SAURASHTRA CEMENT AND CHEMICAL INDSUTRIES LTD. VS INCOME-TAX OFFICER, 1993 PTD-GUJARAT-HIGH-COURT-INDIA 392 (1992)

(a) Income-tax---

----Refund---Assessment---Provisional assessment---Self-assessment---Advance tax---Regular assessment becoming time-barred or annulled---Entire amount of income-tax which is chargeable and is collected as advance paid in provisional assessment or self-assessment or as advance tax on tax deducted at source cannot be refunded---Indian Income Tax Act, 1961, Ss.4, 139, 140A, 143, 199, 219, 237 & 240.

In sections 199 and 219, there is a provision for giving credit for the amounts deducted at source or paid as advance tax. It cannot be said that the tax has been levied and collected without the authority of law and in violation of Article 265 of the Constitution of India when it is collected by way of deduction at source or as advance tax. Advance tax is one of the modes of collection of tax which is recognised even in the charging section, and cannot be described as a "loan" which has distinct and different characteristics.

On the filing of returns under section 139, the provisions of self assessment contained in section 140-A come into operation and it becomes obligatory on the part of the assessee to discharge his liability which has arisen to pay the tax together with the interest that may be payable for late furnishing of returns. The tax payable on the basis of the returns filed by the assessee is treated as "assessed tax". It is not at all made dependent on any regular assessment being made though, in the event of regular assessment, the amount paid under subsection (1) of section 140-A is deemed to have been paid towards the regular assessment. Therefore, by no stretch of imagination, can the tax paid and collected under section 140-A be described as a mere ad hoc or interim payment which can be said to fail in the absence of a regular assessment. The procedure of assessment by the Income-tax Officer is essentially to check the computation of total income done by the assessee and to find out whether the computation made is correct or not. Where the return has been accepted by the Income-tax Officer who may not assess the total income, it cannot be said that the liability to pay the tax under the Act on the basis of the admitted total income as reflected from the returns would vanish. Even in the provisions of section 143 as they stood prior to April 1, 1989, the idea behind the assessment, which was required to be made under subsection (1)(a) of section 143, was to determine the sum payable by the assessee or refundable to him on the basis of such assessment. Therefore, where the Assessing Officer did not find it necessary to make any assessment since no adjustments to the income or loss declared of the nature referred to in clause (a) of subsection (1) were necessary to be made and, therefore, there was no question of determining the sum payable by the assessee or refundable to him as a consequence of which the return as filed stood accepted, it cannot be said that not making of assessment even in such cases entailed any consequence of refund of the entire tax which was, admittedly, payable on the basis of the return filed by the assessee. The fact that the Assessing Officer, when not accepting the correctness of the revised returns, has power to check the computation of income and examine the correctness of the total income declared therein, cannot nullify the validity of the tax levied and collected on the basis of the return filed by the assessee.

Though a period is prescribed for making a claim for refund under Chapter XIX, no period is prescribed for exercise of power by the Income-tax Officer for deciding the question of refund. It would also appear that the decision by the Income-tax Officer under section 141-A on the question of refund by making a provisional assessment would not bar a person from making a claim under section 237 and claiming refund by satisfying the Officer that the amount paid by him exceeded the amount with which he was properly chargeable under the Act for the relevant year. An order which was made under section 237 of the Act is appealable under section 246. Thus, even where a regular assessment is not made by virtue of lapse of time as prescribed by section 153 of the Act, a person who may have been granted refund on provisional assessment under section 141-A, though not entitled to appeal, can still claim under section 237 of the Act that the tax paid by him exceeds the amount with which he is properly chargeable under the Act though such a claim has to be made within the time prescribed under section 239(2) in the form prescribed or may be contained in a revised return filed under section 139(5). Section 240, even as it stood before the addition of the

proviso, made the refund of any amount becoming due as a result of an order passed in appeal or other proceeding under the Act subject to other provisions in the Act. This is reflected from the phrase "except as otherwise provided in this Act". There is no indication in section 240 as it stood prior to the addition of the proviso that the entire, amount of tax which was properly chargeable under the Act was required to be refunded. If such an. interpretation is given to section 240, it would directly be in conflict with the provisions of section 237 which envisage that only the amount which was in excess of the tax which was properly chargeable under the Act was required to be refunded. The question of refund may arise by virtue of a claim being made or as a result of an order passed in appeal or other such proceedings under the Act. It can never be the intention of the Legislature to allow a refund of the amount of tax which is properly chargeable and is payable even as per the return of the assessee. New facts may come to knowledge after the filing of the return which may justify refund of tax. If that be so, there are ample provisions for filing revised returns within the time prescribed and raising the claim for refund within the period prescribed under Chapter XIX in which event the Income-tax Officer can go into all the relevant facts and find out whether excess tax has been paid as claimed. This he can do even if the period prescribed for assessment under section 143 has expired under the provisions of section 153. An enquiry into the question of such refund under Chapter XIX by the Income-tax Officer for arriving at his satisfaction as to whether the excess amount was paid is independent of the function that he discharges while making regular assessment under section 143(3). Even though the regular assessment may have become time-barred, it will not come in the way of his deciding the question of refund under Chapter XIX if the claim is made within the period prescribed and there is no period prescribed for deciding such claim for refund. Therefore, a person is not left without any remedy when the regular assessment is not made and if he feels that he is entitled to refund, he has to be vigilant and claim the refund in accordance with the provisions of the Act.

Hence, on the failure of a regular assessment being made within the time prescribed or in the event of annulment of an assessment order pursuant to which any further demand is required to be made under section 156, no consequence of refund of the entire tax collected on the total income shown in the returns filed by the assessee can ensue and such tax which is collected on the basis of the return filed by the assessee remains a valid and legal recovery in accordance with the provisions of the Act and there is no question of any violation of Article 265 of the Constitution of India in respect of tax so recovered on the basis of the total income shown by the assessee in his return. There is no warrant for holding that the entire amount of income-tax, which is properly chargeable under the Act and is collected by the Department in y accordance with the provisions of the Act should be refunded on the failure to make a regular assessment.

(b) Income-tax---

----Charge of tax---Liability to pay tax arises on determination of rates of tax-- Indian Income Tax Act, 1961, S.4---[Deep Chand Jan v. I.T.O. (1984) 145 ITR 676 (P & H) dissented from].

Subsection (1) of section 4 of the Indian Income Tax Act, 1961, provides that, where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at the rate or those rates shall be charged for that year in accordance with and subject to the provisions of the said Act in respect of the total income of the previous year. It is further provided in subsection (2) that, in respect of income chargeable under subsection (1), income-tax shall be deducted at source or paid in advance, where it is so deductible or payable under any provision of the Act. The provisions relating to advance tax, deduction of tax at source, provisional assessment and self-assessment make it clear that where returns are filed under section 139 on the basis of which tax is payable, the assessee is made liable to pay such tax together with interest payable for any delay in furnishing the return or any default or delay in payment of advance tax. The scheme of the Act, therefore, clearly indicates that liability to pay income-tax chargeable under section 4(1) of the Act does not depend upon the assessment being made by the Income-tax Officer but depends on the enactment by any Central Act prescribing rate or rates for any assessment year. Thus, as soon as the rates are prescribed by the appropriate legislation, the liability to pay tax arises on the total income, which is to be computed by the assessee in accordance with the provisions of the Act, if it exceeded the maximum amount not chargeable to tax.

Deep Chand Jan v. ITO (1984) 145 ITR 676 (P&H) dissented from.

Assistant Collector of Central Excise v. National Tobacco Co. of India Ltd. AIR 1972 SC 2563; Baroda Board and Paper Mills Ltd. v. ITO (1976) 102 ITR 153 (Guj.); Boga (RA.) v. AAC of I.T. (1977) 110 ITR 1 (P&H) Burmah Shell Refineries Ltd. v. G.B. Chand, ITO (1966) 61 ITR 493 (Bom.); CIT v. Harprasad & Co. P. Ltd. (1975) 99 ITR 118 (SC); CIT v. Nagri Mills Ltd. (1987) 166 ITR 292 (Guj); CTT v. Srinivasa Setty (B.C.) (1981) 128 ITR 294 (SC); Dwarka Dass (L.) v. ITO (1956) 29 ITR 60 (All.).; Gadgil (S.S.) v. LAI 8. Co. (1964) 53 ITR 231(SC); Gopal Ramnarayan (R.) v. Third ITO (1980) 126 ITR 369 (Kar.); Grantha Mandir v. CIT (1988) 172 ITR 287 (Orissa); Hansa Agencies (Pvt.) Ltd. v. CIT (1988) 169 TTR 322 (P&H); Jagannath Rameshwar Prasad v. ITO (1974) 93 ITR 16 (All.); Jaipur Udyog Ltd. v. CTT (1969) 71 ITR 799 (SC); Lakshminarayana (G.) v. CTO (1974) 33 STC 558 (AP); Leader Valves (Pvt.) Ltd. v. CIT (1987) 167 ITR 542 (P&H); Manmohanlal v. ITO (1987) 168 ITR 616 (SC); Nalinikant Ambalal Mody v. SA.L. Narayan Row, CIT (1966) 61 ITR 428 (SC); Parikh (M.M.), ITO v. Navanagar Transport and Industries Ltd. (1967) 63 ITR 663 (SC); Purshottam Daval Varshney v. CIT (1974) 94 ITR 187 (All.); Purshottamdas Thakurdas v. CIT (1963) 48 ITR 206 (SC); Rajratna Naranbhai Mills Co. Ltd. v. STO (1991) 189 ITR 90; 71 Comp. Cas. 149; 81 STC 233 (SC); Rayalseema Constructions v. Deputy CTO (1959) 10 STC 345 (Mad.); Salonah Tea Co. Ltd. v. Superintendent of Taxes (1988) 173 ITR 42 (SC) and Siemens India Ltd. v. K. Subramanian, ITO (1983) 143 ITR 120 (Bom.) ref.

J.M. Thakore, Advocate-General and K.H. Kaji for the Petitioner (in S.CA. No.6656 of 1987).

K.H. Kaji for Petitioner (in S.CA. No.5944 of 1987).

J.P. Shah for Petitioner (in S.CA. No.1638 of 1980).

K.C: Patel for Petitioner (in S.CA. No.7835 of 1988).

Mihir J. Thakore instructed by M.R. Bhatt for R.P. Bhatt & Co. for Respondents.

JUDGMENT

R.K. ABICHANDANI, J.---This group of writ petitions raise a common question as to whether the assessee, in whose case provisional assessment for the purpose of refund is made under section 141A of the Income Tax Act, 1961 (hereinafter referred to as "the said Act"), or who has paid advance tax-and/or self-assessment tax, is entitled to refund of the entire tax amount paid by him if, for any reason, the regular assessment becomes time-barred or is annulled. The Division Bench which was seized of these matters found that the question arising in these matters had a far-reaching effect and, therefore, these matters have been referred to the Full Bench. Since the petitions involve a common question, they have been heard together and are being disposed of by this common judgment.

Before dealing with the legal contentions raised in these matters, the facts of each of these petitions may briefly be set out as under:

Special Civil Application No.6656 of 1987:

The petitioner, Saurashtra Cement and Chemical Industries Ltd., filed a return of income for the assessment year 1980-81, on June 12,1980, declaring a total income of Rs.88,15,660. The petitioner had paid tax by way of advance tax and/or tax deducted at source to the tune of Rs.52,40,000. On an application made by the petitioner for making a provisional assessment under section 141A of the said Act, the Income-tax Officer, Jamnagar, passed ail order under section 141A on September 23, 1980, at Annexure `A' to the petition and worked out the tax payable on the returned income at Rs.52,12,221, ordering refund of the excess tax of Rs.27,779, which figure was subsequently rectified to Rs.29,687 by an order dated December 12, 1980, passed by the Income-tax Officer and that amount was refund to the petitioner. On February 22, 1983, a revised return was filed by the petitioner for the said year showing total income at Rs.74,15,660 as against Rs.88,15,660 disclosed in the original return. The difference of Rs.14,00,000 in the total income disclosed in the revised return was alleged to be on account of trading loss alleged to have been suffered by the petitioner due to embezzlement and, according to the petitioner, the refund due under section 141A would have come to Rs.8,26,336. Thereafter, a draft assessment order was prepared and forwarded by the Income-tax Officer to the Inspecting Assistant Commissioner, Central Range-II, Ahmedabad, who gave directions under section 144B of the said Act, which were received by the Income-tax Officer on June 15, 1984. Thereafter, the Income-tax Officer passed the assessment order on June 29,1984, assessing the total income of the petitioner at Rs.90,33,160 and after adjusting the tax already paid against the total tax amount of Rs.53,40,814, issued demand for the balance amount of Rs.1,30,077. The petitioner preferred an appeal before the Commissioner of Income-tax (Appeal), who upheld the assessment made by the Income-tax Officer under section 143(3) read with section 144B of the said Act. Thereafter, the petitioner-assessee preferred an appeal before the Income-tax Appellate Tribunal ("the Tribunal" for short) contending that the assessment order, dated June 29, 1984, was beyond time as the revised return was filed on February 22,1983, and the Inspecting Assistant Commissioner had concurrent jurisdiction in the matter. The Tribunal, upholding the said contentions by its order dated March 17,1987, at Annexure `B' to the petition, annulled the order passed by the Income-tax Officer as having been passed beyond the prescribed time. Thereafter, the Income-tax Officer issued a further refund order for Rs.1,76,783 by his order dated April 21, 1987, which was the amount of tax paid by the petitioner, on the basis of the assessment order dated June 29, 1984. The petitioner, thereafter, filed a miscellaneous application before the Tribunal contending that in view of the fact that the assessment order was annulled, directions should be issued to the Income-tax Officer to refund the entire tax collected by the Department by way of deduction at source and advance tax That application was rejected by the Tribunal on October 27, 1987, by order at Annexure `A' to the petition. The petitioner has prayed for a writ of mandamus or any other appropriate writ, order or direction for getting refund of a sum of Rs.52,12,221 with interest at the rate of 15% till the date of the actual refund of that amount and, in the alternative, has prayed for refund of Rs.8,27,751 on the basis of the revised return filed by it.

Special Civil Application No. 5944 of 1987.

In this matter, the petitioner, who carries on business in the manufacture of woollen and blended fabrics, filed a return of total income of Rs.1,07,66,520 for the assessment year 1981-82, on July 27, 1981, and on the petitioner's making an application under section 141A of the said Act, the Income-tax Officer on August 20, 1981, made a provisional assessment granting refund of Rs.34,72,101. Thereafter, on March 17, 1984, the Income-tax Officer made a draft assessment order under section 144B of the Act and forwarded the same to the Inspecting Assistant Commissioner who, by his order, dated September 18, 1984, gave instructions pursuant to which the Income-tax Officer passed the assessment order on September 19, 1984, assessing total income of the petitioner at Rs.1,38,85,270. On appeal to the Commissioner of Income-tax, certain disallowances made by the Income-tax Officer were upheld and the appeal was dismissed. Thereafter, the Tribunal, on further appeal, by its order dated September 15, 1987, upholding the assessee's contention that the assessment order dated September 19, 1984, was passed beyond time and, therefore, was void, annulled the said order on January 15, 1987. The Tribunal held that the provisions of section 144B of the Act were not applicable in the instant case since the Commissioner of Income tax (Central) had directed that the Inspecting Assistant Commissioner shall perform concurrently all the functions of the Income-tax Officer under the said Act. Thereafter, by his order dated February 25, 1987, the Income-tax Officer gave effect to the Tribunal's order by giving refund only of the demand which was raised. According to the assessee, the entire tax amount which was paid by it ought to have been refunded since the assessment order was annulled. Thereafter, the Tribunal, by its order dated July 22, 1987, rejected the miscellaneous application filed by the petitioner seeking a clarification and direction for refund of the entire amount of tax collected by the Department. The Tribunal held that there was no justification for modifying the earlier order and, if the Income-tax Officer did not grant refund in accordance with the provisions of section 240 of the said Act, the remedy lay elsewhere and not by making such application before the Tribunal, meaning thereby that such an order of the Income-tax Officer was appealable. The petitioner has prayed for a refund of Rs.63,41,906 with interest at 15% per annum on the basis of the order of the Tribunal.

Special Civil Application No.1638 of 1980 :

In this matter, for the assessment year 1973-74, the petitioner filed a return on August 14, 1973, declaring a total income of Rs.30,169. The petitioner had paid advance tax of Rs.3,635 and self-assessment tax under section 140A of Rs.3,663. According to the petitioner, the regular assessment order ought to have been passed in view of the time limit prescribed by section 153 within two years, i.e. before March 31, 1976, but the Income-tax Officer did not take any proceedings. However, he issued notice under section 148 read with section 147(b) on March 29, 1976, requiring the petitioner to deliver the return within 30 days on the ground that the income had escaped assessment. It appears that, thereafter the writ petition filed by the petitioner was rejected and the petitioner submitted another- return in response to that notice. The petitioner requested the Income-tax Officer to drop the proceedings on the ground that the notice was invalid. Eventually, the Income tax Officer passed an assessment order on August 8, 1977, and demand notice was issued under section 143(3) for Rs.10,704. Thereafter, the Appellate Assistant Commissioner, by his order, dated January 11, 1979, held that the notice under section 147(a) and the proceedings pursuant thereto were invalid and annulled the assessment order made on August 8, 1977. Thereafter, the petitioner applied for refund of the advance tax and the tax paid on self- assessment. The Income-tax Officer passed an order on August 27, 1979, issuing a refund order for the tax paid by the petitioner other than payment under section 140A and the advance tax. The petitioner seeks relief for getting refund of the advance tax and the tax paid on self-assessment under section 140A of the Act.

Special Civil Application No. 7835 of 1988:

In this matter, for the assessment year 1984-85, the petitioner had applied for extension of time for filing his return up to September 30, 1984, and on July 31, 1984, the petitioner filed a return of income showing total income of Rs.66,63,487. According to the petitioner, during the previous year ending on March 31, 1984, the petitioner had won the first prize in the Sikkim Super Lottery of Rs.40 lakh and had received Rs.32,37,671 from the Directorate of Lotteries, Sikkim. According to the petitioner, he had paid a sum of Rs.5,96,000 on June 25, 1984, in accordance with section 140A of the Act. Before furnishing the return, advance tax to the tune of Rs.14,061 was also paid by June 25, 1984. The Income-tax Officer issued a notice under section 143(2) on August 19, 1985, requiring the petitioner to attend the office on September 13, 1985, and October 17, 1985. However, no order came to be passed under section 143(3) of the Act. Since the assessment order was not passed within two years from the end of the assessment year, according to the petitioner, the assessment became barred by limitation and the petitioner wrote a letter dated January 19, 1988, to that effect to the Income-tax Officer and thereafter claimed refund of the entire tax collected by the Department.

According to the petitioner, the tax amount is retained by the Department without the authority of law since the final assessment was not made and thereafter, the entire amount aggregating to Rs.10,99,935 should be paid back to the petitioner. At the hearing of the petition, it was, however, submitted that the petitioner was not claiming Rs.10,99.931 but was claiming Rs.7,40,843 after reducing the amount which was recovered by the Sikkim Government under the Sikkim Government Income-tax Rules.

Mr. J.M. Thakore, the learned Advocate-General appearing for the petitioner in Special Civil Application No.6656 of 1987, contended that no liability to pay the tax crystallised in the instant case nor was it quantified since a regular assessment was not made under the provisions of the Act. He submitted that payments by way of advance tax or tax deducted at source or even, for that matter, the tax paid by way of self-assessment were all ad hoc payments which were ultimately to be adjusted when the regular assessment was made under section 143 by the Income-tax Officer. He submitted that, even though liability to tax arises under section 4, no liability to pay the tax can arise until the regular assessment is made. When the regular assessment cannot be made by virtue of its having become time-barred, the charge itself would fail since the tax payable cannot be quantified or determined and no recovery can be made when regular assessment cannot be made in accordance with law and the payability of tax cannot be determined and, therefore, the ad hoc recoveries made pending the regular assessment cannot be adjusted towards such regular assessment as required by the provisions of law, the necessary corollary should be to refund the entire tax collected by the Department by way of advance tax or tax deducted at source or self assessment, as the case may be. He submitted that the tax collected by way of provisional assessment under section 141 or by way of self-assessment under section 140A or the advance tax and the tax deducted at source would all be analogous to an interim order which cannot be sustained if a final order cannot be made. He submitted that the process of collection of tax in these modes pending regular assessment would become abortive on the impossibility of making a regular assessment due to lapse of time. He, therefore, submitted that any retention of such amount collected towards the tax which could not be ultimately determined would violate the provisions of Article 265 of the Constitution of India since such a recovery would become a levy and collection of tax without the authority of law. He, therefore, submitted that the entire amount of tax collected by the Department ought to be refunded to the assessee in such cases. He also submitted that the provisions of section 237 of the Act were not applicable in the case of a person who has filed returns but would apply to cases where returns have not been filed. The other counsel appearing in other matters, Mr. K.H. Kaji, Mr. J.P. Shah and Mr. K.C. Patel, adopted the arguments canvassed by Mr. J.M. Thakore. Mr. Kaji added that, if the computation machinery fails, the charge itself fails and that the charge and computation must go together. He submitted that the charge under section 4 of the Act is to be worked out by computation and assessment to be made by the Income-tax Officer. Mr. J.P. Shah added that, wherever there is no assessment, it is a case of escaped assessment attracting section 147 and submitted that a case of time-barred assessment was also a case of escaped assessment because, despite payment of advance tax on income, that income which ought to have been assessed did not come to be assessed and such case would fall under section 147 subject to the conditions being fulfilled. Mr. K.C. Patel, however, submitted that, in the case of his petitioner, there was no attempt made to reopen the assessment and there were no chances of revival of demand. He submitted that, even according to the communication received by the assessee from the Income-tax Officer; the regular assessment was time-barred.

Mr. M.J. Thakore, appearing for the Department, contended that, in view of the definition of total income in section 2(45), computation can be done even by the assessee when he files the return of income in which the total income has to be mentioned. He submitted that the provisions pertaining to computation of income are to be kept in mind when the return is filed by the assessee who works out the total income as mentioned in the form prescribed while filing the return under section 139 of the Act. He submitted that the tax payable becomes crystallised on the last day of the financial year and assessment is nothing but a procedure to recover the tax which has already become due and payable as per rates which are made applicable for the relevant year. He submitted that, what is contemplated by the Act is computation of income to be first done by the assessee and thereafter to be checked by the Assessing Officer. He submitted that there was no warrant for the contention that the Assessing Officer can alone compute the income. He submitted that taxability is not dependent on the regular assessment. He submitted that only such amount as was paid in excess or which was not payable according to law was required to be refunded under the scheme of the Act and the tax which was payable and collected by the Department which was not wrongly recovered or was not an excess recovery was not required to be refunded even if a regular assessment was not made. Mr. Thakore also argued that the draft assessment order should be considered as final assessment order when the final assessment order was not passed within the time prescribed by section 153. He finally contended that a writ of mandamus should not be issued in favour of the persons who were otherwise liable to pay tax in accordance with law for refund of the tax amount which was payable under the Act and duly collected by them.

For appreciating the rival contentions raised in these matters, it would be appropriate to refer to the relevant provisions of the Act and their effect. Under section 23B of the Indian Income-tax Act, 1922, power was given to the Income-tax Officer Jo make a provisional assessment in advance of regular assessment at any time after the receipt of a return filed under section 22 by proceeding in a summary manner. Such assessment was to be made on the basis of the return and the accounts and documents, if any, accompanying it According to the petitioner, the tax amount is retained by the Department without the authority of law since the final assessment was not made and thereafter, the entire amount aggregating to Rs.10,99,935 should be paid back to the petitioner. At the hearing of the petition, it was, however, submitted that the petitioner was not claiming Rs.10,99,931 but was claiming Rs.7,40,843 after reducing the amount which was recovered by the Sikkim Government under the Sikkim Government Income-tax Rules.

Mr. J.M. Thakore, the learned Advocate-General appearing for the petitioner in Special Civil Application No.6656 of 1987, contended that no liability to pay the tax crystallised in the instant case nor was it quantified since a regular assessment was not made under the provisions of the Act. He submitted that payments by way of advance tax or tax deducted at source or even, for that matter, the tax paid by way of self-assessment were all ad hoc payments which were ultimately to be adjusted when the regular assessment was made under section 143 by the Income-tax Officer. He submitted that, even though liability to tax arises under section 4, no liability to pay the tax can arise until the regular assessment is made. When the regular assessment cannot be made by virtue of its having become time-barred, the charge itself would fail since the tax payable cannot be quantified or determined and no recovery can be made when regular assessment cannot be made in accordance with law and the payability of tax cannot be determined and, therefore, the ad hoc recoveries made pending the regular assessment cannot be adjusted towards such regular assessment as required by the provisions of law, the necessary corollary should be to refund the entire tax collected by the Department by way of advance tax or tax deducted at source or self assessment, as the case may be. He submitted that the tax collected by way of provisional assessment under section 141 or by way of self-assessment under section 140A or the advance tax and the tax deducted at source would all be analogous to an interim order, which cannot be sustained if a final order cannot be made. He submitted that the process of collection of tax in these modes pending regular assessment would become abortive on the impossibility of making a regular assessment due to lapse of time. He, therefore, submitted that any retention of such amount collected towards the tax which could not be ultimately determined would violate the provisions of Article 265 of the Constitution of India since such a recovery would become a levy and collection of tax without the authority of law. He, therefore, submitted that the entire amount of tax collected by the Department ought to be refunded to the assessee in such cases. He also submitted that the provisions of section 237 of the Act were not applicable in the case of a person who has filed returns but would apply to cases where returns have not been filed. The other counsel appearing in other matters, Mr. K.H. Kaji, Mr. J.P. Shah and Mr. K.C. Patel, adopted the arguments canvassed by Mr. J.M. Thakore. Mr. Kaji added that, if the computation machinery fails, the charge itself fails and that the charge and computation must go together. He submitted that the charge under section 4 of the Act is to be worked out by computation and assessment to be made by the Income-tax Officer. Mr. J.P. Shah added that, wherever there is no assessment, it is a case of escaped assessment attracting section 147 and submitted that a case of time-barred assessment was also a case of escaped assessment because, despite payment of advance tax on income, that income which ought to have been assessed did not come to be assessed and such case would fall under section 147 subject to the conditions being fulfilled. Mr. K.C. Patel, however, submitted that, in the case of his petitioner, there was no attempt made to reopen the assessment and there were no chances of revival of demand. He submitted that, even according to the communication received by the assessee from the Income-tax Officer; the regular assessment was time-barred.

Mr. M.J. Thakore, appearing for the Department, contended that, in view of the definition of total income in section 2(45), computation can be done even by the assessee when he files the return of income in which the total income has to be mentioned. He submitted that the provisions pertaining to computation of income are to be kept in mind when the return is filed by the assessee who works out the total income are mentioned in the form prescribed while filing the return under section 139 of the Act. He submitted that the tax payable becomes crystallised on the last day oaf the financial year and assessment is nothing but a procedure to recover the tax which has already become due and payable as per rates which are made applicable for the relevant year. He submitted that, what is contemplated by the Act is computation of income to be first done by the assessee and thereafter to be checked by the Assessing Officer. He submitted that there was no warrant for the contention that the Assessing Officer can alone compute the income. He submitted that taxability is not dependent on the regular assessment. He submitted that only such amount as was paid in excess or which was not payable according to law was required to be refunded under the scheme of the Act and the tax which was payable and collected by the Department which was not wrongly recovered or was not an excess recovery was not required to be refunded even if a regular assessment was not made. Mr. Thakore also argued that the draft assessment order should be considered as final assessment order when the final assessment order was not passed within the time prescribed by section 153. He finally contended that a writ of mandamus should not be issued in favour of the persons who were otherwise liable to pay tax in accordance with law for refund of the tax amount which was payable under the Act and duly collected by them.

For appreciating the rival contentions raised in these matters, it would be appropriate to refer to the relevant provisions of the Act and their effect. Under section 23B of the Indian Income-tax Act, 1922, power was given to the Income-tax Officer to make a provisional assessment in advance of regular assessment at any time after the receipt of a return filed under section 22 by proceeding in a summary manner. Such assessment was to be made on the basis of the return and the accounts and documents, if any, accompanying it after giving due effect to the allowance referred to in paragraph (b) of the proviso to clause (vi) of subsection (2) of section 10 and any loss carried forward under section 24(2) of that Act after a regular assessment. Such amount paid towards provisional assessment was deemed to have been paid towards regular assessment. Similar provisions were effect from April 1, 19 71. Under subsection (5) of section 141, it was also provided that, where the amount paid or deemed to have been paid towards the provisional assessment exceeded the amount payable under the regular assessment, the excess was required to be refunded to the assessee. Any tax deducted at source under sections 192 to 195 or paid in advance under sections 207 to 212 was deemed to have been paid towards the provisional assessment in view of section 234 as it stood at that time and credit for the same was given to the assessee in the provisional assessment. Section 141A, having a bearing on provisional assessment for refund, was inserted by the Finance Act, 1968, with effect from April 1, 1968, and subsection (1) was substituted with effect from April 1, 1976, by the Taxation Laws (Amendment) Act, 1975. Under the said provision, where the assessee claimed that the tax paid or deemed to have been paid under Chapter XVII-B or Chapter XVII-C exceeded the tax payable on the basis of the return and the accounts and documents accompanying it, the Income-tax Officer, where he was of the opinion that the regular assessment was likely to be delayed, was empowered to make a provisional assessment of the sum refundable to the assessee in a summary manner after making adjustments as provided therein. In cases where the regular assessment was not made within six months from the date of receipt of the return, the Income-tax Officer was required to make a provisional assessment under subsection (1) as substituted with effect from April 1, 1976. In making the provisional assessment for refund under subsection (1) of section 141A, the Income-tax Officer was required to make adjustments as provided in subsection (2), which inter alia, include disallowance of any deduction, allowance or relevant claim in the return which on the basis of information available in such return, accounts and documents accompanying it, is prima facie inadmissible. In view of subsection (6) of section 141A, there was no right of appeal against a provisional assessment made for refund under subsection (1). It would, however, be seen that apart from the provisional assessment, for refund under section 141A (now omitted with effect from 1-4-1989, the question of refund may also arise under section 237 of the said Act which provides that, if any person satisfies the Income-tax Officer that the amount of tax paid by him or on his behalf or treated as paid by him or on his behalf, for any assessment year exceeds the amount with which he is properly chargeable under this. Act for that year, he shall be entitled to a refund of the excess. Section 239(2) prescribes the period within which a claim for refund under Chapter XIX can be made by a person and sub-clause (c) lays down that the claim in respect of any income which is assessable for any assessment year other than those covered in clauses (a) and (b), namely, before April 1, 1967, and the assessment year commencing on April 1, 1968, respectively, cannot be allowed unless it is made within two years from the last day of the assessment year. It will thus be seen that though a period is prescribed for making a claim for refund under Chapter XIX, no period is prescribed for exercise of power by the Income-tax Officer for deciding the question of refund. It also would appear that the decision by the Income-tax Officer under section 141A on the question of refund by making a provisional assessment would not bar a person from making a claim under section 237 and claiming refund by satisfying the officer that the amount paid by him exceeded the amount with which he was properly chargeable under the Act for the relevant year. Therefore, when a claim is made within the period prescribed under section 239(2) for refund, the Income-tax Officer can decide the question as to whether (he person concerned had paid any amount which was in excess of the tax which was properly chargeable under the Act and such an enquiry can result only either in the upholding of the claim for refund of excess if it is shown that the amount paid exceeded the tax with which he was properly chargeable or rejection of such claim if he does not establish that fact, but it cannot give rise to any liability to pay further amounts as tax. In other words, the satisfaction of the Income-tax Officer contemplated by section 237 would only be in respect of ascertaining whether the person concerned had paid any amount in excess of tax that was properly chargeable. A claim for refund is required to be made in a prescribed form and verified in the prescribed manner as provided in subsection (1) of section 239 and such form is prescribed by rule 41 of the Income-tax Rules. It would, however, appear to us that even when a revised return is filed under section 139(5) of the Act raising a claim to refund, it should be treated as a claim made in the prescribed form for the purpose of section 239(2) because even the revised return is required to contain all the particulars and verification as are prescribed in the form prescribed under rule 41 of the Rules. An order which is made under section 237 of the Act is appealable under section 246. Thus, even where a regular assessment is not made by virtue of lapse of time as prescribed by section 153 of the Act, a person who may have been granted refund on provisional assessment under section 141A, though not entitled to appeal, can still claim under section 237 of the Act that the tax paid by him exceeds the amount with which he is properly chargeable under the Act though such a claim has to be made within the time prescribed under section 3.39(2) in the form prescribed or may be contained in a revised return filed under section 139(5).

