- (1.) The Income Tax Appellate Tribunal, Delhi has referred the following question of law under section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act) for opinion of this Court. "Whether on the facts and in the circumstances of the case, the I.T.A.T. is justified in holding that clause (b) of proviso to Section 240 of the Income Tax Act, 1961 is not applicable in the case of the assessee for the assessment year 1974-75, in the facts and circumstances of the case in hand?"
(2.) The reference relates to the assessment year 1974-75. Briefly stated the facts giving rise of the present reference are as follows: The assessee company is engaged in the manufacture of textile. Return of income for the assessment year 1974-75 was also filed under section 139(1) of the Act by 31st July, 1974. The assessee company had applied for extension of time, which was allowed upto 7th November, 1974. Return of income showing total income of Rs. 55,82,360/- was filed on 6th December, 1974. Thereafter, the assessee company had also filed a revised return reducing the return income to Rs. 53,60,580/- on 22nd March, 1977. Assessment in this case was completed under section 144 of the Act vide order dated 10th November, 1989 on an income of Rs. 62,00,000/-. Being dissatisfied with the assessment order, the assessee filed an appeal. The Commissioner of Income Tax (Appeals) vide order dated 26th February, 1990 set aside the assessment. The assessee filed second appeal against the order before the Income Tax Appellate Tribunal, Allahabad taking a ground that the assessment order dated 10th November, 1989 was barred by limitation. The Tribunal vide its order dated 22nd March, 1991 held that the assessment order framed by the Assessing Officer was illegal and barred by limitation and therefore, was non est in the eyes of law. Consequent to the above order of the Tribunal, the Assistant Commissioner of Income Tax while giving effect to the said order under section 254 of the Act worked out a refund of Rs. 31,94,970/- and interest amounting to Rs. 7,60,505/- payable under section 244(1A) making the total refundable amount of Rs. 39,55,494/-. The said order was scrutinized by the Commissioner of Income Tax while exercising his powers under section 263 of the Act and he was of the opinion that the order granting refund was erroneous and prejudicial to the interest of the Revenue. Consequently, he set aside the order passed by the Assessing Officer and directed him to pass a fresh order in accordance with law. The assessee being aggrieved against the said order under section 263 of the Act preferred an appeal before the Tribunal. The Tribunal vide its order dated 11th February, 1994 cancelled the said order passed by the Commissioner of Income Tax and restored the order of the Assessing Officer allowing complete refund of the amount deposited by the assessee company. The Tribunal further directed the Assessing Officer to proceed accordingly without taking into consideration the amended provisions of section 240 of the Act which were effective only from 1st April, 1989 on the ground that the refund of the assessee became due on 1st April, 1977 when the said amended provisions had no application.
(3.) We have heard Sri A.N.Mahajan, learned standing counsel for the Revenue and Sri R.S.Agarwal, learned counsel appearing for the respondent assessee.;