Provisional tax assessment remains distinct and is not refundable merely because the regular assessment is later invalidated.

Provisional assessment under section 23B of the Indian Income-tax Act, 1922 is treated as a separate proceeding for collection of tax before regular assessment. Tax paid under that provision is adjusted against a valid regular assessment, but if the regular assessment is a nullity in law, the statutory adjustment mechanism under section 23B(7) does not apply. The provisional assessment does not merge into an invalid final assessment, and the payment retains its own character unless the provisional order itself is set aside. On that basis, the amount paid under the provisional assessment is not refundable merely because the regular assessment was later held invalid.

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Issues: Whether tax paid pursuant to a provisional assessment under section 23B of the Indian Income-tax Act, 1922 became refundable when the regular assessment was later held invalid.

Analysis: The scheme of section 23B treats provisional assessment as a separate and distinct proceeding meant to facilitate collection of tax before regular assessment. The amount paid under that provision is adjusted against the regular assessment only where a valid regular assessment is made. Where the regular assessment is a nullity and does not exist in the eye of law, the statutory adjustment under section 23B(7) is not attracted. The provisional assessment does not merge in the invalid final assessment, and the payment made under it continues to retain its own character. Since the order under section 23B was never set aside, the payment made under it remained valid.

Conclusion: The assessee was not entitled to refund of the tax paid under the provisional assessment.

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