It was, however, contended on behalf of the petitioners that, where refund for any amount became due to the assessee as a result of any order passed in appeal or other proceeding under the Act, the Income-tax Officer was bound to refund the entire amount collected as tax to the assessee without his having to make any claim in that behalf under section 240 as it stood before the addition of a proviso to it with effect from April 1, 1989, which, inter alia, provided that, where the assessment is annulled, the refund shall become due only of the amount, if any, of the tax paid is in excess of the tax chargeable on the total income returned by the assessee. It was contended on behalf of the petitioners that the provision to section 240 could not be given any retrospective effect and it indicated that the refund was confined to the excess of tax chargeable only after the date when the proviso came into force. It, however, appears to us that section 240, even as it stood before the addition of the proviso, made the refund of any amount becoming due as a result of an order passed in appeal or other proceeding under the Act, subject to other provisions in the Act. This is reflected from the phrase "except as otherwise provided in this Act". There is no indication in section 240 as it stood prior to the addition of the proviso that the entire amount of tax which was properly chargeable under the Act was required to be refunded. If such an interpretation is given to section 240, it would directly be in conflict with the provisions of section 237 which envisage that only the amount which was in excess of the tax which was properly chargeable under the Act was required to be refunded. It is, therefore, clear that the provision contained in clause (b) of the proviso to section 240 only makes explicit what was always implicit namely, to refund the amount which exceeds the tax which was properly chargeable under the Act. We are, therefore, firmly of the view that what is refundable under Chapter XIX is only the amount which is paid in excess of the tax properly chargeable under the Act and there can never be any question of refunding the tax which is properly chargeable even according to the assessee as per his return or the revised return, as the case may be. Even while deciding the question of refund consequential to an order passed in appeal or other proceeding under section 240, the Income-tax Officer has to bear in mind the mandate contained in section 237 of the Act to find out as to what is the excess amount which is required to be refunded. There is no justification for confining the provisions of section be spelt out from the provisions of section 237 which are of general nature giving guidance to the Income-tax Officer as to what should be refunded whenever such question arises before him. The question of refund may arise by virtue of a claim being made or as a result of an order passed in appeal or other such proceedings under the Act. It can never be the intention of the Legislature to allow a refund of the amount of tax which is properly chargeable and is payable even as per the return of the assessee. It was submitted that new facts may come to knowledge after the filing of the return which may justify refund of tax. If that be so, there are ample provisions for filing revised returns within the time prescribed and raising the claim for refund within the period prescribed under Chapter XIX in which event the Income-tax Officer can go into all the relevant facts and find out whether excess tax has been paid as claimed. This he can do even if the period prescribed for assessment under section 143 has expired under the provisions of section 153. An enquiry into the question of such refund under Chapter XIX by the Income-tax Officer for arriving at his satisfaction as to whether the excess amount was paid is independent of the function that he discharges for regular assessment under section 143(3). Even though the regular assessment may have been time -barred, it will not come in the way of his deciding the question of refund under Chapter XIX if the claim is made within the period prescribed and there is no period prescribed for deciding such claim for refund. Therefore, a person is not left without any remedy when the regular assessment is not made and if he feels that he is entitled to refund, he has to be vigilant to claim the refund in accordance with the provisions of the said Act.

We may now turn our attention to the contention that the charge itself fails if there is no computation of total income by the Assessing Officer and; when the charge fails in that manner, the tax cannot be retained by the Department without violating the provisions of Article 265 of the Constitution. Subsection (1) of section 4 of the said Act provides that, where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with and subject to the provisions of the said Act in respect of the total income of the previous year. It is further provided in subsection (2) that, in respect of income chargeable under subsection (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of the Act. It will thus be seen that the charging section 4 itself provided in subsection (2) that income-tax could be deducted at source or paid in advance where it is so deductible or payable under the provisions of the Act. Chapter XVII deals with collection and recovery of tax and section 190 provides for deduction at source and advance payment. Subsection (1) of section 190 provides that, notwithstanding that the regular assessment in respect of any income is to be made in a later assessment year, the tax on such income shall be payable by deduction or collection at source or by advance payment, as the case may be, in accordance with the provisions of this Chapter and as provided in subsection (2), nothing in section 190 shall prejudice the charge of tax on such income under the provisions of subsection (1) of section 4 of the Act. Section 191 enjoins a duty on the assessee to pay income tax direct where no provision is made for deduction and where income-tax has not been deducted in accordance with the provisions of Chapter XVII. Section 199, inter alia, provides that any deduction made in accordance with the provisions enumerated therein and paid to the Central Government shall be treated as payment of tax on behalf of the person from whose income the deduction was made. Section 202 clarified that the power to recover tax by deduction was without prejudice to any other mode of recovery. Under section 205, it is provided that, where tax is deductible at the source, the assessee shall not be called upon to pay tax to the extent to which tax has been deducted from the income. As regards advance payment of tax, section 207 provides that tax shall be payable in advance during any financial year in accordance with the provisions of sections 208 to 219 in respect of the current income of the assessee. Under section 208, advance tax shall payable during a financial year in every case where the amount of such tax payable by the assessee during that year as computed in accordance with the provisions of Chapter XVII is 1,500 rupees or more. Section 209 provides for computation of advance tax. Section 210 provides for payment of advance tax by the assessee on his own accord or in pursuance of an order of the Assessing Officer, while section 211 relates to instalments of advance tax and due dates. It will, thus, be seen that elaborate provisions have been made in the Act for deduction at source and advance payment of tax. As provided in section 199, deduction of tax at source is to be treated as a payment of tax on behalf of the person from whose income the deduction was made. In the same manner, as regards advance tax, it is provided in section 219 that, advance tax paid under the relevant provisions shall be treated as payment of tax in respect of the income of the previous year for an assessment for the assessment year next following the financial year in which it was payable. In both these sections, there is a provision for giving credit for the amounts so deducted or paid as advance tax. In view of the elaborate statutory provisions in section 4 levying the charge of the tax and contemplating collection of tax by deduction at source and advance payment of tax and in Chapter XVII detailing such collection and recovery methods, it cannot be said that the tax has been levied and collected without the authority of law and in violation of Article 265 of Constitution of India when it is collected by way of deduction at source or as advance tax. Section 139 of the Act enjoins a duty on every person to furnish a return of his total income during the previous year if it exceeded the maximum amount which is not chargeable to income tax in the form and manner prescribed. On filing of the returns under section 139, the provisions of self-assessment contained in section 140-A come into play and as, inter alia, provided therein, where any tax is payable on the basis of any return required to be furnished under section 139 or section 148, after taking into account the amount of tax, if any, already paid under any provision of this Act, the assessee shall be liable to pay such tax together with interest payable under any provision of the Act for any delay in furnishing the return or for any default or delay in payment of advance tax, before furnishing the return and the return shall be accompanied by proof of payment of tax and interest. These provisions eloquently indicate that the liability to pay tax is not dependent on the regular assessment being made by the assessing officer and where returns are filed under section 139 on the basis of which tax is payable, the assessee is made liable to pay such tax together with interest payable for any delay in furnishing the return or any default or delay in payment of advance tax. In this context, we may also refer to the provisions of section 234-B pertaining to interest for defaults in payment of advance tax and more particularly to Explanation 1 which, inter alia, provides that, in the said section, "assessed tax" means for the purpose of computing the interest payable under section 140-A, the tax on the total income as declared in the return referred to in that section as reduced by the amount of tax deducted or collected at source in accordance with the provisions of Chapter XVII. It would, thus, be clear that, not only the liability to be subjected to tax arises under the charging section 4, but the liability to pay tax also arises immediately on determination of the rates of taxes with effect from the date on which such rates are made applicable and the liability to pay crystallizes in the context of such rates when the total income is computed in accordance with the provisions of the Act. On filing of the return under section 139, wherein such total income is indicated, section 140-A, providing for self-assessment, comes into operation and it becomes obligatory on the part of the assessee to discharge his liability which has arisen to pay the tax together with the interest that may be payable for late furnishing of returns. The tax payable on the basis of the returns filed by the assessee is treated as "assessed tax". It is not at all made dependent on any regular assessment being made though, in the event of regular assessment, the amount paid under subsection (1) of section 140-A is deemed to have been paid towards the regular assessment. Therefore, by no stretch of imagination, can the tax paid and collected under section 140-A be described as a mere ad hoc interim payment which can be said to fail in the absence of a regular assessment, as was sought to be contended on behalf of the petitioners. As provided in subsection (3), failure to pay tax under subsection (1) of section 140-A created a liability to pay penalty under subsection (3) as it stood prior to April 1, 1989, and the assessee is deemed to be in default under the provisions of subsection (3) as they now stand. It will also be seen that the total income in respect of which the return is required to be filed under section 139 by every person where it exceeded the maximum amount which is not chargeable to income-tax, would be the total amount of income referred to in section 5 computed in the manner laid down in the Act. Therefore, while filing the return of total income, the assessee computes the income in the manner laid down in the Act and, where any tax is payable on the basis of such return, after taking into account the amount of Tax, if any, already paid under any provision of the Ac: such as deduction at source or advance payment, the assessee is made liable to pay the remaining amount of Tax under section 140-A of the Act. In view of these specific provisions in the Act, it can never be said that tax is levied and collected without the authority of law and in violation of Article 265 of the Constitution, where the tax is paid on the basis of the returns filed by the assessee, even if regular assessment under section 143 does not take place. This is because, when the assessee files his returns under section 1.39 and pays tax under section 140-A by way of self assessment claiming allowance of the advance tax or tax deducted at source in the amount of tax payable according to him, there is clear admission of the liability that has arisen under the Act to pay the tax on the total income as is computed by the assessee and duly quantified in the return. The procedure of assessment by the Income-tax Officer is essentially to check whether the computation made is correct or not. Where the return has been accepted by the Income-tax Officer who may not assess the total income, it cannot be said that the liability to pay the tax under the Act on the basis of the admitted total income as reflected from the returns would vanish. If the proposition canvassed on behalf of the petitioners is accepted, then it would produce a startling result where though, according to the assessee, he is liable to pay the tax as per the return filed by him and has in fact paid the tax in accordance with the provisions of section 140-A of the Act and the assessing officer does not find it necessary to assess the total income since he may have accepted the return on expiry of the period during which the regular assessment is required to be made, the entire tax amount, admittedly payable under the Act, would be required to be refunded. If such a proposition as is canvassed on behalf of the petitioners is accepted then the provisions of the said Act which not only charge the tax but prescribe advance tax and deduction at source as the modes of recovery of taxes and of self-assessment on the basis of returns filed by the assessee as the primary method of collection of taxes would all become redundant and meaningless. To term payment of advance taxes or deduction at source which are adjustable in the return which may be filed and the tax paid on the basis of the return as mere ad hoc arrangement would be nothing but ignoring the seriousness of the legislative provisions and would verge on defying the mandate of the law authorising the imposition and levy of taxes in such manner.

