TaxTMI 
TaxTMI 
1982 (9) TMI 112
X X X X Extracts X X X X
X X X X Extracts X X X X
....f nature of business carried on by the assessee excise duty is levied upon the assessee. The assessee had paid the sum of Rs. 2,36,782.22 as under: S. No. Period to which relates Amount paid 1. 1-4-1972 to 28-2-1973 37,079.02 2. 9-3-1973 to 30-10-1973 1,24,850.31 3. 2-11-1973 to Feb., 1974 74,853.89 . 2,36,782.22 These amounts had been paid by the assessee under protest because the assessee had contended before the Excise Authorities that it was not liable to pay excise duty so demanded and paid. Therefore, vide letter dt. 23rd July 1973, the assessee claimed refund of an amount of Rs. 37,079.02 from the Asst. Collector, Central Excise who rejected the application vide his letter dt. 27th June 1974. Against this rejection the assessee went in appeal before the Appellate Collector of Central Excise, New Delhi on 20th September 1974. This appeal of the assessee was accepted by the Appellate Collector vide order dt. 2nd December 1975 determining the refund payable to the assessee as claimed above, and directions were issued to the Assistant Collector for issuance of the refund. Accordingly, refund of Rs. 37,079,02 was issued by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... authority and as such could not be withdrawn. However, the Assistant Collector of Central Excise did not accept the contentions of the assessee and rejected the assessee's petition vide his order dt. 8th December 1977 holding that the refund of Rs. 1,24,850.31 was to be withdrawn. Against this order of the Assistant Collector of Central Excise, the assessee went up in appeal before the Appellate Collector who vide his order dt. 15th February 1978 allowed the appeal of the assessee by holding that the refund had correctly been given to the assessee. However, the matter did not end at that because the Central Government had the powers vested in them under sub-s. (2) of s. 36 of the Central Excise and Salt Act, 1944 to call for and examine the record relating the aforesaid proceedings in which the Appellate Collector of Central Excise, New Delhi had made the order holding that the assessee was entitled to the refunds. This was the position at the end of the previous year relevant to the assessment year under appeal. 6. After the previous year relevant to the assessment year under appeal was over, the assessee received a show-cause notice u/s 36(2) of the Central Excise and Salt Ac....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the income because of the disputed nature of the refunds received. The ITO, however, was of the opinion that the sum of Rs. 1,24,850 had been received by the assessee as refund finally and was accordingly assessable as income of the assessee for the asst. yr. 1978-79. The ITO also held that the other tow amounts were also assessable for the year under appeal as the assessee had received them on the dates indicated above. He, therefore, while computing the total income of the assessee, added the total sum of Rs. 2,36,782 and completed the assessment on 28th February 1980. This was challenged in appeal. 9. The CIT (A) upheld the action of the ITO by placing reliance upon the judgement of the Allahabad High Court in the case of CIT vs. Taj Gas Service (1980) 122 ITR 1034 (All). Hence the present appeal before us. 10. The ld. Counsel for the assessee submitted before us that by no stretch of imagination the amounts received by the assessee by way of refunds as mentioned above can be said to be amounts representing cessation or remission of liability finally because no sooner did the assessee receive the funds, the assessee was served with show-cause notices for each of the am....
X X X X Extracts X X X X
X X X X Extracts X X X X
....not entirely consequential. 14. We have given careful consideration to the rival submissions and we are convinced that the authorities below erred in bringing to tax the sum of Rs. 2,36,782.22 on the facts narrated supra. It is very clear that the assessee was not left to deal with or enjoy the amounts issued in the refunds as if there were no encumbrances thereupon. No sooner did the assessee receive the refunds, there was show-cause notices issued by the concerned authorities for each refund amount issued asking the assessee to show-cause why it should not be withdrawn. Unless the proceedings initiated by the show-cause notices issued came to a final conclusion, it could not be said that the amounts which the assessee had been refunded had come to the assessee by way of cessation or remission of the liability. The argument of the revenue before us was that it should be considered that the amounts had been finally remitted to the assessee by the concerned authorities. In our opinion, this is not an acceptable argument because remission or cessation as envisaged in s. 41(1) is when it is final and complete. As it is, in the case before us there was no such final cessation or rem....