TaxTMI 
TaxTMI 
2020 (11) TMI 275
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....greed between the writ petitioner and ECM to share the sale proceeds in the ratio of Rs. 62,00,000/- to the writ petitioner and Rs. 83,00,000/- to ECM. On 27.08.1992, Rs. 50,00,000/- was paid to the writ petitioner towards sale consideration. The balance sale consideration was paid on 10.12.1999 and on the same date, the writ petitioner executed a Power of Attorney to one of the Directors of the purchaser Company. Ultimately, the Power of Attorney of the purchaser had made additions and registered the sale for a value of Rs. 4.30 Crores on 13.03.2002. The writ petitioner filed returns for the year ended 31st March, 2002, for the assessment year 2002-2003 admitting the income towards capital gains and interest and paid the tax on the advice of the Auditor. 3. However, the Assessment Officer had added the sale consideration of Rs. 4.30 Crores in addition to Rs. 62,00,000/- received by the writ petitioner and passed an assessment order on 31.10.2006. The Commissioner of Income Tax, by his order dated 29.12.2009, confirmed the Assessment order, against which, the petitioner preferred an appeal to the Income Tax Appellate Tribunal. The Appellate Tribunal, by its order dated 16.12.201....
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....be availed and hence, the Writ Petition is maintainable. 8. Countering the submissions, the learned counsel for the respondent would submit that the main order of assessment has become final, as there is no challenge to the same and the writ petition challenging the consequential order is not maintainable. The petitioner, having filed a petition for revision of assessment order and after having submitted to the jurisdiction of the assessing authority, cannot turn around and state that the order is without jurisdiction. Since there is an appeal remedy available, non-exhaustion of appeal remedy will render the writ petition not maintainable. Filing the voluntary returns admitting the income on wrong advice is not a ground for refund. The income is assessable to tax and nonpayment of tax taking dubious stands is nothing but tax avoidance, which cannot be entertained. 9. Of course, it is an admitted fact that the writ petitioner is an assessee and derived income under the head capital gains for selling the property. The sale agreement was admittedly entered on 27.08.1992 and possession was handed over to the purchaser. However, the amount was not disclosed on the ground that as p....
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....ction to treat as nugatory any step whatever which a taxpayer may take with a view to the avoidance or mitigation or tax. It remains true in general that the taxpayer, where he is in a position to carry through a transaction in two alternative ways, one of which will result in liability to tax and the other of which will not, is at liberty to choose the latter and to do so effectively in the absence of any specific tax avoidance provision such as s.460 of the Income and Corporation Taxes Act, 1970." ......... The situation in the United States is reflected in the following passage from American Jurisprudence's case (American Jurisprudence [1973] second edition, volume 71): "The legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether to avoid them, by means which the law permits, cannot be doubted. A tax-saving motivation does not justify the taxing authorities or the courts in nullifying or disregarding a taxpayer's otherwise proper and bona fide choice among courses of action, and the state cannot complain, when a taxpayer resorts to a legal method available to him to compute his tax liability, that th....
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....aft in 18 Modern Law Review 209) by some of the best brains in the country being involved in the perpetual war waged between the tax avoider and his expert team of advisers, lawyers and accountants on one side and the tax-gatherer and his perhaps not so skilful, advisers on the other side. Then again there is the 'sense of injustice and inequality which tax avoidance arouses in the breasts of those who are unwilling or unable to profit by it'. Last but not the least is the ethics (to be precise, the lack of it) of transferring the burden of tax liability to the shoulders of the guideless good citizens from those of the 'artful dodgers'. It may, indeed, be difficult for lesser mortals to attain the state of mind of Mr. Justice Holmes, who said, "Taxes are what we pay for civilized society. I like to pay taxes. With them I buy civilization." But, surely, it is high time for the judiciary in India too to part its ways from the principle of Westminister and the alluring logic of tax avoidance. We now live In a welfare state whose financial needs, if backed by the law, have to be respected and met. We must recognise that there is behind taxation laws as much moral sancti....
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....n fact paid the tax in accordance with the provisions of section 140A of the Act and the Assessing Officer did not find it necessary to assess the total income since he may have accepted the return on expiry of the period during which the regular assessment is required to be made, the entire tax amount, admittedly payable under the Act would be required to be refunded. The scheme of the Act clearly indicates that the liability to pay income tax chargeable under section 4(1) of the Act does not depend upon the assessment being made by the Income-tax Officer but depends on the enactment by any Central Act prescribing rate or rates for any assessment year. Thus, as soon as the rates are prescribed by the appropriate legislation, the liability to pay tax arises on the total income which is to be computed by the assessee in accordance with the provisions of the Act. By the process of self-assessment, 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. Having considered all aspects of the matter the Full Ben....
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....ssessee. When tax has been paid on the admitted income, even if the income added by the Income-tax Officer by way of addition in the regular assessment has been set aside in appeal or revision, the assessee has no legal right to claim refund of the tax so paid because what has been set aside is not the self-assessment but the regular assessment." 14. In the instant case also, the assessee paid the tax which is admittedly payable. Even the assessment order is set aside, it will not have any impact on the self assessment made by the assessee. The Income Tax Appellate Tribunal has considered the addition of income under Section 45(5)(b) of the Act as incorrect and nullified it. But, the assessment order on the admitted income was not nullified. Only because, there is an observation that the relevant year of assessment is 1993-1994 in view of Section 53-A of Transfer of Property Act, it will not confer any legal right on the assessee to claim refund. Admittedly, the income is assessable to tax and it was not assessed due to the statement made by the assessee that the transfer was not complete in terms of the sale agreement. The assessee cannot blow hot and cold or approbate and repr....