UNIVERSAL GENERICS P LTD Vs. INCOME TAX OFFICER
LAWS(IT)-1989-1-18
INCOME TAX APPELLATE TRIBUNAL
Decided on January 12,1989

Appellant
VERSUS
Respondents

JUDGEMENT

U.T. Shah, Vice President - (1.)IN this appeal the assessee is contesting the action of the Commissioner of INcome-tax (Appeals) in not granting refund of the entire tax paid by it.
(2.)The assessee is a private limited company. The assessment year is 1978-79 and the relevant previous year ended on 30-6-1977.
As the facts are narrated, it would be seen that the case has a chequered history. The facts in chronological order are as under:

(a) During the relevant financial year the assessee had paid advance tax of Rs. 88,080. Further, Rs. 27,887 was the tax deducted at source. In other words, Rs. 1,15,967 was paid by the assessee by way of advance tax/T.D.S.

(b) On 27-7-1978 the assessee filed the Return of Income declaring total income of Rs. 1,16,920. The tax payable thereon was Rs. 67,521.

(c) On 23-11-1978 the I.T.O., at the instance of the assessee, framed provisional assessment under Section 141A of the Act on a total income of Rs. 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 Under Section !43(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 Under Section !43(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. Ira 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 an appeal before the Tribunal.

(f) On 30-3-1984 the Inspecting Asstt. Commissioner (Asst.) framed the assessment once again in compliance with the aforesaid order of the C.I.T.(A) dated 18-2-1982 wherein he had determined the total income of the assessee at Rs. 4,58,000.

(g) On 22-8-1984 the Tribunal passed the order in I.T.A. No. 1629/Bom/1982 wherein it had cancelled the assessment framed by the I.T.O on 28-8-1981 as being barred by limitation.

(h) Against the fresh order passed by the I.A.C. (Asst.) on 30-3-1984, the assessee had preferred an appeal before the C.I.T.(A) urging that once the Tribunal had held that the original assessment framed by the I.T.O. was invalid in law, the subsequent order dated 30-3-1984 passed by the I.T.O. cannot stand. Accepting the stand taken on behalf of the assessee the C.I.T.(A), in his order dated 11-9-1984, vacated the order passed by the I.A.C. on 30-3-1984.

(i) On 2-11-1984, the I.A.C. (Asst.) gave effect to the order of the C.I.T.(A) dated 11-9-1984.

(j) On 14-10-1985, the I.A.C.(Asst.) gave effect to the order of the Tribunal dated 22-8-1984.

(k) Against the order of the C.I.T.(A) dated 11-9-1984 the Revenue had come up in appeal before the Tribunal and the Tribunal vide its order dated 2-12-1987 in I.T.A. No. 6677/Bom/1984, dismissed the appeal filed by the Revenue.

(1) It may be mentioned that on 14-1-1986 the assessee had requested the I.A.C.(Asst.) to refund the entire tax of Rs. 1,15,118 paid by it.

(3.)ON the aforesaid facts the assessee had preferred an appeal against the order of the I.A.C.(Asst.) dated 14-10-1985 giving effect to the order of the Tribunal dated 22-8-1984. It was urged on behalf of the assessee that the entire tax of Rs. 1,15,967 ought to have been refunded by the I.A.C.(Asst.) in view of the fact that the Tribunal had cancelled the assessment "as being time barred". In his order under appeal the C.I.T.(A) had not accepted the assessee's claim for the refund of the entire amount of Rs. 1,15,967. However, he has directed the I.A.C.(Asst.) to refund a further sum of Rs. 16,265 in the following manner:
2. The appellant has given, without prejudice, a working of the tax refundable, as extracted below, which is due to it after the order of the I.T.A.T. cancelling the assessment order.

JUDGEMENT_10918_TLIT0_19890.htm

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 Under Section 143(3)7144, the income earned by the appellant, in this case the returned income, becomes liable to tax because the charging section is automatically attracted. The finding of the I.T.A.T. that the assessment made by the I.A.C. has become barred by limitation affects only additional demand raised as a result of regular assessment over and above what was admitted by the appellant on the basis of the returned income. In the scheme of the Act, the income becomes liable to tax as soon as the charging section is attracted in the case of a person liable to pay tax under the Act. In view of this matter I find it difficult to agree with the contention of the appellant that the entire sum of Rs. 1,15,967 becomes refundable. However, there is considerable merit in the appellant's contention that at least Rs. 16,265, as indicated earlier, is still due to the appellant. Subject to the verification of the calculation, the I. A.C. is directed to refund Rs. 16,265 for the year under consideration.



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