TaxTMI 
TaxTMI 
2011 (6) TMI 229
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....he basis of return of income filed, refund claimed, pursuant to an assessment order, appellate order or some other order. The two enactments, as noticed below, incorporate statutory provisions for refund of taxes paid in excess of the amount ascertained/determined or due and payable. The question raised in these writ petitions is whether and when an assessee is entitled to refund when tax or part thereof has been paid by inadvertence or if the tax is 'wrongly' paid, recovered or retained. Often in such cases reliance is placed on Article 265 of the Constitution and it is urged that taxes 'wrongly' levied and collected should be refunded. Doctrine/principles of unjust enrichment, equity, justice and good conscience are concomitantly invoked. 4. Article 265 reads as under : "265. Taxes not to be imposed save by authority of law.-No tax shall be levied or collected except by authority of law." 5. Expressions "levy" and "collection" are used in Article 265 in a comprehensive sense and are intended to include the entire process of collection, commencing from charging or taxing a person to taking away money. What the Article enjoins is that every stage in this entire process mus....
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....etitions, we are not concerned with the second category of cases. The two enactments and their provisions have not been challenged on the ground that they are unconstitutional. We are concerned with the first category of cases where an assessee claims refund on the ground that the levy is wrong or contrary to the provisions of the enactment, i.e., under an enactment itself tax should not have been levied or has been wrongly imposed/collected/paid. The first category of cases will also include cases where an assessee claims that he is entitled to refund on the ground that the tax was mistakenly paid under misapprehension or error in understanding the statutory provisions and in fact tax was not payable or exigible. (Mistake of law in understanding/interpreting the statute, will not include cases where the enactment itself or the provision of the enactment is declared to be unconstitutional for violation of any constitutional limitation). Regarding the said category of cases, the Supreme Court in the case of Mafatlal Industries Ltd. (supra) examined the provisions of Article 265 of the Constitution and Central Excise and Salt Act, 1944. The wide scope and width of the issues examined....
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....success of another manufacturer and that no suit or writ is maintainable by him for refund on the ground of alleged discovery of mistake of law on the declaration of law by this Court or a High Court (or a Tribunal or any other authority under the Act) in the case of another person. The Union of India denies that such a person can plead payment of duty under a mistake of law within the meaning of section 72 of the Contract Act. It also denies that such a writ petition or a suit can be filed within three years of such "discovery of mistake of law." 8. The first situation/category mentioned above was answered as under :- "78. There is, however, one exception to the above proposition, i.e., where a provision of the Act whereunder the duty has been levied is found to be unconstitutional for violation of any of the constitutional limitations. This is a situation not contemplated by the Act. The Act does not contemplate any of its provisions being declared unconstitutional and therefore it does not provide for its consequences. Rule 11/Section 11-B are premised upon the supposition that the provisions of the Act are good and valid. But where any provision under which duty is levied....
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....t which we shall deal with a little later. Thus, whether the right to refund of taxes paid under an unconstitutional provision of law is treated as a constitutional right flowing from Article 265 or as a statutory right/equitable right affirmed by section 72 of the Contract Act, the result is the same - there is no automatic or unconditional right to refund. 79. We may now consider a situation where a manufacturer pays a duty unquestioningly - or he questions the levy but fails before the original authority and keeps quiet. It may also be a case where he files an appeal, the appeal goes against him and he keeps quiet. It may also be a case where he files a second appeal/revision, fails and then keeps quiet. The orders in any of the situations have become final against him. Then what happens is that after a year, five years, ten years, twenty years or even much later, a decision is rendered by a High Court or the Supreme Court in the case of another person holding that duty was not payable or was payable at a lesser rate in such a case. (We must reiterate and emphasise that while dealing with this situation we are keeping out the situation where the provision under which the d....
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.... that for filing an appeal or for adopting a remedy provided by the Act, the limitation generally prescribed is about three months (little more or less does not matter). But according to the present practice, writs and suits are being filed after lapse of a long number of years and the rule of limitation applicable in that behalf is said to be three years from the date of discovery of mistake of law. The incongruity of the situation needs no emphasis. And all this because another manufacturer or assessee has obtained a decision favourable to him. What has indeed been happening all these years is that just because one or a few of the assessees succeed in having their interpretation or contention accepted by a High Court or the Supreme Court, all the manufacturers/assessees all over the country are filing refund claims within three years of such decision, irrespective of the fact that they may have paid the duty, say thirty years back, under similar provisions - and their claims are being allowed by courts. All this is said to be flowing from Article 265 which basis, as we have explained hereinbefore, is totally unsustainable for the reason that the Central Excises Act and the Rules ....