Even in the provisions of section 143, as they stood prior to April 1, 1989, subsection (1)(a), inter alia, provided that, where a return has been made under section 139, the Assessing Officer may, without requiring the presence of the assessee or the production by- him of any evidence in support of the return, make an assessment of the total income or loss of the assessee after making such adjustments to the income or kiss declared in the return as were required to be made under clause (b) and determine the sum payable by the assessee or refundable to him on the basis of such assessment. Thus, the idea behind the assessment which was required to be made under subsection (1)(a) of section 143 was to determine the sum payable by the assessee or refundable to him on the basis of such assessment. Therefore, where the Assessing Officer did not' find it necessary to make any assessment since no adjustments to the income or loss declared of the nature referred to in clause (a) of subsection (1) were necessary to be made and, therefore, there was no question of determining the sum payable by the assessee or refundable to him as a consequence of which the return as filed stood accepted, it cannot be said that not making of assessment even in such cases entailed any consequence of refund of the entire tax which was, admittedly, payable on the basis of the return filed by the assessee. The scheme of the Act, therefore, clearly indicates that liability to pay income-tax chargeable under section 4(1) of the Act does not depend upon the assessment being made by the Income-tax Officer but depends on the enactment by any Central Act prescribing rate or rates for any assessment year. Thus, as soon as the rates are prescribed by the appropriate legislation, the liability to pay tax arises on the total income which is to be computed by the assessee in accordance with the provisions of the Act, if it exceeded the maximum amount not chargeable to tax By the process of self-assessment, the assessee is required to pay tax on the basis of his returns and such tax as treated as assessed tax. Therefore, until it is disturbed by any further regular assessment, it remains as tax levied and collected in accordance with law. The fact that the Assessing Officer, when not accepting the correctness of the revised returns, has a power to check the computation of income and examine the correctness of the total income declared therein, cannot nullify the validity of the tax levied and collected on the basis of the return filed by the assessee. Even if the Assessing Officer does not make any regular assessment, the result only would be that the tax payable and which has been paid on the basis of the returns filed by the assessee is deemed to have been accepted as properly paid and no further demand can be made since the regular assessment has not been made within the prescribed time. On the other hand, if the assessee, even after filing the return, felt that the total income was not correctly shown by him, he can, under section 139(5), file a revised return within the prescribed time and, apart from that, he can also file a claim for refund in accordance with section 237 read with section 239 of the Act. The claim for refund has to be made within two years and if such person satisfies the Assessing Officer that the amount of tax paid by him exceeded the amount with which he is properly chargeable under the Act for the relevant assessment year, such assessee would be entitled to refund of the excess. Thus, not making a regular assessment does not, in any way, prejudice the assessee, firstly because his return and the tax which, according to him, was admittedly payable and paid are deemed to have been accepted as true, and secondly, even if the assessee feels that he is entitled to a refund, he can make a suitable claim showing that he had paid tax in excess of the amount which is properly chargeable under the Act for the relevant year. We are, therefore, of the view that, on failure of a regular assessment being made within the time prescribed or in the event of annulment of the assessment order pursuant to which any further demand is required to be made under section 156, no consequence of refund of the entire tax collected according to the total income shown in the returns filed by the assessee can ensue and such tax which is collected on the basis of the return filed by the assessee remains a valid and legal recovery m accordance with the provisions of the said Act and there is no question of any violation of Article 265 of the Constitution of India in respect of the tax so recovered on the basis of the total income shown by the assessee in his return.

In Jagannath Rameshwar Prasad v. ITO (1974) 93 ITR 16, a Division Bench of the Allahabad High Court, while considering the provisions of section 23B of the Act of 1922 (corresponding to section 141 of the Act of 1961), held that the object behind the said provision of provisional assessment was to expedite collection of tax on the basis of the returns made by the assessee. It was observed that the Act contained several such provisions, as for example, payment of advance tax and deduction of tax at source from salary and dividends. By virtue of subsection (7) of section 23B of the Act of 1922, the quantum of tax computed under the provisional assessment was deemed to have been paid towards the regular assessment and was liable to be adjusted. If the amount exceeded the amount payable under the regular assessment, the excess amount was required to be refunded and, except for this limited purpose, the provisional assessment was a distinct proceeding. It was held that it was described as a provisional assessment only for the purpose of indicating that it was provisional as to the amount of tax payable and that it did not preclude a regular assessment determining the tax liability finally. It was held that the provisional assessment did not merge in a final assessment and if the regular assessment was void and, therefore, non-est, the amount paid towards provisional assessment continued to bear that character and could not be deemed to have been paid towards the regular assessment which was without jurisdiction and did not exist in the eye of law. In such a situation, the provisions of subsection (7) of section 23B of that Act were not attracted as no regular assessment was made. However, the order under, section 23B remained valid and the amount paid under such provisional assessment continued to be a valid payment and the assessee was, therefore, not entitled to refund of the amount of tax paid under section 23B of the Act. We find ourselves in respectful agreement with the aforesaid decision of the Allahabad High Court.

In R.A. Boga v. AAC of I.T. (1977) 110 ITR 1, a Full Bench of the Punjab and Haryana High Court, while considering the provisions of section 23B of the Act of 1922, held that the scheme of the Act was to treat a provisional assessment as altogether distinct from a regular assessment and was designed for speedy collection of tax. The provisional assessment was not meant to merge in the regular assessment and if a regular assessment were set aside for any reason. It would not follow that the provisional assessment also stood set aside. The Full Bench, agreeing with the observations of the Allahabad High Court in Jagannath's case (1974) 93 ITR 16, added that if provisional tax was paid and later it was discovered by the assessee that he had paid in excess of what was lawfully due from him, the assessee was not without a remedy and can seek refund of the excess amount in accordance with law.

Reliance was placed on behalf of the petitioners on the decision of the Supreme Court in M.M. Parikh, ITO v. Navanagar Transport and Industries Ltd. (1967) 63 ITR. 663, in which it was held that every order which contemplated computation of income for determination of the amount of tax payable was not an order of assessment within the meaning of the Act of 1922, nor did prescribing of procedure for determining and imposing tax liability make it an order of assessment. It will, however, be seen that the matter pertained to super tax payable by the company and the Supreme Court held that, under section 23A, there was no statutory charge in respect of additional super tax and the liability was imposed by the order of the Income-tax Officer and the source of liability to pay additional super tax was not there in sections 3 and 4 of the Act but arose out of the order of the Income-tax Officer. Therefore, the said decision can be of no assistance to the petitioners.

