TaxTMI 
TaxTMI 
TaxTMI 
2020 (8) TMI 193
X X X X Extracts X X X X
X X X X Extracts X X X X
....gh Video Conference due to prevailing condition of COVID 19 pandemic. 2. None has appeared on behalf of the assessee when the appeal is called for hearing. However, the ld. A/R of the assessee has filed a letter dated 22nd January, 2020 which was received by email on 24th June, 2020 wherein it is pleaded that the paper book and written submissions filed by the assessee may kindly be considered while disposing off the appeal. Accordingly, we have heard the ld. D/R and carefully perused the written submissions filed by the assessee. The controversy in the present appeal is regarding the denial of refund of tax paid by the assessee while filing the return of income under section 158BC of the IT Act on 24th December, 1998. In the quantum proceedings, the Hon'ble High Court has quashed the proceedings initiated under section 158BC on the ground that the notice issued under section 158BC by the AO was invalid as the time limit granted under the said notice was less than statutory period provided under the said provision. Thus the assessee filed an application under section 154 of the Act seeking refund of the tax paid on the income declared by the assessee in the return of income fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to be in valid by the Hon'ble High Court, therefore, such return does not exist i.e. it is void ab-initio and non est in the eye of law which has no legal sanctity. Proviso (b) to section 240 of the Act, it is axiomatic that the 'return' completed in the said section has to be a valid return, and an illegal/ invalid return has no sanctity in the eye of law and would have no application. 3.1. The assessee further submitted that no tax shall be levied or collected except with authority of law, as enjoined by Article 265 of the constitution of India. If the return is declared to be invalid, such return does not exist i.e. it is void ab initio and non est in the eye of law which has no legal sanctity. If that is so, then the invalid return has to be ignored and have to be examined whether refund to be payable by the department under the proviso (b) to section 240 of the Act. For whatever reasons, if the authorities were barred from framing the assessment/not amenable to self assessment, then department is precluded from with-holding the tax and interest paid by the assessee. Even assuming, the assessee has admitted certain taxes in an invalid return, such admitted tax cann....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Vs. Union of India and others (2000) 242 ITR 302 (Delhi) 6. CIT & Dy. CIT (Inv.) Vs. N. R. Sudhir ITA No. 202/2009 Dt. 17/11/2014 (Karnataka) The assessee has submitted that if after passing of an assessment under chapter XIV-B the assessee challenges the entire proceedings on the ground that the proceedings initiated are without jurisdiction and the assessment order passed is unsustainable and up holding such contention, the assessment order is set-aside, then there is no liability on the part of the assessee to pay any tax in pursuance of such order. The return filed in pursuance to the notice issued under section 158 BC cannot be equated with the return filed under section 139(1) or 139(5) of the Act. The return filed under section 139(1) or 139(5) are voluntary in nature whereas the return filed under section 158 BC of the Act is in pursuance of the search and seizure where he is compelled to file a return in the prescribed form. Chapter XIV-B is a complete code in respect of assessments of 'Undisclosed income'. Section 158BA (2) is the charging section in respect of the undisclosed income. Section 2 (45) defines 'total income' to mean the amount of income re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts and circumstances of the case ? 2. Whether the Tribunal was justified in law in appreciating the act of revenue in retaining the amount of tax without valid return amounts to unjust enrichment at the cost of the appellant, on the facts and circumstances of the case ? 3. Whether the Tribunal was correct in law in holding that the appellant is not eligible for any refund of the tax paid, when all authorities held that the revised return filed was void abinitio and non-est in the eye of law on the facts and circumstances of the case ? In the said case the undisputed facts on which the High Court has directed the refund of tax paid by the assessee were that the AO treated the return of income filed by the assessee as invalid and non-est while passing the assessment order, subsequently the assessment was quashed by the Tribunal for want of jurisdiction. In those facts when the return itself is not valid, then the High Court has held that the tax paid by the assessee in pursuant to the return of income which is considered by the AO as invalid is also refundable when the assessment itself was quashed for want of jurisdiction. In the case in hand, there is no dispute