High Court Of Allahabad
British India Corporation Ltd. vs. S.P. Gupta, Inspecting Assistant Commissioner
Sections BPT 13
M. Katju & O. Bhati, JJ.
Civil Misc. Writ Petn. No. 640 of 1983
13th December, 2000
M. KATJU, J. :
This writ petition has been filed for quashing the impugned order of the Tribunal dt. 8th March, 1983, Annexure G to the writ petition as well as the order dt. 30th Jan., 1978, passed by the IAC vide Annexure F to the petition.
The case relates to the Business Profits Tax Act, 1947. The petitioner is a public limited company incorporated under the Indian Companies Act, 1913 and is now a Government company as it has been taken over by the Central Government.
The petitioner submitted four returns for the chargeable accounting periods, namely, for period, ending 31st Dec., 1946, 31st Dec., 1947, 31st Dec., 1948 and 31st March, 1949, in respect of these periods provisional assessment were made under s. 13 of the Act on various dated from 27th Dec., 1948 to 22nd Jan., 1951, and the tax determined under the provisional assessments was paid. The regular assessment was made on 31st Dec., 1969. However, the regular assessment was quashed by the Tribunal by its order dt. 24th March, 1973 Annexure 1 to the supplementary affidavit. Against this order of the Tribunal a reference was made to the High Court vide IT Ref. No. 255 of 1974 but the High Court decided the reference on 28th Aug., 1978, in favour of the assessee vide Annexure 4 to the supplementary affidavit. Hence, the decision of the Tribunal became final. The Tribunal took the view that the assessment under the Business Profits Act cannot be made after the lapse of nearly twenty years and as such the assessment order was null and void. The Tribunal and the High Court also held that the regular assessment under s. 12 has to be made within four years of the end of the chargeable accountable period.
In view of these decisions of the Tribunal and the High Court, the petitioner applied for the refund of the tax it had paid pursuant to the provisional assessments. The petitioner submitted that after the regular assessment had been quashed the provisional assessments did not have any legs to stand on their own and, hence, the amount deposited pursuant to the provisional assessments had to be refunded. However, the IAC by order dt. 4th Jan., 1978, rejected the claim of the assessee for refund of tax paid on the basis of the provisional assessments. The petitioner filed appeal to the CIT(A) which was also dismissed. However, when the matter was taken up in further appeal before the Tribunal, there was a difference of opinion between the JM and AM. The JM held in favour of the assessee while the AM held in favour of the Department. The matter went to a third member who was also an AM who held in favour of the Department. Against that order this writ petition has been filed.
5. We are of the opinion that the judgments of the Tribunal and the IAC are not correct and deserve to be set aside. In our opinion, the provisional assessment will merge into the regular assessment as is evident from s. 13(5) to (7) of the Business Profit Tax Act, 1947. Sec. 13(5) to (7) states as follows : “(5) There shall be no right to appeal against a provisional assessment made under this section, and it shall, until a regular assessment is made in due course under s. 12, determines the amount of business profits tax due from the assessee. (6) If, when a regular assessment is made in due course under s. 12, the amount of business profits tax payable thereunder is found to exceed that determined as payable by the provisional assessment, it shall be reduced by the amount determined as payable by the provisional assessment. (7) If, when a regular assessment is made in due course under s. 12, the amount of business profits tax payable thereunder is found to be less than that determined as payable by the provisional assessment, any excess of tax paid as a result of the provisional assessment shall be refunded to the assessee, together with interest of two per cent per annum calculated from the date of payment of such excess tax to the date of the order of refund, both days inclusive.”
A reading of the above provisions clearly shows that the provisional assessment will merge into the regular assessment when the latter is made. Once the regular assessment is made, the provisional assessment ceases to exist, and, hence, if the regular assessment is quashed, there can be no liability of the assessee on the basis of the provisional assessment.
A perusal of s. 13(5) shows that there is no right of appeal against the provisional assessment, which indicates that the provisional assessment was meant to merge into the regular assessment. In this connection reference may be made to the decision of the Supreme Court in Jaipur Udyog Ltd. vs. CIT (1969) 71 ITR 799 (SC) : TC 4R.245 where the Supreme Court held that tax pursuant to provisional assessment is liable to be adjusted in the light of the regular assessment. This decision was relied upon by the Madhya Pradesh High Court in Smt. Shantibai vs. CIT (1984) 41 CTR (MP) 133 : (1984) 148 ITR 49 (MP): TC 6R.841 where it was observed that the provisional assessment did not bind either the assessee or the Revenue and appeal is provided only against the regular assessment.
In our view, the contention of the learned counsel for the petitioner is correct and the provisional assessment will stand only till such time as the regular assessment is made or could validly have been made. If this view is not accepted, it will lead to strange consequences. For instance, even where a regular assessment is made at a figure which is lower than that in the provisional assessment, and subsequently the regular assessment is set aside for some reason, the demand on account of the provisional assessment would stand at a higher figure than that payable on the basis of the regular assessment. Moreover, where the provisional assessment is not followed by any regular assessment, the assessee will not be left without any statutory remedy against the provisional assessment. This would encourage the IT authorities to make an inflated provisional assessment but thereafter not follow it up with a regular assessment. We cannot accept such an anomaly.
For the above reason, the writ petition is allowed, the impugned orders dt. 30th Jan., 1978 and 8th March, 1983 are quashed and a mandamus is issued to the respondents to refund to the petitioner the amount of Rs. 32,85,964 which is the tax paid on the basis of the provisional assessment along with 12 per cent interest from the date of payment of such tax by the petitioner till the date of refund. The Department will make this refund with interest to the petitioner within two months from the date of production of a certified copy of this order before the CIT concerned.
[Citation : 255 ITR 579]