Assessee entitled to claim refund on basis of return in case where AO dropped proceedings under s 147/148 after filing of return

Chitranjan Jaiswal v CIT and Anr.

High Court of Jharkhand

C.W.J.C. No. 2889 of 2000

Decided on: 16 June 2011

Judgment

The Order of the Court was as follows:

1. Heard learned counsel for the parties.

2. Following substantial question of law is involved in this writ petition:

“Whether in a case where the Assessing Officer drops a proceeding under Section 147/148 of the Income Tax Act, 1961 after filing of return and on the basis of return then refund claimed in that return is required to be allowed to the assessee?”

3. The petitioner is aggrieved against the order dated 24th February,2000 passed by the Commissioner of Income Tax under section 264 of the Income Tax Act,1961, rejecting the petitioner’s claim for refund of Rs.29,830/-.

4. As per the brief facts, the petitioner did not file the return for the assessment year 1992-93. However, the Assessing Officer issued notice under section 148 of the Income Tax Act on 24^th March, 1994 which was duly received by the assessee on 26th March, 1994 and petitioner was called upon to furnish return. Upon which the petitioner submitted his return of income on 8^th February, 1995 showing total income of Rs.75,594/- and agricultural income of Rs.15,000/-. The assessee claimed refund of Rs.29,830/- . The assessee was also directed to appear before the Assessing Officer and he duly heard the petitioner and he passed the order that from the return submitted by the petitioner, it appears that there is refundable amount of Rs.29,830/- and after taking note of this fact he simply passed the order to drop the proceedings under section 148 of the Act without passing any order for refund of Rs.29,830/-. The petitioner approached the Commissioner of Income Tax under section 264 of the Income Tax Act, 1961 and the learned Commissioner of Income Tax, Ranchi vide impugned order dated 24th February,2000 held that the proceeding under section 147/148 of the Income Tax Act, 1961 is not the proceeding of assessment of income of the assessee and because of dropping of the proceeding only the petitioner cannot claim the amount, as claimed in the return submitted by him under the proceeding initiated under section 147/148 of the Income Tax Act, 1961. Hence this writ petition has been preferred by the petitioner.

5. Learned counsel for the petitioner submitted that any order passed under section 147/148 of the Act is an order of assessment in view of the judgment of the Supreme Court , delivered in the case of Commissioner of Income Tax, Bhopal v Shelly Products and another reported in (2003) 5 Supreme Court Cases, 461 2003 Indlaw SC 477 followed in subsequent judgment delivered by the Allahabad High Court in the case of Commissioner of Income Tax v Vali Brothers, reported in (2005) 199 CTR(All) 294 2005 Indlaw ALL 163 and, therefore the petitioner who was asked to submit the return and he filed the return under section 147/148 proceeding amounts to a return filed under section 139(1) by virtue of section-142 of the Act of 1961 and, therefore once the return has been accepted and the proceeding has been dropped, the excess deposit of tax amount should have been refunded to the petitioner.

6. Learned counsel appearing for the Revenue submitted that the proceeding once initiated under section 147/148 is dropped then it is not the assessment but it is a dropping of proceeding on the ground of not finding out any escaped income for which these proceedings were initiated.

7. We have considered the submissions of the learned counsel for the parties and perused the impugned order dated 24th February, 2000 passed by the Commissioner Income Tax and the order passed by the Assessing Officer dated 9th February, 1996.

8. The order dated 9th February, 1996 clearly reveals that after initiation of the proceeding under section 147/148 of the Act of 1961, the Assessing Authority at its own has not dropped the proceeding upon satisfaction of his own without the help of the return. Admittedly, there was no regular assessment for the assessee of the year 1992-93 and petitioner was directed as well as required to submit the return in response to the notice under section 147/148 read with section 142 of the Act of 1961 and he duly submitted that return. The order dated 9th February, 1996 passed by the Assessing Officer clearly indicates that the proceeding was dropped by the Assessing Officer on the basis of return submitted by the assessee and that return has duly been accepted by the Assessing Officer with clear indication that as per return the assessee was entitled to refund of Rs.29,830/-. The Assessing Officer has not rejected the claim of assessee for refund of Rs.29,830/- while passing the impugned order. Therefore, the Revenue is required to refund the amount of Rs.29,830/-, the excess deposit of tax by the assessee. The learned Commissioner of Income Tax committed error of law, in view of the fact that it failed to take note of the reason given in the order passed by the Assessing Officer and proceeded to decide the application of the assessee on assumption that it is a case of mere dropping of the proceeding, ignoring the fact why it has been dropped.

9. As we have indicated that the proceeding has been dropped because of the filing of the return which was found to be correct by the Assessing Officer, containing the demand of refund of Rs.29,830/-, therefore, the writ petition is allowed and the respondents are directed to refund a sum of Rs.29,830/- to the petitioner with interest accordingly.

NF