In the case of Jaipur Udyog Ltd. v. CIT (1969) 71 ITR 799 (SC), which was referred to on behalf of the petitioners, the Supreme Court dealt with the nature of the provision of section 141 of the Act holding that the said provision authorised the Income-tax Officer to make a provisional assessment of the income on the basis of the return made under section 139 and the document and accounts accompanying the return. It was held that the assessment so made was a summary one and the Income-tax Officer was not bound to make any enquiry before making a provisional assessment. It was also held that the provision of section 141 was enacted with the object of expediting collection of tax on the basis of the return made by the assessee. The ratio laid down by the said decision is that it was not open to the Income-tax Officer in a provisional assessment to reject or ignore the claim of the company to carry forward and set off the losses and that section 141 bars an enquiry at the stage of making a provisional assessment into disputed questions of law and fact. Therefore, this decision also cannot support the proposition canvassed on behalf of the petitioners that, on failure of regular assessment, the entire tax recovered by way of advance tax or tax deducted at source should be refunded. Even the decision of the Supreme Court in Purshottamdas Thakurdas v. CIT (1963) 48 ITR (SC) 206, which considered the nature of advance payment of tax under section 18A which was inserted in the Act of 1922 in the year 1944 cannot help the petitioners. on the basis of the observation made therein that advance payment of tax was only provisional and, if, after the regular assessment is made, the tax paid in advance is found to be in excess of the tax payable, the assessee would be entitled to the refund of such excess.

Reliance was also placed on the decision of the Supreme Court in CIT v. Harprasad & Co. (P.) Ltd. (1975) 99 ITR 118 (SC), more particularly on the observations at page 125 to the effect that, although section 6 of the Act of 1922 classified income under six heads, the main charging provision was section 3 which levied income-tax as only one tax, on the total income of the assessee as defined in section 2(15) of the Act of 1922, and further that an income, in order to come within the purview of that definition, must satisfy two conditions, namely, it must comprise the "total amount of income, profits and gains referred to in section 4(1)" and must be "computed in the manner laid down in the Act". If either of these conditions fails, the income will not be a part of the total income that can be brought to charge. There can hardly be any dispute about these propositions but what was sought to be urged on behalf of the petitioners was that the computation of income which was envisaged in the second condition was computation to be made by the Income-tax Officer. It is difficult to agree with this proposition because section 140A read with section 139 also recognises the computation of total income by the assessee when he files returns and pays tax on self-assessment. Therefore, this decision also can hardly assist the petitioners.

Reliance was placed on the decision of the Karnataka High Court in R. Gopal Ramnarayan v. Third ITO (1980) 126 ITR 369, where the learned Single Judge held that it is possible in many instances and for a good number of reasons that the whole of the advance tax paid may become refundable, if the assessee is ultimately found not liable to pay tax after the assessment proceedings are completed. It was held that the Revenue had no right to collect the tax until and unless the quantum of tax is determined in accordance with the procedure laid down by law and if tax by way of advance tax or of self assessment or having been deducted at source has been paid, the same cannot be retained contrary to the requirements of Article 265 of the Constitution. It appears that an appeal was filed against the said decision before the Division Bench being Appeal No.1525 of 1980, which was decided on January 8, 1986 and, as observed in the judgment rendered in appeal, while the writ petitions were pending, the appellant had moved the Tribunal for modification of its earlier order annulling the assessment and, after disposal of the said writ petitions, the Tribunal had allowed the application and modified its earlier order permitting the appellant--Income-tax Officer to make a fresh assessment which was made by him and the earlier amounts were adjusted towards the tax found due in that order. In this view of the matter, the Division Bench held that the very basis of the foundation on which the writ petitions were founded and the order of the learned Single Judge was made had totally disappeared and, therefore, the order of the learned Single Judge was set aside without examining the correctness or otherwise of the view expressed by the learned Single Judge. Apart from the fact that the said decision has been set aside by the Division Bench, the reasoning therein to the effect that it is possible in many instances that, for a good number of reasons, the whole of the advance tax paid may become refundable, if the assessee is ultimately found not liable to pay tax after the assessment proceedings are completed cannot help the petitioners for the reasons which we have already indicated in this judgment since the petitioners have, by a self-assessment made under section 140A read with section 139 paid, the amount which was properly chargeable as tax according to them.

Reliance was sought to be placed on the decision of the Punjab and Haryana High-Court in Deep Chand Jain v. ITO (1984) 145 ITR 676, wherein the learned Single Judge held that the computation of total income and tax thereon envisaged the final determination by the assessing authority in terms of section 143 or section 144 of the said Act and, unless and until the quantum of tax is determined in accordance with the procedure laid down by law, the Revenue has no right to collect the tax and if tax, by way of advance tax or on self-assessment or having been deducted at source has been paid by the petitioner, the same cannot be retained contrary to the requirements of Article 265 of the Constitution. The learned Single Judge concurred with the view taken in R. Gopal Ramnarayan's case (1980) 126 ITR 369 by the learned Single Judge of the Karnataka High Court. As pointed out hereinabove, the decision of the learned Single Judge of the Karnataka High Court in R. Gopal Ramnarayan's case (1980) 126 ITR 369 was set aside by a Division Bench of that High Court. We have, however, already indicated our reasons for holding that mere failure of regular assessment will not entitle the assessee to a refund of the entire amount of tax paid by him on self assessment and which was properly chargebale under the Act. With respect, therefore, we are unable to agree with the view taken by the learned Single Judge in Deep Chand's case (1984) 145 ITR 676 (P&H).

In Assistant Collector of Central Excise v. National Tobacco Co. of India Ltd. AIR 1972 SC 2563, on which reliance was placed on behalf of the petitioners, the Supreme Court held that the term "levy" appeared to be wider in its import than the term "assessment" and may include both imposition of tax as well as assessment. It was held that the term "assessment" was generally used for the actual procedure adopted in fixing the liability to pay a tax on account of particular goods or property or whatever may be the object of the tax in a particular case and determining its amount. The Court was concerned with the provisions of the Central Excise Rules and held that mere mechanical adjustment and ostensible settlement of accounts by making the debit entries could not be equated with an assessment which was a quasi judicial process involving an application of mind to the facts as well as to the requirements of law. It is clear that the said decision of the Supreme Court stands totally on a different footing and can have no application to the facts of the present case.

The decision of the Supreme Court in Nalinikant Ambalal Mody v. SA.L. Narayan Row (1966) 61 ITR 428, on which reliance was placed also cannot help the petitioners because it was held in that case that the receipts in dispute were not chargeable to tax at all either under the head "professional income" or under the "residuary" head and it was not=said that the receipts might be brought to tax under any other head.

In Burmah Shell Refineries Ltd. v. G.B. Chand, ITO (1966) 61 ITR 493 (Bom.), it was held that the, Income-tax Officer, while making a provisional assessment under section 141(1) of the Act, acted in excess of his jurisdiction in enquiring into the question whether the assessee's business was one of manufacture or production of mineral oil.

Therefore, that decision also cannot help the petitioners.

In Siemens India Ltd. v. K. Subramanian, ITO (1983) 143 ITR 120, the Bombay High Court was concerned with the provisional assessment under the Surtax Act and under section 7(2) of that Act, issuance of notice was necessary whether a return was filed or not. The High Court, on a comparison between the provisions of section 141 of the said Act and section 7 of the Surtax Act, found that they differed in two respects, firstly, while section 141 expressly provided that a provisional assessment was to be made on the basis of the assessee's return and the accounts and documents, if any, such a qualification was conspicuously absent in section 7 and, secondly, section 141 did not require any notice to be given to an assessee of the Income-tax Officer's intention to make a provisional assessment and calling upon him to state his objections, if any, to the amount of the proposed assessment. The learned Single Judge of the High Court held that, in making the order of provisional assessment under section 7(2) of the Surtax Act, the. Income-tax Officer had travelled beyond the ambit of a provisional assessment and acted in disregard of the law then prevailing and, in the case of items relating to deductions under Chapter VI-A of the Income-tax Act also acted contrary to the, provisions of the Act and the order of provisional assessment was, therefore, in excess of the jurisdiction vested in the Income-tax Officer. It will, thus, be seen that, both as regards the provision of law with which the Court was concerned and the facts, the decision rests totally on a different footing and cannot assist the petitioners.

In S.S. Gadgil v. Lal & Co. (1964) 53 ITR 231, the Supreme Court held that the period prescribed by section 34 of the Act of 1922 (corresponding to section 153 of the Act of 1961), imposed a fetter upon the power of the Income-tax Officer to bring to tax escaped income and prescribed different periods in different classes of cases for enforcement of the right of the State to recover the tax. The period prescribed by section 34 of the Act of 1922 for assessment or reassessment was not a period of limitation. The Supreme Court found that the right to commence a proceeding for assessment against the assessee as an agent of a non-resident party under the Income-tax Act, before it was amended ended on March 31, 1956. Though, under the amending Act, by section 18 of the Finance Act, 1956, authority was conferred upon the Income-tax Officer to assess a person as an agent of a foreign party under section 43 within two years from the end of the year of assessment, the authority of the Income-tax Officer under the Act prior to its amendment having already come to an end, the amending provision did not assist him to commence a proceeding even though at the date when he issued notice, it was within the period provided by that amending Act. The Supreme Court, found that the Legislature had given to section 18 of the Finance Act, 1956 a limited retrospective operation, that is, .up to April 1, 1956, only and, in the absence of any express provision or clear implication, no greater retrospectivity cold be attributed to the amending provision than what was expressly mentioned. It is, thus, clear that the decision of the. Supreme Court in Gadgil's case (1964) 53 ITR 231 stands totally on a different footing and cannot help the petitioners on the points raised in this petition which have been dealt with by us above.

In Salonah Tea Company Ltd. v. Superintendent of Taxes (1988) 173 ITR 42, the Supreme Court held that where the assessment was declared to be without jurisdiction by the Supreme Court, the respondents had no authority to retain the money collected from the appellants which was liable to be refunded. A case where the assessment is declared to be without jurisdiction under a judgment of the Supreme Court entailing refund to tax paid, stands totally on a different footing and the said decision given in that context has no relevance to the present case.

In Baroda Board and Paper Mills Ltd. v. ITO (1976) 102 ITR 153, a Division Bench of this Court was construing the meaning of the expression "debt due" in section 530 of the Companies Act which provided that, in a winding up, there shall be paid in priority to all other debts, inter alia, all revenues, taxes, cesses and rates due from the company to the Central or a State Government or to a local authority and it is in that context that this Court held that the income-tax for a particular assessment year became a debt due to the State only when the income-tax was calculated and assessed by reference to the income of the assessee of that particular year under consideration and thereafter, the demand was made under the relevant provisions of the said Act. Therefore, that decision also cannot help the petitioners. The decision in Rajratna Naranbhai Mills Co. Ltd. v. STO (1991) 189 ITR 90 (SC) also falls in the same line.

In Dwarka Dass (L.) v. ITO (1956) 29 TTR 60 (All.), it was held that the petitioner had made the payments in excess of his liability and, therefore, he was entitled to a refund of he excess payment. It was observed that the advance tax was in the nature of a loan to be adjusted in the regular assessment. With respect, we are unable to agree with this proposition that the advance tax under the provisions of the said Act can be described as a loan. As observed earlier, advance tax is one of the modes, which was recognised even in the charging section, of collection of tax, and cannot be described as a "loan" which has distinct and different characteristics.

In Grantha Mandir v. CIT (1988) 172 ITR 287, it was held by the Orissa High Court that the amount of tax paid by the petitioner under the assessment orders became refundable to him as soon as the assessment orders were set aside and since the refund was not paid within the period prescribed, the petitioner was entitled to payment of interest on the amounts refundable to him. Thus, the Court was concerned with the question pertaining to the right of the assessee to get interest on the amount of refund that became payable to him and the said decision cannot, therefore, help the petitioners.

Even in Purshottam Dayal Varshney v. CIT (1974) 94 ITR 187 (All.), the Court was concerned with the payment of the amount of interest since refund was delayed. It was held that, if an assessment order was set aside, the notice of demand became ineffective and the tax already paid under such a notice of demand became refundable. The Court found that the Income-tax Officer took six years to pass an order ultimately holding that the tax was wrongly collected and, therefore, there was no rational basis as to why the petitioners should be deprived of the interest for the period of six years during which the Income-tax Officer kept the proceedings pending. The said decision, therefore, cannot help the petitioners.

In Rayalseema Constructions v. DCTO (1959) 10 STC 345, the Madras High Court, while construing the meaning of the words "levy" and "collection" which are used in Article 265 of the Constitution of India, held that, in relation to a tax where an Assessing Officer acts outside the boundaries of his jurisdiction, his acts will, to that extent, be null and void, and, if any authority seeks to collect a tax so imposed, the citizen can call into aid Article 265 of the Constitution of India. In the said case before the Madras High Court, it was established by the judicial decision that the law conferred upon the officers no power to make the levy. Therefore, the said decision stands on a different footing and cannot help the petitioners.

The decision of the learned Single Judge of the Andhra Pradesh High Court in G. Lakshminarayana v. CTO (1974) 33 STC 558, was pressed into service on behalf of the petitioners for their contentions that refund of the whole of the tax paid by them should have been made. The said decision was rendered in the context of the provisions of the Andhra Pradesh General Sales Tax Act and its ratio cannot be extended to the provisions of the Income-tax Act the scheme of which as we have indicated above, does not warrant refund of the Income-tax which is properly chargeable under the Act and envisages only the refund of the tax which may have been paid in excess of what is properly chargeable under the Act.

In Leader Valves (Pvt.) Ltd. v. CIT (1987) 167 ITR 542, the Punjab and Haryana High Court, while considering the provisions of section 241 of the said Act, held that the power to withhold the refund cannot be exercised merely because some proceeding under the Income-tax Act is pending. Therefore, the ratio of that decision also cannot help the petitioners. For the same reason, the decision in Hansa Agencies (Pvt.) Ltd. v. CIT (1988) 169 ITR 322, of the Punjab and Haryana High Court which has followed Leader Valves case (1987) 167 ITR 542 (P&H), also cannot help the petitioners.

In CIT v. B.C. Srinivasa Setty (1981) 128 ITR 294, the Supreme Court, while considering the question whether goodwill generated in a newly commenced business can be described as an asset within the terms of section 45 of the said Act, held that the transfer of goodwill initially generated in a business does not give rise to a capital gain for the purpose of income-tax. The Supreme Court held that all transactions encompassed by section 45 must fall under the governance of its computation provisions. The transactions to which those provisions cannot be applied must be regarded as never intended by section 45 to be the subject of the charge. Thus the said decision of the Supreme Court was rendered in a totally different context and has no relevance to the facts of the present case.

Reliance on CIT v. Nagri Mills Ltd. (1987) 166 ITR 292 (Guj.), on behalf of the petitioners, is also misconceived because, in that decision, a Division Bench of this Court held that no question of law arose for reference where the Tribunal held that no interest was chargeable under section 216 of the Act because the Income-tax Officer had failed to record a finding that there had been an underestimate of advance tax by the assessee.

The decision of the Supreme Court in Manmohanlal v. ITO (1987) 168 ITR 616 is an authority for the proposition that tax can be recovered from an assessee only when it becomes a debt due from him and that it becomes a debt due when a notice of demand calling for payment of the tax has been served on the assessee. The Supreme Court held that if an assessee objected to the recovery proceedings on the ground that there was no valid service of a notice of demand and, if such objection is upheld, the recovery of tax cannot be permitted by the Court if it upholds the objection. Thus, the said decision also has no applicability to the instant case and cannot help the petitioners.

Having given our anxious consideration to the precedents cited before us, we feel that there is no warrant for holding that the entire amount of income-tax which is properly chargeable under the Act and is collected by the Department in accordance with the provisions of the Act should be refunded on failure of the regular assessment. We hold that only the amount of tax which is paid wrongly or in excess of what is properly chargeable under the Act can be refunded and the provisions of the said Act do not,, authorise refund of tax, which is properly collected.

In view of the above discussion, we pass the following orders in these matters:

Special Civil Application No. 6656 of 1987.

The claim for refund of the entire amount of tax is rejected. The respondents are, however, directed to consider the reduction of Rs. 14 lakh claimed in the revised returns filed by the petitioner on February 22, 1983, as a claim made under section 239 of the Act and dispose of it in accordance with section 237 and other relevant provisions of the Act. Rule is made absolute to this limited extent with no order as to costs.

Special Civil Application No. 5944 of 1987.

The petition is dismissed. Rule is discharged with no order as to costs.

Special Civil Application No. 1638 of 1980:

The petition is dismissed. Rule is discharged with no order as to costs.

Special Civil Application No. 7835 of 1988:

The petition is dismissed. Rule is discharged with no order as to costs.

After judgment was pronounced, learned counsel for the parties applied for certificate for appeal to the Supreme Court under Article 134A read with Article 133 of the Constitution. In our opinion, these petitions do not involve a substantial question of law of general importance which needs to be decided by the Supreme Court. We, therefore, reject the prayer for certificate.

M.BA./1979/T Petitions dismissed.