High Court Of Allahabad
Harihar Nath Agarwal (P) Family Trust vs. Asisstant Commissioner Of Income Tax & Anr.
Sections 237, 240
Asst. Year 1984-85
M. Katju & Umeshwar Pandey, JJ.
Civil Misc. Writ Petn. No. 483 of 1994
22nd September, 2003
Counsel Appeared
V. Gulati, for the Petitioner : S. Srivastava, for the Respondent
JUDGMENT
M. KATJU, J. :
This writ petition has been filed for a mandamus directing the respondents to refund a sum of Rs. 3,23,226 with interest from 1st April, 1986, till the date of actual refund in relation to the asst. yr. 1984-85. Heard learned counsel for the parties.
The petitioner was assessed in the status of AOP and tax was charged at the maximum marginal rate under the IT Act. True copy of the assessment order is Annexure 1 to the writ petition. Against this order the petitioner filed an appeal which was allowed by the CIT(A) which set aside the order of the ITO and directed him to pass a fresh order. True copy of the order of the CIT(A), is Annexure 2 to the writ petition. Against this order the Department filed an appeal before the Tribunal which dismissed the appeal. True copy of the order of the Tribunal is Annexure 3 to the writ petition.
It is alleged in para. 4 of the writ petition that in pursuance of the order of the CIT(A) dt. 21st March, 1988 the ITO was required to pass a fresh order within two years from the date of the order of the CIT(A), but the ITO did not pass any such order, and hence the assessment has become time-barred.
The petitioner wrote a letter dt. 17th Jan., 1994, to the Asstt. CIT (Inv.) Circle II, Agra that since the assessment proceedings have become time-barred on 31st March, 1990, hence the tax deposited by him should be returned to him with interest. True copy of the letter is Annexure 4 to the writ petition. The petitioner sent reminders after reminders but to no avail. Hence this petition. A counter-affidavit has been filed and we have perused the same. In para. 3 of the same it is stated that the assessee originally filed return of Rs. 2,45,450 in the status of a trust. Subsequently, the return was revised declaring an income of Rs. 6,89,720 to which a sum of Rs. 6,00,000 representing the deposit in the name of M/s Ankur Trust and Ankur Co. was surrendered. Along with the revised return the assessee filed an application stating that the trust was not genuine, and the earlier return and other papers may be treated as withdrawn. During the course of assessment proceedings it was further noticed that there were deposits of Rs. 4,44,000 in the name of C.D. Trust and Rs. 3,49,100 in the name of Lord Ganesh (P) Trust and unexplained money amounting to Rs. 2,88,609 with the trust. The above amounts were added to the assessee’s income by the ITO who also disallowed the interest credited on those deposits. The ITO observed that as there was no legal trust in existence, the income actually belongs to the trustees. Accordingly he framed the assessment on protective basis in the status of AOP and charged the tax at the maximum marginal rate as the members and their shares were found to be undetermined.
The CIT(A) allowed the assessee’s appeal and directed that the income be assessed substantively and in the status claimed in the return. In further appeal the Tribunal held that the substantive assessment in the name of the real owner of the income should be assessed. It is alleged that effect has been given and relief allowed by the CIT(A) and after giving relief the remaining demand amounts to Rs. 1,84,365. True copy of the tax calculation receipt dt. 2nd March, 1993, calculated on the basis of the direction given by the CIT(A) is Annexure 1 to the counter- affidavit. In para. 7 it is alleged that the AO has not passed a fresh order after the order of the CIT(A) but he has given effect to the order of the appellate authority. A rejoinder affidavit has also been filed. In para. 3 it is stated that the assessee has never stated that the trust was not genuine or that the earlier return and other papers may be treated as withdrawn. True copy of the application dt. 27th March, 1986, filed with the revised return is Annexure 1 to the rejoinder affidavit. The finding of the ITO was that there was no legal trust in existence, but the CIT(A) has set aside the assessment order and directed the AO to recompute the income of the trust on substantive basis in the hands of the real owner of the income. A perusal of para. 5 of the order of the CIT(A) shows that he has directed : “The ITO is accordingly directed to recompute the income of the trust after considering the material.”
In view of the above observation the Tribunal rightly observed in para. 4 its order that the : “Issue of framing substantive assessment in the hands of the real owner of the income earned during the year under consideration is wide open in this case resulting in no apprehension of loss of revenue to the Department.” Since the assessment order was set aside by the CIT(A) by his order dt. 21st March, 1988, a fresh assessment could have been made latest by 31st March, 1990, vide s. 153(2A) of the IT Act but no fresh order was made by that date and hence the petitioner is right in saying that the same has become time-barred.
In Hari Nandan Agarwal (HUF) vs. ITO (1985) 49 CTR (All) 304 : (1986) 159 ITR 816 (All) a Division Bench of this Court held that where an order of assessment is set aside and the matter was restored to the ITO for passing a fresh order of assessment the assessee is entitled to get a refund of the amount deposited by him in pursuance of the assessment order. The same view was taken by a Division Bench of this Court in Purshottam Dayal Varshney & Anr. vs. CIT (1974) 94 ITR 187 (All) in which it was held that in view of s. 240 of the IT Act if the ITO does not grant the refund within a period of six months from the date of appellate order the Central Government shall pay to the assessee simple interest at certain rate per annum on the amount of refund from the date immediately following the expiry of the period of six months to the date on which the refund is granted. The period of six months should be calculated from the date of the appellate order setting aside the assessment and not from the date on which the ITO makes a fresh assessment. Following the aforesaid decisions this petition is allowed. A mandamus as prayed for is granted. The respondent shall refund the amount prayed for with interest at 12 per cent per annum from the date of deposit till the date of refund. This refund must be made within two months from today.
[Citation : 264 ITR 612]
