TaxTMI 
TaxTMI 
1973 (5) TMI 11
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....hares of Rs. 1,000 each of M/s. S. K. Glass Works Ltd., Kandra. She received a dividend of Rs. 15,000 on October 14, 1957, and the second dividend of Rs. 18,000 was received by her in the year 1958. She filed her return for the year 1959-60, showing therein dividend income of Rs. 18,000. The Hindu undivided family also filed its return for that year and the dividend income received by Smt. Ganga Devi was not included in that return. On March 9, 1960, the Income-tax Officer passed an assessment order against the Hindu undivided family for the year 1959-60, clubbing the income of Smt. Ganga Devi with that of the Hindu undivided family on the ground that she held the shares benami for the Hindu undivided family. The Hindu undivided family file....
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...., 1958. For the assessment year 1960-61, accordingly separate returns were filed by the members of the erstwhile family along with an application under section 25A of the Indian Income-tax Act, 1922, requesting the Income-tax Officer to recognise the partition. Separate returns were also filed for the assessment year 1961-62, by the separating members of the family. The Income-tax Officer rejected the application under section 25A by his order, dated January 25, 1962, and passed two assessment orders both dated January 25, 1962, for the years 1960-61 and 1961-62, treating the income of the separating members as belonging to the Hindu undivided family. There was an appeal on behalf of the Hindu undivided family which was rejected by the Appe....
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....ard to the remaining two years, the Commissioner held that the petitioners were entitled to interest, but not to the extent claimed by them. The petitioner shave now approached this court under article 226 of the Constitution. The contention of the petitioners is that with regard to the assessment year 1959-60, they are entitled to interest for the period between the expiry of six months from the date of the order of the Tribunal setting aside the assessment order to the date of refund and similarly with regard to the assessment years 1960-61 and 1961-62, they are entitled to interest for t he period between the expiry of six months from the date of the order of the Appellate Assistant Commissioner setting aside the assessment orders to th....
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....f there is no assessment order, the assessee is not liable to pay any tax. If follows, therefore, that if an assessment order is set aside, the notice of demand becomes ineffective and the tax already paid under such a notice of demand becomes refundable. If a fresh assessment is made, the tax determined as a result of the fresh assessment order again becomes due and payable only after a fresh notice of demand is served upon the assessee. The contention of the learned counsel for the department is that the refund becomes due only if the assessment is annulled and not when it is merely set aside and the matter is remanded to the lower authorities. The learned counsel has not cited any provision or a decided case in support of his contention....
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....er the provisions of section 241, the Central Government shall pay interest at the aforesaid rate on the amount of refund ultimately determined to be due as a result of the appeal or further proceeding for the period commencing after the expiry of six months from the date of the order referred to in section 241 to the date the refund is granted." This provision very clearly shows that as soon as an assessment order is set aside, the tax paid by the assessee under the assessment order becomes refundable to him. But the Income-tax Officer can withhold the refund during the pendency of the remand proceedings and in such a situation the assessee will not be prejudiced. Now, turning to the facts of the instant case, the assessment order for th....