NEW WOODLANDS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) The question is whether the petitioner firm (the "assessee") is entitled to interest on the income tax paid by it as per the notices of demand when the orders of assessment were set aside by the Appellate Assistant Commissioner who remanded the matter for fresh consideration and the Income Tax Officer has not refunded the amounts paid as per the notices of demand within three months from the end of the month in which the order of the Appellate Authority was passed. The assessee paid tax on the basis of Exts. P1 dated 16-3-1972, P2 dated 16-3-1972 and P3 dated 19-3-1973 which respectively are the original orders of assessment for the years 1968-69,1969-70 and 1970-71. The assessee filed appeals against the orders of assessment. By Exts. P4 and P5 dated 15-9-1972 and 24-10-1975 respectively the Appellate Assistant Commissioner accepted the assessee's contention that no proper enquiry has been conducted by the Income Tax Officer. The Appellate Authority accordingly quashed Exts. P1 to P3 orders of assessment and remanded the matter to the Income Tax Officer for fresh consideration of the various contentions of the assessee and for fresh computation of the tax due. Thereupon the Income Tax Officer passed fresh orders of assessments, Exts. P6 to P8 dated 12-11-1976, for the three years in question. Considerable reduction was made in the tax originally determined as a result of which the excess tax paid was refunded to the assessee. The assessee is no longer aggrieved on that count.

(2.) The question now is, as I stated earlier, whether the assessee is entitled to interest on the total amount paid by it as per the notices of demand based upon Exts. P1 to P3 for the period commencing on the expiry of three months after the end of the month in which the orders of the Appellate Authority were passed and ending on the date of the fresh assessment orders. The answer depends upon whether the assessee was entitled to refund of the tax paid when the original orders of assessment were quashed and the matter was remanded for fresh consideration. If the assessee was entitled to refund in such circumstances, then, of course, the assessee is also entitled to interest for the amount not refunded within three months from the date prescribed under S.244.

(3.) S.240 of the Income Tax Act reads: