M.C. Agarwal, J. - (1.) BY this petition under article 226 of the Constitution of India the petitioner seeks quashing of a notice issued under Section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the assessment year 1977-78 and a direction to refund to the petitioner the entire taxes deposited by it for the assessment year 1977-78 with interest.
(2.) WE have heard Sri M. C. Ramachandran assisted by Sri Anil Sharma, learned counsel for the petitioner, and Sri Bharat Ji Agarwal, learned senior standing counsel, for the respondents. The facts are that the assessee, who is an old assessee under the Act, filed the return of income for the assessment year 1977-78 declaring an income of Rs. 21,17,906. In respect of this income, the tax deducted at source was Rs. 2,513, advance tax paid was Rs. 11,45,000 and self-assessment tax deposited under Section 140A was Rs. 96,267. Thus a total of Rs. 12,43,780 had been paid as tax in respect of the returned income. An assessment order dated September 25, 1980, was made determining its income at Rs. 38,58,904. This assessment was subjected to appeal and the Income-tax Appellate Tribunal held that the assessment was barred by time and was accordingly annulled. After the annulment of the assessment, the petitioner asked the Assessing Officer to refund the whole amount of Rs. 12,43,780 paid by it but the Assessing Officer did not do so. Instead, he initiated proceedings under Section 147 read with section 148 for making a reassessment. The petitioner then filed the present writ petition for the reliefs mentioned above. Since no interim order staying the assessment proceedings was made by this court, the assessment was completed overruling the petitioner's objection that there was no cause for initiating action under Section 147/148 of the Act. The petitioner preferred appeals and ultimately the Income-tax Appellate Tribunal by order dated April 12, 1989, quashed the reassessment holding that the assessee having filed a return of income, proceedings under Section 147(a) could not be taken against the assessee. The assessment was accordingly quashed. In view of the subsequent developments, i.e., the quashing of the reassessment by the Tribunal, it was agreed by learned counsel for the parties that the petition in so far as it challenges the notice under Section 147/148 of the Act has become infructuous. We, therefore, need not deal with that matter and the writ petition for reliefs (a), (b) and (c) is dismissed as having become infructuous.
(3.) WE are now left with the petitioner's claim for refund of the entire taxes. The contention of the petitioner is that the assessments having been quashed, there remains no liability of income-tax on the petitioner and, therefore, it is entitled to the refund of pre-paid tax. For this proposition, reliance was placed on a judgment of this court dated December 19, 1984, in Hari Nandan Agarwal (HUF) v. ITO [1986] 159 ITR 816. In that case it was held that where an assessment order is set aside and the matter is remanded to the Income-tax Officer for passing a fresh order, the amounts deposited in pursuance of the assessment order become refundable. This plea was raised in paragraph 2 of the writ petition which has been replied in paragraph 17 of the counter affidavit as under : "17. That paragraph 2 of the writ petition needs no reply. However, it may be mentioned here that after the receipt of the order of the Tribunal dated March 6, 1985, it was considered by the Department to withhold the refund under Section 241 as there were heavy demands outstanding in the subsequent years. Subsequently, a fresh assessment was made, vide order dated July 1, 1986, under Section 148/143(3) of the Act and after adjusting pre and post-collections, a refund of Rs. 3,61,332 was worked out which was adjusted towards demand for the assessment year 1981-82." ;