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TMI Blog1989 (1) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,16,920 as declared by the assessee in its Return. The assessee was accordingly granted refund for the excess tax paid by it, by way of advance tax/T.D.S. (d) On 28-8-1981, the I.T.O. framed assessment u/s.143(3)/144B of the Act, on a total income of Rs. 15,93,020. In doing so the I.T.O. had made an addition of Rs. 12,32,000 on account of unexplained investment in factory building. (e) Against the aforesaid order of the I.T.O. dated 28-8-1981, the assessee preferred an appeal before the C.I.T.(A), wherein it had challenged the action of the I.T.O. in framing assessment u/s.143(3) 144B of the Act on the ground that the same was framed beyond the time prescribed under the relevant provisions of the Act. The assessee had also disputed the addition of Rs. 12,32,000 made by the I.T.O in respect of factory building. In his appellate order dated 18-2-1982 the C.I.T.(A) did not accept the assessee's contention challenging the assessment being time barred. However, in respect of the addition made in the factory building the C.I.T.(A) restored the matter back to the file of the I.T.O, for framing the assessment afresh. Against the said order of the C.I.T. (A) the assessee had preferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5,967 ----------------- Income returned Rs.1,16,920 Tax @ 55% + S.C. @ 5% on 1,16,920 Rs. 67,521 Refund Due (Rs.1,15,967 less 67,521) Rs. 47,597 Less : Amount already refunded Rs. 22,728 ----------------- Rs. 24,869 Less : Demand of 1976-77 adjusted Rs. 8,604 ----------------- Refund Due Rs. 16,265 3. The appellant has contended that since the assessment has been cancelled by the I.T.A.T. as being barred by limitation, the entire sum of tax paid by way of advance tax and tax deducted at source amounting to Rs. 1,15,967 becomes refundable. It is pointed out that a sum of Rs. 22,728 has already been refunded and therefore the amount of refund yet due to the appellant is Rs. 93,239 (Rs. 1,15,967 less Rs. 22,728). 4. However, I find it difficult to accept the appellant's contention that once the regular assessment is cancelled, the entire amount of advance tax paid as well as the tax deducted at source becomes refundable. In this connection it is to be noted that the tax due on the returned income of Rs. 1,16,920 works out to Rs. 67,521 and the appellant paid Rs. 88,080 by way of advance tax and Rs. 27,887 was deducted at source. Even before an assessment is made u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.A.C. had not passed any order in respect of the refund due to the assessee, the assessee could not have filed any appeal before the CIT(A). Relying on the decision of the Hon'ble Supreme Court in the case of Salonah Tea Co. Ltd. v. Superintendent of Taxes [1988] 173 ITR 42, he submitted that at best the assessee could have filed a suit against the Revenue for recovering the tax paid by it. Inviting our attention to sec. 237 of the Act, he submitted that since the income earned by the assessee was "chargeable" under the Act, the CIT(A) was fully justified in holding that the assessee was not entitled to refund of the entire sum of Rs. 1,15,967. Inviting our attention to the decision in the case of S. Sundaram v. ITO [1987] 163 ITR 662 (Kar.), the learned representative of the department pointed out that the court had depreciated the attempt of an assessee to make unjust enrichment on the ground that the assessment was not completed within time. According to him, the various reported decisions relied on behalf of the assessee are not of much help to the assessee, as in those cases the attention of the Hon'ble courts was not drawn to the scheme and ambit of various sections of the 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, on completion of regular assessment, the assessee is required to pay tax if it exceeds the amount which has already been paid under Chapter XVII. If, on the other hand, the assessee has paid more tax under Chapter XVII than what was payable on completion of the regular assessment, he would be entitled to the refund of excess amount paid. 10. In the aforesaid background we have to consider what is the true meaning of "assessment" framed under the provisions of the Act. It is by now a well settled law that the liability to tax arises by virtue of the charging section alone and it arises not later than the close of the previous year, though quantification of the amount payable is postponed. The assessment only particularises the amount payable and it does not create liability to pay. In other words, the assessment order only quantifies the liability which is already created by the charging section. 11. In this connection, it would be necessary to advert to certain decisions of the Hon'ble Supreme Court. In Chatturam Horilram Ltd v. CIT [1955] 27 ITR 709, the Hon'ble Supreme Court had an occasion to deal with the charging section of the Indian Income-tax Act, 1922 vis-a-vis th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of 1939 shall be deemed to have come into force in the area to which this Regulation extends on the 30th day of March, 1939". By virtue of this deeming provision the Indian Finance Act of 1939 must be assumed even factually to have come into operation on the date specified and the tax must be taken to have become chargeable in that very year, though the actual liability for payment could not arise until proper and valid steps are taken for quantification of the tax. The contention, therefore, of the appellant that the income was not chargeable to tax in the year 1939-40 cannot be accepted." In Neptune Assurance Co. Ltd. v. LIC [1963] 48 ITR 144 the Hon'ble Supreme Court was concerned with the date on which the said company had a right to receive refund of tax. In this connection at page 149 of the report the Hon'ble Supreme Court observed as under : "Now as to the first part of this question it seems to us plain that the right to the refund existed on September 1, 1956. It is no doubt true that the amounts of the refund had been ascertained till the orders of assessment had been made and these had been made later than September 1, 1956. But that does not affect the question. