2009 (12) TMI 571 - HC - Income Tax

Court Rules Self-Assessed Tax Not Refundable after Death

The court dismissed the writ petition, ruling that the self-assessed tax paid voluntarily by the deceased assessee for assessment years 1979-80 to 1984-85 ... Refund – Self assessment – Tax paid on self assessment cannot be refunded - assessment orders passed by the Department was annulled and it has not set aside the 'self-assessment' made by the deceased assessee and not ordered any refund of tax already remitted by her in respect of the different assessment years as stipulated and requested by the assessee - No premium can be given to anybody for his/her own deeds or misdeeds and acts or omissions – Petition dismissed Issues Involved:1. Refund of self-assessed tax paid by the assessee.2. Validity and timeliness of the returns filed for assessment years 1979-80 to 1984-85.3. Impact of appellate authority's annulment of assessment orders.4. Application of Section 148 notices and subsequent returns.5. Legal standing of self-assessment and its implications on tax refunds.Issue-wise Detailed Analysis:1. Refund of Self-Assessed Tax Paid by the Assessee:The primary issue was whether the self-assessed tax paid by the assessee on March 30, 1989, for assessment years 1979-80 to 1984-85, based on returns filed later on October 11, 1989, should be refunded after the assessment order under section 143(3) was set aside. The court found that the tax paid voluntarily by the deceased assessee through self-assessment could not be refunded merely because subsequent proceedings were annulled. The court emphasized that the self-assessment and payment of tax were voluntary acts by the assessee, and such amounts are not refundable as per legal precedents, including the Supreme Court's decision in CIT v. Shelly Products [2003] 261 ITR 367.2. Validity and Timeliness of the Returns Filed for Assessment Years 1979-80 to 1984-85:The returns filed on October 11, 1989, for the assessment years 1979-80 to 1984-85 were beyond the specified time under section 139 of the Income-tax Act. Despite the issuance of notices under sections 148 and 142(1), the returns were delayed due to the assessee's belief that she had no taxable income until the finalization of enhanced compensation proceedings. The court noted that the returns were eventually filed after the compensation was quantified and disbursed, but the delay rendered them invalid under the statutory timeline.3. Impact of Appellate Authority's Annulment of Assessment Orders:The appellate authority annulled the assessment orders for the years 1979-80 to 1984-85, holding them unsustainable due to the extinguishment of liability by limitation. However, the court clarified that the appellate order did not mandate a refund of the self-assessed tax paid. The appellate authority's decision only addressed the invalidity of the assessment orders and not the voluntary self-assessment and payment of tax by the assessee.4. Application of Section 148 Notices and Subsequent Returns:In response to the fresh notices under section 148 issued on January 18, 1990, the assessee requested that the returns filed on October 11, 1989, be treated as valid returns. The court upheld this request as valid, referencing similar judicial decisions, including the Calcutta High Court's ruling in Iqbal Singh Atwal v. CIT [1984] 147 ITR 599, which supported the validity of treating previously filed returns as responses to section 148 notices.5. Legal Standing of Self-Assessment and Its Implications on Tax Refunds:The court highlighted that self-assessment and payment of tax are voluntary acts by the taxpayer. The deceased assessee's self-assessment and payment of Rs. 26,58,000 were in line with the returns filed and the income admitted. The court emphasized that self-assessment tax payments are not subject to refund, as established by legal precedents and the specific provisions of the Income-tax Act, including proviso (b) to section 240, which became effective from April 1, 1989.Conclusion:The court dismissed the writ petition, concluding that no refund of the self-assessed tax was warranted. The voluntary nature of the self-assessment and payment, coupled with the legal framework and judicial precedents, supported the decision that the tax paid by the deceased assessee was not refundable, despite the annulment of subsequent assessment orders.