Merely because assessee has not claimed refund in return form itself, it cannot be said that assessee not entitled to refund

HIGH COURT OF DELHI

Indglonal Investment & Finance Ltd. v. Income-tax Officer

WRIT PETITION (CIVIL) NOS. 15639 OF 2006

AND 7127 OF 2008 JUNE 3, 2011

JUDGMENT

Sanjiv Khanna, J. –

These two writ petitions were heard on different dates, but as the issue and subject-matter are similar, they are being disposed of by this common decision. Factual aspects have been discussed below and the result would show one writ petition is being allowed and the other is being dismissed by applying the legal principles and ratio to the factual matrix.

2. Income-tax Act, 1961 (1961 Act) and Wealth-tax Act, 1957 (1957 Act) are direct taxes. Under the 1961 Act, taxes are collected by deduction of tax at source (TDS, for short), payment of self-assessment tax or advance tax. Under the 1957 Act, self-assessment tax is paid by the assessee. Taxes are also paid on demand raised.

3. An assessee may be entitled to refund of the tax paid on the basis of return of income filed, refund claimed, pursuant to an assessment order, appellate order or some other order. The two enactments, as noticed below, incorporate statutory provisions for refund of taxes paid in excess of the amount ascertained/determined or due and payable. The question raised in these writ petitions is whether and when an assessee is entitled to refund when tax or part thereof has been paid by inadvertence or if the tax is ‘wrongly’ paid, recovered or retained. Often in such cases reliance is placed on Article 265 of the Constitution and it is urged that taxes ‘wrongly’ levied and collected should be refunded. Doctrine/principles of unjust enrichment, equity, justice and good conscience are concomitantly invoked.