Refund of tax deposited under a set-aside assessment is due unless a fresh demand is raised before repayment.

When an assessment order is set aside in appeal and the matter is remanded for fresh assessment, tax deposited under the cancelled order loses its basis for retention and becomes refundable. The refund entitlement continues unless a fresh assessment and notice of demand are issued before the refund is made, in which event adjustment may be required. The HC treated the writ petition as fit for final disposal and directed the assessing authority to refund the amount deposited under the annulled assessment, subject to any lawful adjustment on fresh assessment.

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Issues: Whether the amount deposited by the assessee pursuant to an assessment order that had been set aside was refundable before completion of fresh assessment.

Analysis: The assessment order had been set aside in appellate proceedings and the matter was remanded for fresh assessment after giving the assessee an adequate and reasonable opportunity of hearing. In that situation, the amount paid under the cancelled assessment no longer retained its basis for retention, and the assessee became entitled to refund of the sum deposited. The Court also treated the writ petition as fit for final disposal at that stage.

Conclusion: The assessee was entitled to refund of the amount deposited under the set-aside assessment, subject to adjustment if a fresh assessment and fresh notice of demand were issued before refund.

Final Conclusion: The writ petition was allowed and the assessing authority was directed to refund the amount deposited under the annulled assessment.

Ratio Decidendi: When an assessment order is set aside and the matter is remanded for fresh assessment, tax deposited in pursuance of that set-aside order becomes refundable unless a fresh assessment and demand are made before refund.

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