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, it shows that income-tax shall be charged at the rates specified in Part I of the First Schedule, and super-tax, for purposes of section 55 of the Income-tax Act,, 1922, shall be charged at the rates specified in Part II of the First Schedule. The primary object of the Finance Act is only to prescribe the rates so that the tax can be charged under the Income-tax Act. The Income-tax Act is a permanent Act, whereas the Finance Act is passed every year and its main purpose is to fix the rates to be charged under the Income-tax Act for that year. That should be the construction is also made clear by section 55 of the Income-tax Act, whereunder super-tax shall be charged for any year in respect of the total income of the previous year of any individual Hindu undivided family, company, etc., at the rate or rates laid down for that year by a Central Act. This section brings out the distinction between a tax charged and the rate at which it is charged. This construction is also emphasized by section 67B of the Income-tax Act, whereunder if, on the 1st day of April in any year, provision has not yet been made by a Central Act for the charging of income-tax for that year, the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. "Provisional assessment for refund" reads as under :-- "141A. Provisional assessment for refund -- (1) Where a return has been furnished under section 139 and the assessee claims that the tax paid or deemed to have been paid under the provisions of Chapter XVII-B, or XVII-C, exceeds the tax payable on the basis of the return and the accounts and documents accompanying it, the Income-tax Officer, if he is of the opinion that the regular assessment of the assessee is not likely to be made within six months from the date of furnishing of the return, shall make in a summary manner within the said six months a provisional assessment of the sum refindable to the assessee, after making such adjustments to the income or loss declared in the return as are required to be made under sub-section (2) with reference to such return, accounts and documents, and for the purposes of the adjustments referred to in clause (iv) of sub-section (2), also with reference to the records of the assessments, if any, of past years." 14. It would be seen from the above that an assessee is required to pay tax on self-assessment or is entitled to refund on provisional assessment on the quantification of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving effect to the order of the Tribunal dated 22-8-1984. In other words, the order dt. 14-10-1985 can at best be treated as an order made u/s 240 of the Act. On the receipt of the said order the assessee had addressed a letter on 14-1-1986 to the I.A.C. (Asst.) wherein it had requested the I.A.C. (Asst.) to refund the entire tax of Rs.1,15,976. It appears that the I.A.C.(Asst.) has not taken any action on this letter till to-date. If he had done so, then he would have been required to pass an order u/s 237 or 154 of the Act which would have been appealable. Therefore, we had to appreciate how the A.A.C. entertained the appeal in the manner he did. However, since the revenue has neither come in cross appeal nor filed cross-objection in this regard, nothing further need be discussed. 18. Under Section 237 of the Act, if any person satisfies the I.T.O. that the amount of tax paid by him or on his behalf exceeds the amount with which he is properly chargeable under this Act for that year, he shall be entitled to refund the excess. The expression used in this section is "amount with which he is properly chargeable under this Act" and not amount on which he is taxable or assessable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n he substantially accepts the assessee's computation of total income but makes certain token disallowances whereby he raised additional tax of Rs.450. If the assessment so framed is found to be technically defective and is liable to be quashed can it be said that the assessee would be entitled to refund of Rs.45 lakhs + Rs.450 even though Rs. 45 lakhs was levied and collected by the authority of law. In our opinion, the assessee would be entitled to refund of Rs.450 only in the event the assessment is held to be invalid. Otherwise the whole purpose of "self-assessment" would be frustrated on a technical lapse on the part of the I.T.O. Similar would be the position in respect of advance tax. payment and tax deducted at source. 22. In the instant, case, it is an undisputed fact that the assessee had paid tax of Rs.1,15,976 by way of advance tax/TDS. Again it is an undisputed fact that at the instance of the assessee, the I.T.O. had framed provisional assessment u/s 141A of the Act, whereby he granted certain refund to the assessee. Till this stage it cannot be disputed that the tax collected from the assessee was under the authority of law. Therefore, according to our considered o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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