TaxTMI 
TaxTMI 
2000 (2) TMI 4
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 exces. " Under r. 41 of the IT Rules, 1962 (for short the 'Rules') a claim for refund is to be made in Form No. 30. This rule is as under : "41(1) A claim for refund under Chapter XIX shall be made in Form No. 30. (2) The claim under sub-r. (1) shall be accompanied by a return in the form prescribed under s. 139 unless the claimant has already made such a return to the AO. (3) Where any part of the total income of a person making a claim for refund of tax consists of dividends or any other income from which tax has been deducted under the provisions of ss. 192 to 194, s. 194A and s. 195, the claim shall be accompanied by the certificates prescribed under s. 203. (4) The claim under sub-r. (1) may be presented by the claimant in person or through a duly authorised agent or may be sent by post." The claim for refund is to be accompanied by return of income in the form prescribed under s. 139 of the Act unless the claimant has already made such a return to the ITO. Since there was no response from the ITO....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the assessee on 2nd April, 1964, along with the refund application was one filed under s. 139(1) of the IT Act ? (2) Even if it is assumed that the return filed by the assessee along with the refund application commences assessment proceedings, whether the proceedings should be treated to have been finalised by the ITO at least by his note dt. 10th Nov., 1965, if not earlier by his letter dt. 26th Sept., 1964, addressed to the assessee, and as the proceedings for the refund were terminated by the ITO by his note dt. 10th Nov., 1965, there is no bar for the reassessment proceedings for the same year and, hence, the reassessment proceedings in respect of the income of such year would be valid ?" There was difference of opinion between the Accountant Member and the Judicial Member comprising the Tribunal and the matter was referred to the third member in the following manner : "Whether, on the facts and in the circumstances of the case, the order of assessment made by the ITO for the asst. yr. 1962-63 under s. 147 of the IT Act, 196 1, is valid in law." The Accountant Member was of the view that the return filed by the assessee along with its refund claim did not set i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... reassessment proceeding for the same year and the reassessment proceedings were, therefore, valid. Now it is the assessee, which felt aggrieved and has come to this Court. 3. It is not disputed that the return filed with the refund application under s. 237 of the Act is a valid return and the ITO can initiate proceedings for assessment on the basis of the return so filed. The only question that falls for consideration for us is if in the circumstances of the case it could be said that the note recorded by the ITO in his file on 10th Nov., 1965, is an order which concluded the assessment proceedings for the asst, yr. 1962-63 before he initiated proceedings under s. 147 of the Act. It is also not disputed that this note/order of 10th Nov., 1965, terminating the assessment proceedings for the asst. yr. 1962-63 was never communicated to the trustees till 16th July, 1970, and that too in a reply to the letter sent by the trustees. According to the High Court the note, which is an order, did terminate the assessment proceedings. High Court was of the view that the first part of the order gave reasons and the second part of the order clearly spoke of the conclusion when read "Hence....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t. Learned counsel for the Revenue argues that it is visualised by the section that there should be an order made under the Act under which tax, penalty or interest is due before a notice of demand is served, and that this means that service of notice does not bear on the validity of an order. In other words, what he points out is that that there should be first a valid order, and then only a notice of demand is required to be served, so that service of notice is not a condition to the validity of the order itself. Though prima facie the argument may appear to be tenable, the question may arise as to whether proceedings under s. 34 could be initiated between the date of an order under the Act and service of notice of that order. But an examination of some of the other provisions of the Act like ss. 24(3), 23(5) and (6), 27, proviso (2) to s. 30(1) and the related provisions in s. 30 lead us to the conclusion that where orders are passed under or in pursuance of the Act, which are prejudicial to an assessee, notice of the order is required to be served and, for the purposes of resorting to the remedy, limitation is to count from the date of service of notice of such order. In this c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessee when a tax or penalty is due in consequence of an order passed under the Act. But it is of course not only desirable but necessary that an order of assessment should be communicated to the assessee. The Act itself envisages service of the assessment order, Subs. (3) of s. 31 for instance provides that an appeal from the order of assessment shall be presented within a period of thirty days from the date of service of the order. Apart from this, the assessee is entitled to know the reasoning for imposing tax or penalty on him and he would be able to exercise his right of appeal, if any, only if the order is communicated to him. But the question is not whether it is either desirable or necessary that an order of assessment should be communicated, but whether the lack of communication of the order would make the order void or would have the result of keeping the assessment proceedings pending. We conceive that once an order had been passed by the officer, it is not open to him to modify or alter that order even if the order had not been communicated to the assessee, without adopting the procedure prescribed by s. 35 or s. 36." 8. In Kalyankumar Ray vs. CIT (1992) 102 CTR (SC)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt, the period from the date on which the application is made to the date on which the order passed on the application is served on the assessee shall be excluded, or (c) in any other case, the date on which intimation of the order sought to be appealed against is served." There is difference in cls. (b) and (c) of sub-s. (2) of s, 249 of the Act. 11. Return of income filed in the form prescribed along with an application for refund under s. 237 of the Act is a valid return. There is no stopping the ITO to complete the assessment on the basis of return so filed. It may be that the ITO limit the scope of examination of the return to satisfy himself regarding the correctness of the amount claimed as refund. For that purpose, he will examine if the tax paid by the assessee exceeds the amount of tax for which he is chargeable. If it is found that the income was "nil", he will direct refund be granted to the assessee for any amount of tax paid. That will certainly be assessment, Filing of return in the form prescribed under s. 139 of the Act along with the application for refund is not an empty formality. It assumes importance if such return had not been filed earlier. We have ....