K SUDHAKAR S SHANBHAG Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) BY this writ petition, the petitioner seeks a direction to the Income tax Officer, Satara, to complete the assessments of his income for the assessment years 1987-88 and 1988-89 on the basis of the returns submitted by him pursuant to the notices under Section 148 of the income-tax Act, 1961 ("the Act"), and to refund the amount paid by him as advance tax which, according to him, is in excess of the amount due as per the returns submitted pursuant to the said notices. The contention of the petitioner is that having initiated proceedings for assessment or reassessment of the income of the petitioner for the assessment years 1987-88 and 1988-89 under Section 147 by issue of notices under Section 148 of the Act, the Income-tax Officer is under a statutory obligation to bring those proceedings to a logical end by making the assessments and refunding the amount paid by the petitioner as advance tax which is in excess of the amount that might be due as per the assessments, if made, under Section 147 of the Act.

(2.) THE material facts giving rise to this petition are as follows : The petitioner is an individual. For the assessment year 1987-88, he paid in three instalments, a sum of Rs. 66,750 by way of advance tax. Similarly, for the assessment year 1988-89, he paid, by way of advance tax, a sum of Rs. 51,709. No return, however, was submitted under Section 139 of the Act for any of the above two assessment years. On March 23, 1991, the petitioner received two notices from the income-tax Officer, Satara, under Section 148 of the Act for these two assessment years. The petitioner submitted returns declaring an income of Rs. 1,02,700 and Rs. 75,200 for the assessment years 1987-88 and 1988-89, respectively. The tax due from the petitioner on the basis of the returns submitted pursuant to the notices under section 148 of the Act was less than the advance tax paid by him by rs. 34,200 and Rs. 30,212 for the assessment years 1987-88 and 1988 89, respectively. The Income-tax Officer did not make any assessment order and dropped the proceedings initiated under Section 147 of the Act. On the expiry of the time-limit for completion of assessment proceedings pursuant to the above notices under Section 148 of the Act, the petitioner claimed refund of the advance tax paid or the difference between the advance tax and the amount due as per returns submitted pursuant to the notices under Section 148 of the Act. The basis for this claim was that the tax payable on the income disclosed in the returns submitted pursuant to the notices under section 148 of the Act for the two assessment years was less than the advance tax paid by the petitioner and if the proceedings for assessment initiated under Section 147 of the Act were completed by the Income-tax Officer, the petitioner would have been entitled to refund of Rs. 34,200 and Rs. 30,212 for the assessment years 198788 and 1988-89, respectively. The petitioner applied for refund of the above amounts on the basis of deemed acceptance of the returns by the Income-tax Officer in the proceedings under Section 147 of the Act. As the application for refund was barred by limitation under Section 239 of the Act, he applied to the Central Board of Direct Taxes ("the board") to condone the delay in filing the same. The said application was rejected by the Board. The petitioner, thereafter, filed this writ petition seeking a direction to the Income-tax Officer to bring the proceedings under Section 147 of the Act to a logical end by completing the assessments and refunding the excess tax paid by him by way of advance tax.

(3.) MR. A. K. Jasani, learned counsel for the petitioner, submits that on issuance of notices under Section 148 of the Act to the petitioner for the assessment years 1987-88 and 1988-89, the petitioner got a right to submit returns for those assessment years and the Income-tax Officer was under a statutory obligation to complete the proceedings for assessment or reassessment under Section 147 of the Act and to refund any amount paid by the petitioner as advance tax which might be in excess of the amounts shown in the returns or the amount that might be due as per such assessments. In other words, the case of the petitioner is that the Income-tax Officer was bound to complete the proceedings under Section 147 of the Act even if it resulted in refund of the amounts already paid by the petitioner by way of advance tax for those assessment years and to refund the excess amount to the petitioner.