INDER PAUL KHANNA Vs. INOCME TAX OFFICER

JUDGEMENT

(1.) BY the Court This is a petition under Arts. 226 and 227 of the Constitution, seeking the refund of the amount of income-tax paid by the assessee for the asst. yr. 1976-77.

(2.) THE petitioner Inder Paul Khanna, in the status of HUF, was an assessee under the IT Act, 1961 ('the Act'), and was engaged in the business of manufacturing textile goods in the name and style of Paul Woollen & Silk Mills at Amritsar. Return of income was filed by the petitioner for the asst. yr. 1976-77 on 6th Dec., 1976 declaring an income of Rs. 59,471. Previous year relevant to the asst. yr. 1976-77 started from 1st April, 1975 and ended on 31st March, 1976. The ITO framed an ex parte best judgment assessment under S. 144 of the Act, vide order dt. 14th Sept., 1978. An addition of Rs. 20,000 was made in the trading account and an additional demand for Rs. 12,029 was created. A sum of Rs. 15,218 was recovered from the petitioner after the passing of the assessment order. The petitioner went in appeal against the assessment order passed under S. 144 and the AAC, vide order dt. 21st May, 1979, set aside the assessment and remanded the case to the ITO with a direction to make assessment afresh after making enquiries and giving fresh opportunity to the petitioner. Fresh assessment was, however, not made thereafter. The petitioner moved an application on 6th Feb., 1986 before the ITO claiming refund of the amount of Rs. 42,022 deposited by him by way of advance tax, tax deducted at source, self-assessment tax and tax paid on demand. The petitioner did not get the refund though he filed several applications and had also a meeting with the IAC. The petitioner was informed by the ITO, vide letter dt. 13th March, 1986, that the petitioner's records for the asst. yr. 1976-77 were not available and therefore, the petitioner should produce the receipt evidencing the filing of the return. The petitioner filed on 17th March, 1986 copies of the assessment order dt. 14th Sept., 1978 and appellate order dt. 21st May, 1979. The ITO vide letter dt. 24th March, 1986 further asked the petitioner to produce the original assessment and the appellate orders and also certain other documents. The petitioner appeared before the ITO on 10th April, 1986 and submitted the copies of the P&L A/c and the balance sheet relating of the assessment year in question as required by the ITO. He filed an affidavit also on 11th July, 1986, giving therein the details of the deposits totalling Rs. 42,022. The petitioner was informed by the ITO, vide letter dt. 25th Aug., 1986, to approach the Board because the assessment had become time-barred and the matter could be taken up after necessary instructions from the Board. The petitioner has, through the present writ petition, sought a mandamus to the respondents to refund the deposit of tax aggregating to Rs. 42,022. The petitioner had made the payment for the asst. yr. 1976-77 as under : (i) Deposits by way of advance tax under S. 210: Rs. Rs. (a) On 18th Sept., 1975 4,260 (b) On 15th Dec., 1975 4,260 (c) On 10th March, 1976 2,433 (d) On 12th March, 1976 2,433 13,386 (ii) Tax deducted at source (TDS) 13,386 The petitioner's claim for refund has been resisted by the respondents with three-fold pleas. First, the application for refund, being time-barred and filed beyond the period of limitation, is liable to be rejected. Second, the petitioner was advised to approach the Board for necessary direction about his claim for refund but he did not adhere to the advice given by the ITO in this behalf. That was an alternative remedy which the assessee should have availed. If not so availed, then the petitioner should have filed a civil suit claiming the refund of the amount. Third, the amounts of advance tax, TDS and the self-assessment tax are not to be refunded inasmuch as these payments were made voluntarily on the basis of the return filed by the petitioner.

(3.) THE plea raised by Shri Bansal on behalf of the respondents regarding the refund application being time-barred is found to have no force in view of the peculiar circumstances of the case. It has been noticed that the claim for refund arose on account of the appellate order dt. 21st May, 1979. The period of limitation for the purposes of S. 239 of the Act is applicable to cases where the claim for refund arose after the completion of the assessment. In a case where an appeal gives rise to a refund, S. 240 of the Act would come into play. Sec. 240, as it was applicable for the asst. yr. 1976-77, read as under: