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TMI Blog1987 (11) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order. 4.2 On appeal, reliance was placed by the assessee on the decision of the Supreme Court in the case of CIT v. Balkrishna Malhotra [1971] 81 ITR 759, decision of the Jammu and Kashmir High Court in the case of S. Mubarik Shah Naqshbandi v. CIT [1977] 110 ITR 217 and in the case of R. Gopal Ramnaryan v. Third ITO [1980] 126 ITR 369 (Kar.). The CIT (A) rejected this ground of the assessee holding that on verifying the records not only the assessment order was completed on 10-12-1982 but even ITNS 150A was prepared on 10-12-1982. On 19-1-1983, the Income-tax Officer made a reference to IAC regarding checking of the refund because the assessment resulted in refund of more than Rs. 5,000 and the IAC vide letter dated 26-4-1983 permitted the Income-tax Officer to issue refund order, if there was no arrear of demand pending. He, therefore, held that assessment was legally completed. The reliance placed by the assessee on various decisions of the Courts were distinguished and therefore not applicable. 4.3 Before us, the learned counsel appearing on behalf of the assessee reiterated the submissions made before the lower authorities. On query from the Bench as to whether tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situation that can be envisaged, from administrative point of view, could be to verify the pending arrears, if any, in spite of which whether to grant refund or not. But then IAC has replied on 27-4-1983 that ITO should verify this position before issuing refund. We are not all enlightened on this aspect in any manner. Hence, the only in inference that can be drawn is Department wanted to utilise money of the assessee without any cost in the guise of assessment order having been passed on 10-12-1982. It cannot be expected of an office of IAC sitting inactive over request of ITO to issue refund order for period of almost four months. In fact, the function of the office of IAC is to remove such delays rather than cause them. Apart from this, we are not shown even the copy of the acknowledgment in respect of receipt of the assessment order, tax calculation form, etc. Again in the same order the CIT (A) has allowed interest under section 214 up to 27-4-1983, i.e., the date of issue of refund order, in spite of his stand that assessment was completed on 10-12-1982. As per provisions of section 214(1) the interest is payable by Govt. only for the period commencing from 1st day of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the proceedings before the Income-tax Officer commenced. It would be necessary to allow fair proportion of the expenditure under section 37 and remaining portion of the expenditure which can be directly related to services in respect of the proceedings before the Income-tax Officer shall have to be considered as per the provisions of section 80VV. Looking to the details of the expenditure in respect of Rs. 12,950, we are of the view that Rs. 5,000 consisting of two items clearly fell to the extent of 100 per cent within the meaning of section 80VV and, therefore, the same is considered under that section and allowable to the maximum extent of Rs. 5,000. Out of the balance amount of Rs. 7,950, in our opinion, proportion of 50.50 falling under section 37 and 80VV would be a correct estimate considering the types of comprehensive services usually rendered by the Chartered Accountants in general. Therefore, Rs. 3,975 shall be allowed under section 37 and balance of Rs. 3,975 falling under section 80VV shall attract disallowance. 6.4 While on the aspect we would like to touch upon the aspect to Department's stand usually taken in such matters, though not specifically taken here ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Inspecting Assistant Commissioner of Income-tax vide his order dated 26-4-1983 to award refund, which shows that the assessment order was passed and calculation of income-tax was made and the same is very clear vide reference made by the Income-tax Officer to the Inspecting Assistant Commissioner of Income-tax on 19-1-1983 and the permission was granted by the Inspecting Assistant Commissioner of Income-tax on 26-4-1983. When this is so, then it can be safely held that the assessment was made as it is to be made under the provisions of law. No doubt, the learned Accountant Member has held from these facts that only inference could be drawn is that the department wanted to utilise money of the assessee without any costing the guise of assessment order having been passed on 10-12-1982, which is negatived by the facts on record, and the facts mentioned above as well as CIT (A) in his order in details in paras 1.1 and 1.2 respectively. No adverse inference can be drawn if there is delay in making the refund for the assessment order made by the Income-tax Officer in the assessment year under consideration and on account of such delay the assessment cannot be held as invalid and nulli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. Reliance can be placed on the decision of the Ahmedabad Bench 'C' in the case of C. M. C. (India) v. ITO [IT Appeal No. 924 (Ahd.) of 1981, dated 14-5-1982]. Hence I hold that the assessee is entitled to claim a deduction to the extent of Rs. 5,000 only which has been granted by the authorities below. I further hold that no further deduction under section 37 of the Act is allowable to the assessee. Accordingly, I decide this issue in favour of the revenue and again the assessee. 3.1 No doubt, my learned brother in his order at para 6.4 has discussed the provisions of section 139(2) /148 by holding that the assessment proceedings are there when these provisions are applied and executed and, therefore, he came to the conclusion that if prior to the proceedings under these sections any services are rendered by the Tax Consultants to the assessee and the assessee has paid remuneration or amount for such services, then the same amount is subject-matter of section 37 of the Act, which view is contrary to the judicial view taken by the Hon'ble Supreme Court holding therein that the general provisions cannot override the special provisions of the Act and as such it cannot be held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber, 1982. The notice of demand dated 27th April, 1983 was received by the assessee subsequently. There was a refund of Rs. 4,50,000 according to the notice of demand. The assessee in appeal, relying on the cases of Balkrishna Malhotra, S. Mubarik Shah Naqshbandi and R. Gopal Ramnaryan challenged that the assessment was not made in time, which was not accepted by the appellate authority. The assessee came in appeal before the Tribunal and the learned Accountant Member and the Judicial Member could not come to the common conclusion. Consequently the difference of opinion was referred to the President. Two common questions were recorded by both the Members. They are as under : (1) Whether, on the facts and circumstances of the case, the assessment for the assessment year 1980-81 is nullity in the eye of law or not ?. (2) Whether, on the facts and circumstances of the case, the provisions of section 80VV of the Income-tax Act, 1961 are applicable and, therefore, the Commissioner of Income-tax (Appeals) was right in sustaining disallowance of Rs. 7,950 out of Rs. 12,950 paid by way of professional charges ? The Hon'ble Accountant Member has framed a third question, which has not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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