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....diction and powers under the Act that a transaction is taxable, it cannot be said that the decision of the authority is without jurisdiction. We respectfully agree with the above propositions and hold that the said principles apply with equal force in the case of both the Central Excises and Salt Act and the Customs Act. Once this is so, it is ununderstandable how an assessment/adjudication made under the Act levying or affirming the duty can be ignored because some years later another view of law is taken by another court in another person's case. Nor is there any provision in the Act for reopening the concluded proceedings on the aforesaid basis. We must reiterate that the provisions of the Central Excise Act also constitute "law" within the meaning of Article 265 and any collection or retention of tax in accordance or pursuant to the said provisions is collection or retention under "the authority of law" within the meaning of the said article. In short, no claim for refund is permissible except under and in accordance with Rule 11 and section 11-B. An order or decree of a court does not become ineffective or unenforceable simply because at a later point of time, a different view....
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....covery, refund, appeals and all incidental/ancillary matters. For an assessee to claim refund, he must satisfy the statutory requirements and Article 265 of the Constitution is not violated if an assessee does not claim refund as per the provisions of the Act or when the "wrong" assessment or any other "wrong" order becomes final and has the effect of denying refund. An assessee cannot file a writ petition and state that Article 265 of the Constitution is violated because he is not being refunded tax which is not refundable under the enactment. In such cases, tax has been collected in accordance with law, i.e., under the enactment itself and no amount is refundable unless a refund can be claimed in terms of the statute/enactment. Of course, if the "wrong" order itself is challenged in a writ petition and the challenge is accepted then refund can be a consequence. Invoking the writ jurisdiction to question an order or assessment is a separate aspect. Existence of an adequate legal remedy which has not been availed of is an important and relevant consideration before resort to extraordinary jurisdiction is accepted. 10. Any other interpretation would lead to incongruous results wi....
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....ent. The power given to the tax authorities under the enactments are mandated with the duty to exercise them when the statutory provisions so warrant. It is imperative upon them to exercise their authority in an appropriate manner. In case the Assessing Officer or tax authority comes to know that an assessee is entitled to deduction, relief or refund on the facts of the case and the assessee has omitted to make the claim, he should draw the attention of the assessee. The tax authorities should act as facilitators and not occlude and obstruct. The role of tax authorities has been aptly described in Asstt. CIT v. Rajesh Jhaveri Stock Brokers (P.) Ltd. [2007] 291 ITR 500/161 Taxman 316 (SC) :- "19... The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers." 13. In CIT v. Shelly Products [2003] 261 ITR 367/129 Taxman 271 the Supreme Court while upholding the right of the tax authorities to retain taxes due and payable even when the assessment proceeding is annulled, on the question of refund when tax is not payable clarified the position as under : "We cannot lose sight of the fac....
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....16. Sections 237, 239(1) & (2)(c) and 240 of the 1961 Act read as under:- "237. Refunds.-If any person satisfies the [Assessing] Officer that the amount of tax paid by him or on his behalf or treated as paid by him or on his behalf for any assessment year exceeds the amount with which he is properly chargeable under this Act for that year, he shall be entitled to a refund of the excess." 239. Forms of claim for refund and limitation.-"(1) Every claim for refund under this Chapter shall be made in the prescribed form and verified in the prescribed manner. [(2) No such claim shall be allowed, unless it is made within the period specified hereunder, namely :- ** ** ** (c) Where the claim is in respect of income which is assessable for any other assessment year, [one] year from the last day of such assessment year;]" 240. Refund on appeal, etc.-"Where, as a result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to the assessee, the Assessing Officer shall, except as otherwise provided in this Act, refund the amount to the assessee without his having to make any claim in that behalf : Provided tha....
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....154 (rectification proceedings), orders passed by the High Court or the Supreme Court under section 260 (in reference) and orders passed by the Commissioner of Income-tax in revision applications under section 263 or 264 or on an application under section 273A of the Act. In this view of the matter, in our view, there is no reason to restrict the meaning of the phrase "other proceedings" under the Income-tax Act used in section 240 to only some orders by which refund of excess tax or penalty is granted and not to cover orders passed under section 273A of the Act. Sub-section (1A) of section 244 also, inter alia, provides that where the whole or any part of the refund referred to in sub-section (1) is due to the assessee in pursuance of any order of assessment or penalty and such amount or any part thereof having been found in other proceedings under this Act to be in excess of the amount which such assessee is liable to pay as penalty, then the Government is required to pay to such assessee simple interest as specified therein. In this view of the matter, there is no reason to hold that in case where penalty is waived or reduced under section 273A of the Act, the assessee is not en....
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....e Asian Consolidated Industries Limited dated 14-7-1993 is available on record at page No. 21. The said TDS certificate relates to equity dividend for the year 1991-92. The gross dividend declared in the accounts is Rs. 20,83,125. The amount of Rs. 2,81,479 has been paid as interest and an amount of Rs. 5,73,038 has been deducted towards TDS and accordingly net payment of Rs. 17,91,566 has been made. It is noticed from the audited accounts that this amount of Rs. 2,81,479 towards interest has been shown as interest received. 22. The returned income as declared was accepted. The question arises whether or not the assessee had asked for refund or the assessed income entitles the petitioner to refund of TDS of Rs. 5,73,034. 23. The contention of the Revenue is that only the return form and the not the annexures attached are relevant to decide whether the assessee is entitled to refund or not. Thus, if the assessee has not claimed refund in the return form itself, then the assessee is not entitled to refund. The aforesaid submission cannot be accepted in the present case. We are concerned with assessment year 1994-95 and the relevant provisions of the 1961 Act applicable in the s....
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....nt are maintained by the assessee, the return is accompanied by copies of-- (i) manufacturing account, trading account, profit and loss account or, as the case may be, income and expenditure account or any other similar account and balance-sheet; (ii) in the case of a proprietary business or profession, the personal account of the proprietor; in the case of a firm, association of persons or body of individuals, personal accounts of the partners or members; and in the case of a partner or member of a firm, association of persons or body of individuals, also his personal account in the firm, association of persons or body of individuals; (e) where the accounts of the assessee have been audited, the return is accompanied by copies of the audited profit and loss account and balance-sheet and the auditor's report and, where an audit of cost accounts of the assessee has been conducted, under section 233B of the Companies Act, 1956 (1 of 1956), also the report under that section; (f) where regular books of account are not maintained by the assessee, the return is accompanied by a statement indicating the amounts of turnover or,....
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.... written to the Deputy Commissioner of Income-tax, New Delhi on 20-12-1999 stating that it had filed its return of income on 29-11-1994 for the assessment year 1994-95 declaring a loss of Rs. 4,56,994. In the said letter the petitioner had prayed for refund of Rs. 5,73,038 in respect of TDS and had filed copy of Income-tax return, TDS certificate and a computation of income along with the said letter. Thereafter, the petitioner wrote several letters from 2004 onwards to the respondent and also to the Commissioner of Income-tax, Help Line requesting for the refund and interest in view of provisions of sections 237 and 239 of the 1961 Act. On 23-4-2007, the revenue had sent a letter to the petitioner asking them to furnish evidence in relation to its initial claim for refund. No question of limitation or delay was raised by the respondent. 27. Plea of the respondent relying upon the doctrine of delay and laches has to be rejected. Apart from the facts noticed above, once it is held that the petitioner had applied for and is entitled to refund, then the delay in making the refund is attributable to the respondent. The respondent rejected the claim for refund only vide order dated 2....
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....shelter to thousands and to implement the scheme of a planned city, which is a must in the present set-up. The outweighing public interest has to be given due weight. That is why this Court has been resisting attempts on the part of the landholders, seeking quashing of the acquisition proceedings on ground of delay in completion of such proceedings. But, can the respondents be not directed to compensate the petitioners, who were small cultivators holding lands within the ceiling limit in and around Delhi, for the injury caused to them, not by the provisions of the Act, but because of the non-exercise of the power by the authorities under the Act within a reasonable time?" 29. In the present case the respondent has deprived the petitioner of its money which was refundable as per statute. The question of delay invoking writ jurisdiction has to be considered with a duty cast by the statute on the authority. When a statutory authority does not pass any order and fails to comply with the statutory mandate within reasonable time, they cannot take the defence of laches and delay. Delay in such cases furnishes cause of action and right to the petitioner to approach courts. Of course if ....
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....etition is to be allowed. Facts of the W.P. (C) No. 15639 of 2006 31. Taksal Theaters Private Limited has filed this petition for refund of wealth tax deposited by them for the assessment year 1999-2000. Claim for refund for the assessment year 2000-01 has been granted and to this extent the prayer in the writ petition is infructuous. Another prayer made in the writ petition is that it should be declared that the properties of the petitioner at Varansi being a theater and commercial complex during the relevant assessment year were exempt from payment of wealth tax. 32. The admitted factual position is that the petitioner had filed the wealth tax return and had deposited Rs. 1,49,536 on self assessment basis, as the wealth tax for the assessment year 1999-2000. In the wealth tax return, the petitioner had declared taxable wealth on the basis of which the self assessment tax was paid. The petitioner in taxable wealth, has included the asset, the cinema hall-cum-commercial complex. In the writ petition, the petitioner has not mentioned the date when the return for the assessment year 1999-2000 was filed. The respondents also have not stated in their counter affidavit the date....
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....d there, any evidence on which the assessee may rely in support of the return : Provided that no notice under this sub-section shall be served on the assessee after the expiry of twelve months from the end of the month in which the return is furnished : (3) On the day specified in the notice issued under sub-section (2) or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by order in writing, assess the net wealth of the assessee and determine the sum payable by him on the basis of such assessment. (4) For the purposes of making an assessment under this Act, the Assessing Officer may serve, on any person who has made a return under section 14 or section 15 or in whose case the time allowed under sub-section (1) of section 14 for furnishing the return has expired, a notice requiring him, on a date to be specified therein,- (i) Where such person has not made a return within the time allowed under sub-section (1) of section 14 to furnish a re....
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.... to section 16. The aforesaid sub-section related to cases which were taken up for scrutiny. The proviso to section 16(2) stipulated that no notice for scrutiny would be served on the assessee after expiry of 12 months from the end of the month in which the return was furnished. With regard to intimation under section 16(1) also, the second proviso stipulated that no intimation under section 16(1) shall be sent two years after the end of the assessment year in which the net wealth was assessable. The first proviso stipulated that the acknowledgment of the return shall be deemed to be intimation under this sub-section where no sum was payable by the assessee or no refund was due to him. It, therefore, follows that if no intimation was received after expiry of two years from the end of the assessment year, then acknowledgment of the return issued by the revenue was to be treated as the intimation that no sum was payable by the assessee and no refund was due to him. 36. The sum effect of section 16(1) and (2) is that in case no notice under sub-section (2) to section 16 was issued and no intimation for refund or payment of tax was issued within two years, the acknowledgment issued ....
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....nbsp; the order is the subject-matter of an appeal or further proceeding ; or (iii) any other proceeding under this Act is pending, that the grant of the refund is likely to adversely affect the revenue, the Assessing Officer may, with the previous approval of the Chief Commissioner or Commissioner, withhold the refund till such time as the Chief Commissioner or Commissioner may determine." 39. Under sub-section (1), the Assessing Officer was required to make refund of tax paid by the assessee without any claim or application on behalf of the assessee if the same becomes due as a result of an order passed in an appeal or any other proceedings. Sub-section (2) makes it clear that a refund may become due even when an order was passed or intimation was made under sub-section 1 to section 16 of the 1957 Act. As discussed above the acknowledgment of the return constitutes intimation but as per the said intimation, no amount is refundable. The order of intimation under section 16(1) has attained finality and has not been challenged or questioned in a revision. Return of wealth has also not been revised. In terms of section 34A of the 1957 Act, the tax paid by the petitioner i....
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....ment. It was held that as per the relevant provisions and in the facts, interest was payable on the amount refundable even when the amount paid by the assessee was towards the interest element. In the present case, the intimation under section 16(1) of the 1957 Act has attained finality. No amount is refundable as per the said intimation. 42. Decision of the Delhi High Court in Vijay Kumar Bhati v. CIT [1994] 205 ITR 110/[1993] 71 Taxman 627 deals with section 241 of the 1961 Act and the power of the Assessing Officer to set off of refunds under section 241 of the 1961 Act. In the said case, refunds were due but the Assessing Officer without intimation had passed an order under section 241 of the 1961 Act which was held to be bad. Accordingly, directions were issued by the High Court. 43. In another judgment of the Delhi High Court in Glaxo Smith Kline Asia (P.) Ltd. v. CIT [2007] 160 Taxman 259, section 245 of the 1961 Act was invoked and in that context observations were made with regard to power to set off a refund against an outstanding demand. It was held that the restrictions on power under section 241, were equally applicable to section 245 and the section should not b....