1992 (1) TMI 99 - HC - Income Tax

Court clarifies tax refund rules under Income-tax Act, rejects constitutional violation claim

Saurashtra Cement And Chemical Industries Limited Versus Income-Tax Officer

The court held that only the amount of tax paid in excess of what is properly chargeable under the Income-tax Act can be refunded when a regular ... Advance Tax, Assessment, Provisional Assessment, Refund, Self-Assessment Issues Involved:1. Entitlement to Refund of Entire Tax Amount Paid if Regular Assessment is Time-Barred or Annulled.2. Interpretation of Provisions under Sections 141A, 237, 239, and 240 of the Income-tax Act, 1961.3. Applicability of Article 265 of the Constitution of India in Tax Collection and Refund.Summary:Issue 1: Entitlement to Refund of Entire Tax Amount Paid if Regular Assessment is Time-Barred or AnnulledThe court examined whether the assessee is entitled to a refund of the entire tax amount paid if the regular assessment becomes time-barred or is annulled. The court held that only the amount of tax paid in excess of what is properly chargeable under the Act can be refunded. It rejected the contention that the entire tax collected should be refunded in such cases, stating that the tax paid on the basis of returns filed by the assessee is a valid and legal recovery in accordance with the provisions of the Act.Issue 2: Interpretation of Provisions under Sections 141A, 237, 239, and 240 of the Income-tax Act, 1961The court discussed the provisions of section 141A regarding provisional assessment for refund, stating that such assessments are distinct from regular assessments. It clarified that section 237 allows for a claim for a refund if the tax paid exceeds the amount properly chargeable, and such claims must be made within the period prescribed under section 239. The court also interpreted section 240, noting that refunds are subject to other provisions in the Act, and only the excess amount over the tax chargeable is refundable.Issue 3: Applicability of Article 265 of the Constitution of India in Tax Collection and RefundThe court addressed the argument that retaining tax without a regular assessment violates Article 265 of the Constitution, which mandates that no tax shall be levied or collected except by the authority of law. The court held that the liability to pay tax arises under section 4 of the Act and is not dependent on regular assessment. The court emphasized that tax collected through advance tax, tax deducted at source, or self-assessment under section 140A is lawful and does not violate Article 265.Orders:1. Special Civil Application No. 6656 of 1987: The claim for refund of the entire tax amount is rejected. The respondents are directed to consider the reduction claimed in the revised returns as a claim under section 239 and dispose of it in accordance with section 237.2. Special Civil Application No. 5944 of 1987, 1638 of 1980, and 7835 of 1988: The petitions are dismissed, and the rules are discharged with no order as to costs.Certificate for Appeal:The court rejected the prayer for a certificate for appeal to the Supreme Court, stating that the petitions do not involve a substantial question of law of general importance.