that the retur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....contention". The Supreme Court upheld the view that liability to pay tax arises because of Section 4 (1) which does not depend on an assessment order, but upon the rate or rates applicable for a given assessment year. The liability to pay tax arises on the total income on the publication of rates; such tax is to be computed by the assessee in accordance with the provisions of the Act. By the process of selfassessment, the assessee is required to pay tax on the basis of his return and such tax is treated as assessed tax. Therefore, until it is disturbed by any further regular assessment, it remains as tax levied and collected in accordance with law. The Gujarat Full Bench had ruled: "We are, therefore, of the view that, on failure of a regular assessment being made within the time prescribed or in the event of annulment of the assessment order pursuant to which any further demand is required to be made under section 156, no consequence of refund of the entire tax collected according to the total income shown in the returns filed by the assessee can ensue and such tax which is collected on the basis of the return filed by the assessee remains a valid and legal recovery in accorda....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the admitted liability of the assessee, and failure or inability to frame another assessment after the earlier assessment is set aside or nullified in appropriate proceedings, does not entitle the assessee to claim refund because to this extent the assessee has admitted his liability to pay tax in accordance with law. The tax liability is computed on the basis of the relevant Finance Act laying down the rate or rates at which the tax is payable and provides for other matters relevant to the computation of tax. Thus the tax is required to be paid in advance by the assessee, even before assessment is made, and he himself is required to compute his liability having regard to the rates and exemptions applicable. Thus, both the levy and collection of tax is in accordance with law. We find considerable force in the submission of the revenue and it must be upheld. We have earlier noticed the scheme of the Act. Section 4 of the Act creates the charge and provides inter alia for payment of tax in advance or deduction of tax at source. The Act provides for the manner in which advance tax is to be paid and penalises any assessee who makes a default or delays payment thereof. Similarly the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sh assessment is barred. In other words, the tax paid by the assessee must be accepted as it is, and in the event of the tax paid being in excess of the tax liability duly computed on the basis of return furnished and the rates applicable, the excess shall be refunded to the assessee, since its retention may offend Article 265 of the Constitution. We cannot lose sight of the fact that the failure or inability of the revenue to frame a fresh assessment should not place the assessee in a more disadvantageous position than in what he would have been if a fresh assessment was made. In a case where an assessee chooses to deposit by way of abundant caution advance tax or selfassessment tax which is in excess of his liability on the basis of return furnished or there is any arithmetical error or inaccuracy, it is open to him to claim refund of the excess tax paid in the course of assessment proceeding. He can certainly make such a claim also before the concerned authority calculating the refund. Similarly, if he has by mistake or inadvertence or on account of ignorance, included in his income any amount which is exempted from payment of income-tax, or is not income within the contemplat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ble Delhi High Court after considering the judgment of Hon'ble Karnataka High Court in case of K. Nagesh (supra) has held that the decision of Hon'ble Supreme Court in case of CIT vs. Shelly Products, 261 ITR 367 (SC) is applicable in the case where the assessee has paid the tax while filing the return of income though the notice and assessment proceedings itself are quashed subsequently. The refund under section 240 of the Act is only in respect of the amount which has resulted due to the addition made by the AO during the assessment. The Hon'ble Supreme Court in case of CIT vs. Micro Nova Pharmaceutical Pvt. Ltd. (supra) has again considered this issue and by following the earlier judgment in case of CIT vs. Shelly Products (supra) has decided in favour of the revenue. The question before the Hon'ble Supreme Court is reproduced in para 3 of the judgment as under :- " Whether in the facts and circumstances of the present case and in law, the Hon'ble High Court was correct in holding that section 240 of the Act is not applicable to chapter XIV B of the Act and therefore, the taxes paid pursuant to the return filed in the block assessment is liable to be refund....