9911796707
TMI Blog1983 (9) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of the order ? and 2. Whether interest becomes payable after six months of the order of the Appellate Tribunal or on the quantification of the amount to be refunded by the WTO pursuant to the order of the Appellant Tribunal ? and lastly 3. Whether any enquiry was necessary consequent upon the Appellate Tribunal's order for the purpose of quantifying the amount of payment and whether that enquiry must necessarily be completed within period of six months and whether irrespective of who was responsible for the delay, the liability to pay interest arises after a lapse of six months." In order to appreciate the contentions giving rise to the above questions of law, the few facts necessary, which are practically common to all the writ petitions, may briefly be stated. The trustees of the petitioner-trust filed wealth-tax returns for the assessment years 1957-58 to 1972-73. The assessments were completed and the tax due was recovered from the petitioner. These assessment orders were the subject-matter of appeals and ultimately the Appellate Tribunal by its order dated March 31, 1974, in W.T.As. Nos. 1525 to 1527 of 1965-66 in regard to the assessment years 1957-58 to 1959-6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd wealth of the beneficiaries under the plea that that information was necessary to give effect to the order of the Appellate Tribunal. In reply thereto, the assessee-trust gave the full method of working out the tax liability through its letter dated October 10, 1974. By a further letter dated November 5, 1974, the assessee informed the 2nd respondent that the trust was not aware of the particulars of the other wealth of the beneficiaries. On April 3, 1975, the 2nd respondent addressed a letter which was received by the petitioner on April 9, 1975, stating that he cannot give effect to the order of the Appellate Tribunal without the information regarding the other assets and wealth of the beneficiaries. In that letter, he stated that he had two courses open: (i) to reopen the assessments of the beneficiaries and bring to charge the corpus payments due to them under certain clauses of the trust deed, or (ii) to assess the said corpus in the hands of the trustees under s. 21(1), and opined that the second method was more convenient both for the Department as well as the trustees and, accordingly, proceeded to give effect to the Appellate Tribunal's order. The assessee objected to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issuance of the modification orders, the petitioner requested the WTO to refund the amount through his letter dated December 15, 1976, and also claimed payment of interest. Even after the so-called adjustment, a sum of Rs. 78,220 was refundable. The, petitioner requested for the, refund of the amount and for payment of interest from the (late the excess amount of tax was collected until it was refunded. No steps were taken during the period of first six months after the passing of the Appellate Tribunal's order or even subsequent to the passing of the modification orders to assess the amount refundable. To a reminder issued by the petitioner on August 29, 1977, the only response of the WTO on September 2, 1977, was to say that the matter was receiving attention. For the first time by a letter dated September 6, 1977, the officer informed the petitioner that interest was not allowed and also explained the reasons for the delay in ordering the refund and imposed the responsibility for the delay in the issuance of the modification orders on the assessee and his failure to supply the information required of it. Lastly, lie stated that the amount had been adjusted towards the tax due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate delay on the part of the WTO in refunding the amount. In order to determine the above questions, it is necessary to read the provisions of s. 34A of the Act. In so far as it is relevant for our present purpose, it is as under: " 34A. (1) Where, as a result of any order passed in appeal or other proceeding (including a rectification proceeding) under this Act, refund of any amount becomes due to the assessee, the Wealth-tax Officer shall, except as otherwise provided in this Act, refund the amount to the assessee without his having to make any claim in that behalf. (2) Where an order giving rise to a refund is the subject-matter of an appeal or further proceeding or where any other proceeding under this Act is pending and the Wealth-tax Officer is of the opinion that the grant of the refund is likely to adversely affect the Revenue, the Wealth-tax Officer may, with the previous approval of the Commissioner, withhold the refund till such time as the Commissioner may determine. (3) Where a refund is due to the assessee in pursuance of an order referred to in subsection (1) and the Wealth-tax Officer does not grant the refund within a period of six months from the date of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a " consequential order The order also further goes on to record that it is being made in pursuance of the Appellate Tribunal's orders to revise the net wealth and the tax liability. In calculating the excess amount refundable, the amount of wealth assessed as per the original assessment is taken as the basis and the deductions worked out in accordance with the Appellate Tribunal's order are allowed and after working out the tax liability of the assessee as per the Appellate Tribunal's order, and deducting from out of it the tax already paid by the assessee, the excess amount refundable to the petitioner was