2003 (3) TMI 96 - SC - Income Tax

Supreme Court Upholds Revenue Appeal on Time-Barred Refund Orders

The Supreme Court upheld the Revenue's appeal, setting aside the High Court's decision to quash refund orders due to time-barred regular assessment ... Whether the regular assessment orders were barred by time? Whether use of the word 'return', instead of 'refund', does not make any difference to the right? Held that:- Section 50 of the 1922 Act, as modified by rule 4A, is a provision of the statute which was required to be applied by the High Court at the time of considering the relief, if any, to be granted in the writ petition. The claim being barred by time, the writ petition could not have been allowed nor could any relief be granted. The first contention, therefore, fails. The money which was paid as provisional tax became returnable on the date on which the right of the Revenue authorities to make a regular assessment under section 12 came to an end. Assuming that there was a right in the respondent-assessee to reclaim this money, such a right ought to have been exercised within a period of three years under the residuary article 137 of the Limitation Act, after which even such a right must be held to be barred. There is no doubt that by the time the assessee asserted his so called right, even this period had expired in respect of the assessment years in question. The contention based on article 265 of the Constitution also must, therefore, fail. Issues:1. Validity of quashing orders dated January 30, 1978, and March 8, 1983, for refund of tax.2. Claim for refund based on time-barred regular assessment orders.3. Interpretation of section 50 of the 1922 Act and rule 4A of the Business Profits Tax Rules.4. Application of article 265 of the Constitution to claim for refund.5. Consideration of limitation period for refund claims.6. Argument regarding validity of refund claim despite time-barred regular assessment.Analysis:1. The appeal challenged the High Court's decision to quash orders directing a refund of Rs. 32,85,964 to the respondent-assessee. The Tribunal accepted the contention that regular assessment orders were time-barred, leading to the refund claim. The Revenue argued that the refund claim was time-barred under rule 4A and section 50 of the 1922 Act.2. The High Court held that the regular assessment became time-barred due to the time-barred refund claim. The respondent's contention that the regular assessment was barred by time was successful, as their right to claim a refund was time-barred under section 50 of the 1922 Act, as modified by rule 4A.3. The respondent argued that the claim for refund was not time-barred as it was the first time the right to seek a refund arose. However, the Supreme Court held that the money paid as provisional tax became returnable when the right of the Revenue authorities to make a regular assessment ended. The Court rejected the argument based on article 265 of the Constitution.4. The Court emphasized that the respondent's argument that the validity of the refund claim should be considered separately from the regular assessment validity was akin to wanting to 'have the cake and eat it.' The Court dismissed this argument and set aside the High Court's judgment, denying the refund claim.5. The Court clarified that it did not delve into other issues raised in the matter and ruled in favor of the Revenue, highlighting that the respondent's claim for refund was time-barred under the relevant provisions. The appeal was allowed, and the writ petition filed by the respondent was dismissed, with no order as to costs.