by using his wide powers also cannot direct reopening of such assessment'. The appeal filed by the assessee was allowed and the appeal of the Revenue was disposed of. 5. Then on 6.11.2003, without considering the order passed by the Tribunal, the Assessing Officer passed an order giving effect to the order of the CIT(A) dated 21.10.2003 and provided that a net income of Rs. 10,732/- was to be refunded to the assessee. Challenging this order dated 6.11.2003, assessee filed an appeal before the CIT(A). By order dated 11.10.2004, the CIT (A) allowed the appeal and remanded the matter to the Assessing Officer to give a fresh decision by a speaking order In compliance of the aforesaid order dated 11.10.2004 of the CIT (A), the Assessing Officer passed an order dated 9.12.2004 whereby the claim of the assessee was rejected and only the interest amount of Rs. 12,535/- under S. 244A of the Act was found refunda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; 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] ITR 242 page 302 8. The learned counsel Sri K V Aravind appearing for the revenue supported the order passed by the Tribunal and argued that in view of the authorities and the Tribunal having held that the revised return filed by the assessee on 30.12.1993 is an invalid return, Assessing Officer cannot process such invalid return; however, the admission of taxes made by the assessee based on such invalid returns does not ceases, income admitted in a return, whether it is valid or invalid cannot be refunded if, it is chargeable under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 arrears raises a dispute as to the amount, the Estate Officer in determining the amount payable cannot ignore the existing laws. If the recovery of any amount is barred by the law of limitation, it is difficult to hold that the Estate Officer could still insist that the said amount was payable. When a duty is cast on an authority to determine the arrears of rent, the determination must be in accordance wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Under Section 70(2) of the Kerala Revenue Recovery Act the right of a debtor to file a suit for refund is expressly preserved. Instead of the bank or the financial institution filing a suit which is defended by the debtor, the creditor first recovers and then defends his recovery in a suit filed by the debtor. The rights of the parties are not thereby enlarged. The process of recovery is different. An Act must exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept 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 Rs. 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 interest paid by the assessee on the revised return which is held to be invalid in the eye of law. Even assuming, the assessee has admitted certain taxes in an invalid return, such admitted tax cannot be retained by the department unless it is supported by law. In the absence of any such provisions, withholding of the taxes admitted in an invalid return, amounts to tax collected without authority of law, offending Article 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ince 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 furnished and the rates applicable, the excess shall be refunded to the assessee. Applying the said principles of law, if we examine the case on hand, it is clear that fresh assessment is barred. If there is no authority for the assessing Officer to proceed on the invalid return then what remains is the original return and on the basis of such valid return, if there is excess of tax paid by the assessee, it has to be refunded to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee a notice of demand in the prescribed form specifying the sum so payable. If no order would be passed under the Act by the Assessing Officer, no notice of demand would be issued in terms of Section 156 of the Act. It is the case of the Revenue that in that context, the Apex Court has held that even if the tax paid is found to be less than payable, no further demand can be made for the recovery of the balance amount since a fresh assessment is b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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