ascertained. Even the order dated December 23, 1976, is on the same lines. In the body of the order, after referring to the operative portion of the Appellate Tribunal's order, the WTO proceeds to state : " Respectfully giving effect to the said decision, the proportionate taxable wealth is computed as under and the balance refundable is arrived at ". From a reading of these orders, there can be no manner of doubt that there was no fresh assessment but only a modification order and the amount, of tax refundable was being quantified giving effect to the Appellate Tribunal's or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not paid, interest becomes payable. He contends that that distinction must be made applicable to a case of refund as well. In this context lie relies upon a judgment of the Supreme Court in Kesoram Industries v. CWT [1966] 59 ITR 767. One of the questions which their Lordships had to consider under the W.T. Act in that case was whether in computing the net wealth of the assessee, the amount of the provision for payment of income-tax and super-tax in respect of the year of account was a " debt owed " within the meaning of s. 2(m) of the W.T. Act and as such deductible in computing the net wealth of the assessee. Their Lordships observed (p. 784): " A debt is a present obligation to pay an ascertainable sum of money, whether the amount is payable lit Praesenti or in futuro ; debitum in praesenti, solvendum in futuro. But a sum payable upon a contingency does not become a debt until the said contingency has happened., A liability to pay income-tax is a present liability though it becomes payable after it is quantified in accordance with ascertainable data. There is a perfected debt at any rate on the last day of the accounting year and not a contingent liability. The rate is alw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... So, the amount was to be re funded to and not collected from the assessee. The Revenue, which was liable to refund the amount, cannot postpone its liability by failing to quantify the amount refundable. The liability to refund having arisen under the Appellate Tribunal's order, the legislature itself determined the period within which such a calculation has to be made and the amount refunded. The legislature was quite aware of the fact that Pursuant to the orders of the Appellate Tribunal, certain calculations have to be made and the amount refundable quantified before the refund could be made. So when the liability to refund arises on account of the Appellate Tribunal's order, the liability to pay interest on the amount refundable arises from that moment. But unless the amount refundable is quantified, it is not possible to issue the refund voucher. Lest the Revenue be saddled with the burden of paying interest on such amount during the period required for calculating this amount, to make the scheme of refund workable and at the same time ensure refund within a reasonable time, the legislature advisedly fixed a period of six months during which all calculations have to be made an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the consequential order even without that information. In any event, any such particulars, if in the opinion of the WTO, were required to be ascertained, in the absence of those particulars being furnished by the assessee, he should have made his own enquiry and proceeded to quantify the amount of tax payable and on that basis determined the amount, if any, refundable to the petitioner-assessee Within the period of six months. Whoever may be responsible for the delay in not furnishing those particulars to the WTO, the provisions of sub-s. (3) of s. 34A do not absolve the payment of interest on the amount of tax refundable to the assessee nor does it extend the period within which tax may be refunded to the assessee without incurring the liability to pay interest. The liability to refund the tax on the expiry of the period of six months of the order which has occasioned the refund is absolute. The Act nowhere makes any provision for exempting the Revenue from the liability to pay interest on the amount refundable after that period on any ground, valid or otherwise. It is also significant to note that in this case even after determining the amount, the tax was not refunded. Even th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he WTO may have been engaged in other urgent work and whatever may have been his difficulties in passing the consequential orders, inasmuch as sub-s. (3) of s. 34-A does not make any provision for extension of time of six months prescribed thereunder, it is unnecessary for us to consider how far the grounds stated for justifying the delay could be accepted. Even assuming that they are true, the Revenue is not absolved of the liability to pay interest on the amount found to be refundable. As per the assessment order dated December 23, 1976, relating to the assessment year 1974-75, a sum of Rs. 8,41,776 due by way of refund of wealth-tax pursuant to the Appellate Tribunal's order dated March 31, 1974, and the consequential order dated April 28, 1975, was treated as the wealth of the petitioner-assessee and was not adjusted towards income-tax or any other tax due from the petitioner. If it were adjusted towards any tax due from the petitioner, it could not have been shown as the wealth of the assessee. Likewise, from the assessment orders dated December 23, 1976, relating to the assessment years 1975-76 and 1976-77, a sum of Rs. 36,07,045 was shown as wealth-tax refundable as per th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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