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TMI Blog1996 (7) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... P. No. 2750 of 1984), the assessee/petitioner was informed that "the refund may be given for taxes paid on regular assessment which has been annulled now excluding taxes paid in advance and on self-assessment". Similarly, the order dated August 21, 1987 (annexure "J"), has been challenged in Miscellaneous Petition No. 3773 of 1987, whereby the assessees/petitioners have been informed that "the refund is withheld till the reference application filed in the case of the firm, Shelly Products, is decided by the High Court". Hence, all these cases are taken up for disposal together. For convenient disposal of all the aforesaid cases, the facts given in Miscellaneous Civil Case No. 368 of 1993 --- CIT v. Shelly Products, are taken into consideration. The year of assessment involved is 1976-77. The assessments in the cases of both the assessees for these assessment years were annulled by the order of the Tribunal. The assessee, therefore, claimed refund of advance tax and self-assessment tax paid by them. The Income-tax Officer by letter dated August 13, 1994, informed the assessee that the refund may be given for taxes paid on regular assessment which has been annulled now excluding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and only when the liability of tax has been assessed by the competent authority. If the assessment has been made and any amount has been found to be due from the assessee, then alone the law confers a power on the assessing authority to recover the same. The tax can only be recovered under the law as per the method provided therein. Under the scheme of the Act, it is only after the assessment has been made in accordance with the provisions laid down in the Income-tax Act, then and then alone, the liability to recover tax arises. In the present case, the assessment was made and, ultimately, the Tribunal found that the order of assessment was without jurisdiction and it was found to be a nullity and the same was quashed. Once the order of assessment was quashed, then there was no alternative left to the assessing authority except to return the amount of tax or any self-assessment tax paid by the assessee, because the first and foremost condition for recovery of the amount is that there should be an assessment and an amount of tax due against the assessee under the provisions of the Act. If the assessment under which the tax is due to the State from the assessee is quashed and it is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be, shall arise only after a regular assessment has been made. Neither the assessee can be subjected to any tax nor can he claim any refund, before the assessment is framed. Therefore, the factum of adjudication is an essential and integral part in the scheme of the Act, and when the assessment is nullified, there remains no lawful authority in the Revenue to retain that amount. Therefore, we are not impressed by the argument of learned counsel for the Revenue. Learned counsel has invited our attention to the Full Bench decision of the Gujarat High Court in Saurashtra Cement and Chemical Industries Ltd. v. ITO [1992] 194 ITR 659. This was a case in which the question was that the assessment was not made within the time prescribed, therefore, the assessee claimed the refund and in that context, their Lordships observed : " There is no warrant for holding that the entire amount of income-tax which is properly chargeable under the Act and is collected by the Department in accordance with the provisions of the Act should be refunded on the failure to make a regular assessment. " With great respect, we do not subscribe to this view because no tax can be recovered unless there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he operation of that section the tax has been levied, assessed and collected. Assessment is the final process which completes the levy of tax under section 4. Until and unless the quantum of tax is determined in accordance with the procedure laid down by law, the Revenue has no right to collect the tax and if tax by way of advance tax or on self-assessment or having been deducted at source has been paid, the same cannot be retained contrary to the requirements of article 265 of the Constitution. " Similarly, the Punjab and Haryana High Court in Deep Chand Jain v. ITO [1984] 145 ITR 676 has also taken the same view and held : " The advance tax collected from the petitioner had to be related to a final assessment order and since no final assessment order could be passed, the same having become barred by limitation, the collection of the advance tax itself became illegal and so also its retention. " This court in Smt. Shantibai v. CIT [1984] 148 ITR 49, has also taken a similar view and held : " The order of the Income-tax Officer refusing to refund the amount of tax deposited by the assessee, which became refundable on assessment of the income as nil by the Income-tax Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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