9911796707
TMI Blog1998 (12) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in proceedings under section 132 became liable to be returned to the petitioner. The amount was not returned notwithstanding that as a result of regular assessment the amount become so payable to the assessee in terms of section 132B(3) of the Act. The assessee ultimately made a demand for a refund of the amount which became payable to it by the respondents as a result of regular assessments dated June 19, 1989, vide letters dated December 16, 1991 and December 18, 1991. A sum of Rs. 1,41,800 was finally paid to the assessee by way of refund voucher on November 17, 1995, and interest on the said amount between August 3, 1987, that is to say, with effect from the date of expiry of six months from the date of an order under section 132(5) to June 19, 1989, the date of regular assessment under section 143(3) of the Act was computed and ordered to be refunded. The interest was worked out at the rate provided under the aforesaid provision. The said amount has also been paid by the respondents to the assessee. Aggrieved by the calculation of interest payable on the amount which became due to the assessee on the making of assessment order dated June 19, 1989, the assessee preferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions for interest becoming payable under that provision in relation to the proceedings for any assessment year prior to the 1st day of April, 1989. The provision does not say that no interest is payable after April 1, 1989, even if the refund was due in respect of an assessment for a period prior to April 1, 1989. The interpretation which has commended itself to the Commissioner of Income-tax to get over the decision of this court in Anilkumar D. Gajjar's case [1996] 220 ITR 470, is on a total misreading of the provision. The matter would have rested at that but for the reason that the Commissioner of Income-tax has accepted the contentions of the petitioner that he is entitled to interest on delayed refund of the amount which became payable to it as a result of a regular assessment out of the sums retained by the Revenue in proceedings under section 132(5). It is also apparent from the observation in the impugned order that there has been inordinate delay in refund of the amount to the petitioner for which he is not responsible. It is apparent from the very fact that, having expressed his regret, the revisional authority has stressed the need for taking the matter at adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government is liable to pay simple interest at the rate specified in sub-section (1) on the amount so found to be in excess from the date on which such amount was paid, to the date on which refund is granted. Section 244A which was inserted with effect from April 1, 1989, by the Direct Tax Laws (Amendment) Act, 1987, simultaneously with the insertion of sub-section (3) in section 244 and section 243 excluding the applicability of those provisions in respect of the assessments for the assessment year commencing on or after April 1, 1989, to provide interest on refunds, only governs the field for payment of interest on refunds relating to the assessment years after April 1, 1989. We are here concerned with the refund of an amount as a result of regular assessment for an assessment year prior to April 1, 1989. From the various provisions of the Act referred to above, the position that emerges is that retention of amount which takes place under section 132(5) is directly related to the estimated tax liability up to that date, inasmuch as before the retention of any asset which includes monies found during the course of search in the possession of the assessee, determinatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed is referable to the liability of the assessee to pay taxes including penalty and interest under the Income-tax Act or allied Acts which are either existing or created by summary assessment under section 132(5)(i). No part of the asset is retained when there is corresponding liability having been created under the Act or under the allied Acts, as on the date of the making of the order of retention, is satisfied. The amount or proceeds of assets are only to discharge such existing liability whether in respect of which he is already in default or deemed to be in default as well as which though ex hypothesi fixed but awaits final determination in regular proceedings. Each application of amount follows levy of tax, interest or penalty as per regular assessment, whether tax liability already existing or such determination follows the order under section 132(5) relates to period or periods prior to the date of order under section 132(5). It is also apparent from the scheme of section 132B(3) that any amount out of the retained sum becomes returnable only after regular assessment or reassessment has been made in respect of such income. In other words, the return of assets under subsect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like provision was made under sections 215, 216 and 217 for payment of interest to the Central Government. Interest on refunds following regular assessments for periods thereafter is governed, as noticed, in all situations under sections 243 and 244 as the case may be. However, until provision under section 132B(4) was made, no provision corresponding to section 214 was there for payment of interest on excess amount retained than required to satisfy the tax assessed on regular assessment from the date of retention up to the date of such regular assessment. To cover this unoccupied field, to rationalise the provision relating to retention of monies which was ultimately found to be more than the existing liability estimated under section 132(5), section 132B(4) was enacted. Once the assessment order is made and it becomes apparent that the amount if any in the possession of the Department is required to be paid to the assessee or the person from whose custody such amount has been seized, it is to be forthwith returned with interest up to the date of regular assessment. It is not as consequence of an order under section 132(5) but is as a consequence of regular assessment that the amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... timately found against the assessee is though linked with making of regular assessment and creation of demand but is ultimately dependant on discharge of existing liability by appropriating the same against the amount lying with the Revenue by way of retention order under section 132(5), That is to say, payment is not immediately due as a result of regular assessment order but becomes payable where on appropriation it is found to be in excess of liability discharged. Therefore, the case must fall within province of section 243 and not under section 244. The interest becomes payable under section 243 on such amount refundable if the same is not paid within three months from the end of month in which refund claim is made under the Chapter whereas under section 244, the interest becomes payable, if the refund is not made within three months from the date on which refund becomes due. That is to say, on the expiry of three months from the date of the order as a result of which such refund becomes due. Section 240 further postulates that in order that refund becomes due it must not be necessary as a result of order passed in appeal but it also applies if it becomes due as a result of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount repayable is with the Department by way of payment by the assessee voluntarily or is as a result of retention order under section 132(5). In either case the sum is of the assessee and remains with the Department only to be appropriated finally on regular assessment against liabilities finally determined. We are also not impressed by the contention of learned counsel for the Revenue that section 132B is a complete code in itself and there is no room for operation of Chapter XIX in that regard. Section 132B read with section 132(5) operates only until regular assessment is made, the existing liability as on the date of the order of section 132(5) is actually crystallised and the amount in the hands of the Revenue becomes available to be applied for discharge of the liability finally determined and excess amount refundable. The amounts in the hands of the Revenue prior to the regular assessment had the character of the amount referable to the tax liability estimated to be existing on that date. On regular assessment, the said amount is appropriated to the tax liability existing as per final determination and the balance is to be refunded. The period after regular assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the specified period with effect from the expiry of such specified periods. For the first period interest is for extra retention of an amount which could not be paid to the assessee earlier to regular assessment. Interest for the later period is to compensate for not making the refund of amount within the reasonable time prescribed in the Act with effect from expiry of such specified periods. The same is the situation in refund of amount retained under section 132(5), and not refunded in spite on regular assessment such amount became refundable. Merely because provision for interest up to the date of regular assessment finds place in different Chapters than in Chapter XIX, in the case of excess amount retained under section 132(5) the provision for payment of interest for the later period governed by the provision under Chapter XIX, independently of provision for payment of interest for period up to regular assessment cannot be treated differently. On the contrary, this supports that independent provisions operate for the preassessment and post-assessment periods for the purpose of payment of interest and the one does not exclude the operation of the other. With utmost res ..... 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