Refund of excess advance tax and statutory set-off survive partition where the liability transfers under constitutional orders.

Excess advance tax paid under section 18A was treated as refundable where the amounts exceeded the tax chargeable for the relevant years. The statutory scheme under section 48 gave a right to refund, and section 49E allowed the refundable amount to be set off against later tax dues, with the set-off power treated in these circumstances as a duty when refund was due. The fact that the payments were made in Lahore did not defeat the claim, because the refund liability was regarded as a financial obligation transferred to the Union of India under the Indian Independence Order and article 294(b) of the Constitution. The refund claim was also not barred by limitation on the material shown.

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Issues: Whether excess advance tax paid under section 18A in Lahore for earlier assessment years was refundable and could be set off against later assessments in India; whether the liability survived partition under the relevant constitutional and independence orders; and whether the writ petition was barred by limitation or by availability of an appellate remedy.

Analysis: The excess payments were made under section 18A of the Income-tax Act and, on the facts found, were in excess of the tax chargeable for the relevant years. The statutory scheme under section 48 entitled the assessee to refund of excess tax, and section 49E empowered the Income-tax Officer to set off the refundable amount against later tax dues. The Court treated that statutory power, in the circumstances, as one coupled with a duty to grant the beneficial relief when refund was due. The objection that the payments were made in Lahore did not defeat the claim, because the liability for refund of advance tax was treated as a financial obligation within article 9 of the Indian Independence (Rights, Property and Liabilities) Order, 1947, and, by article 294(b) of the Constitution, the liability stood transferred to the Union of India, subject to any valid adjustment. The Indian Independence (Income-tax Proceedings) Order, 1947 did not extinguish the refund liability merely because the file had not been transferred. The argument founded on the Expert Committee and Partition Council proceedings also failed, as no binding inter-Dominion arrangement covering this claim was shown. The claim was not held to be time-barred, since the material showed that the refund/set-off claim had been made within the statutory period. The preliminary objection as to an appellate remedy was rejected because the impugned refusal was not treated as an adequate or efficacious alternative remedy in the circumstances.

Conclusion: The assessee was entitled to refund of the excess advance tax and to have the refundable amount set off against the later assessments.

Final Conclusion: The writ petition succeeded and the Income-tax authorities were required to determine the excess payments made under section 18A and allow set-off against the subsequent assessment years.

Ratio Decidendi: Excess advance tax paid under a statutory scheme remains refundable notwithstanding partition where the liability is transferred by the relevant constitutional and independence orders, and the refunding authority may be directed to exercise the statutory set-off power as a duty when the refund is due.

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