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TMI Blog2014 (11) TMI 1224X X X X Extracts X X X X X X X X Extracts X X X X ..... larificatory in nature it must be held to be retrospective, in the facts and circumstances of the case. It is well settled that the legislature may pass a declaratory Act to set aside what the legislature deems to have been a judicial error in the interpretation of statute. It only seeks to clear a meaning of a provision of the principal Act and make explicit that which was already implicit. Where the assessment is annulled, the refund shall become due only In respect of the amount, if any, paid in excess of the tax chargeable on the total income return by the aesessee. Therefore, it necessarily follows that there should be return filed by the assessee showing his total income and paying tax. Thereafter, if the Assessing Officer were to make any addition and pass an assessment older and if that assessment is annulled, then, what is annulled is not the entire liability to pay tax. What is annulled is only additional tax foisted on the assessee by virtue of the assessment order in which event the tax refundable is only additional tax paid in pursuance of the assessment order and not the tax paid as per the returns. The returns filed was in pursuance of the notice issued under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14,50,000/- was given in the assessment order and balance payable was calculated at ₹ 47,25,200/. Aggrieved by the said order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) (hereinafter referred to as 'the First Appellate Authority' for short), which came to he dismissed on the ground of want of jurisdiction. Thereafter, an appeal was preferred to the Tribunal. The Tribunal held that the assessment is invalid as the assessment is pursuant to invalid notice issued. The defect is not curable under the provisions of Section 292B of the Act. Insofar as the assessment of undisclosed income is concerned, the Tribunal was of the view that no material was found during search conducted at the premises of Mr.K.R.Prabhu which relates to the assessee An order under Section 158BC can be passed in accordance with the provisions of Chapter XIV B where a search is initiated under Section 132 or books of accounts, other documents or assets or requisitioned under Section 132A. Similarly under Section 158BD, where the Assessing Officer is satisfied that undisclosed income belongs to a person other than the person with respect to whom search was made under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e following substantial question of law: Whether the Tribunal was correct in holding that the assessee would be entitled to claim the entire refund of taxes paid on the undisclosed income declared m the return of income filed by the assessee of ₹ 83 lakhs and the admitted tax paid along with the return of ₹ 14,50,000/- and the balance after assessment, since the assessment order was set aside by ignoring the principle that the amount admitted in the return of income cannot be refunded. 5. Learned counsel for the Revenue assailing the impugned order contends that In pursuance of the notice issued under Section 138BC, calling upon the assessee to file a return of income, he had an option to file NIL return instead, he chose to file a return showing the income of ₹ 83,00,000/-. Therefore, even if the assessment order is cancelled in appeal by the Tribunal, the admitted liability in the return and the tax paid thereon would not become liable to be refunded in pursuance of such an order. It is only in respect of the disputed tax liability, if it is set aside in appeal, the same requires to be refunded by virtue of proviso (b) to Section 240 of the Act. Learned co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procedure for assessment of search cases. If in a search conducted under Section 132 in a proceeding under Section 132A the undisclosed income is unemthed, Section 158BC of the Act empowers the Assessing Officer to call upon the assessee to furnish a return within the prescribed time setting forth his total income including undisclosed income for the block period. The condition precedent for issue of search notice under Section 158BC is that the condition stipulated in Section 132 or 132A should exists. If such condition exists and the proceedings are initiated validly under Chapter XIV B and a return is filed in pursuance of the notice issued under Section 158BC, then the said Chapter provides for passing of an assessment order on the basis of the said assessment and also taking into consideration the income that is not disclosed even in that return, if after passing of an assessment under the aforesaid Chapter the assessee challenges the entire proceedings on the ground that the proceeding initiated are without jurisdiction and the assessment order passed is unsustainable and upholding such contention, the assessment order is set aside then there is no liability on the part of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessing authority, which if satisfied, may grant him relief and refund the tax paid in excess, if any. Such matters can be brought to the notice of the concerned authority in a case when refund is due and payable, and the authority concerned, on being satisfied, shall grant appropriate relief. In cases governed by section 240 of the Act, an obligation is cast upon the revenue to refund the amount to the assessee without his having to make any claim in that behalf. In appropriate cases therefore, it is open to the assessee to bring facts to the notice of the concerned authority on the basis of the return furnished, which may have a bearing on the quantum of the refund, such as those the assessee could have urged under section 237 of the Act. The concerned authority, for the limited purpose of calculating the amount to be refunded under section 240 of the Act, may take all such facts into consideration and calculate the amount to be refunded. So viewed, an assessee will not be placed in a more disadvantages position than what he would have been, had an assessment been made in accordance with law. 25. It was contended before us that proviso to section 240 was inserted by an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the aid of the amended provision. It, therefore, follows that proviso (b) to section 240 is also declaratory. It seeks to clarify the law so as to remove doubts leading to the courts giving conflicting decisions, and in several cases directing the revenue to refund the entire amount of income-tax paid by the assessee where the revenue was not in a position to frame a fresh assessment, Being clarificatory in nature it must be held to be retrospective, in the facts and circumstances of the case. It is well settled that the legislature may pass a declaratory Act to set aside what the legislature deems to have been a judicial error in the interpretation of statute. It only seeks to clear a meaning of a provision of the principal Act and make explicit that which was already implicit. 9. The constitutional bench of the Apex Court in the case of COMMISSIONER OF INCOME TAX VATIKA TOWNSHIP P. LTD. reported in (2014) 367 ITR 466 (SC) at paragraph 28 has held as under: 28. From the above, it becomes manifest that Chapter XIVB comprehensively takes can of all the aspects relating to the block assessment relating to undisclosed income, which includes Section 156BA(2) as the charging s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and nature of 'undisclosed income' to in Chapter XIVB becomes quite distinct from 'total income ' referred to in Section 5. It is of some significance to observe that when a separate charging section is introduced specially, to assess the undisclosed income, notwithstanding a provision in the nature of Section 4 already on the statute book, this move of the legislature has to be assigned some reason, otherwise, there was no necessity to make a provision in the form of Section 158BA(2). It could only be that for assessing undisclosed income, charging provision is Section 158BA(2) alone. What follows from the said judgment is, Chapter XIV B is a complete code in respect of assessments of 'undisclosed Income'. Section 158BA(2) is the charging Section in respect of the undisclosed income. Section 2(45) defines total income' to mean the amount of income referred to in Section 5 computed in the manner laid down in the Act. Total Income does not include the undisclosed income. Section 240(b) provides - where the order of assessment is annulled, refund shall become due only of the amounts if any of the tax paid excess of the tax chargeable on the total inco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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