SH. NARESH CHAND RANA,SONEPAT vs. CIT, ROHTAK

The notice u/s 148 of the Income Tax Act was issued on 5/1/2011 to the assessee. As per reasons recorded u/s 147 of the Income Tax Act, 1961, the assessee received payment of Rs. 25,10,728/-, during Assessment Year 2008- 09, on which tax was deducted at source amounting to Rs.2,81,667/-. The A.O observed that the income of Rs.25,10,728/- on account of the payment received by the assessee was an escaped income for the Assessment Year 2008- 09 within the meaning of Section 147 of the Income Tax Act. The Assessing Officer recorded that the assessee did not file any return of income for the Assessment Year 2008-09, though the income of the assessee was taxable. Accordingly, notice u/s 148 has been issued to the assessee on 5/1/2011 and served upon the assessee on 15/1/2011. The assessee filed return of income on 28/11/2011 in response to the notice u/s 148 of the Income Tax Act, 1961 declaring an income of Rs. 18,750/- after claiming deduction of Rs. 75,832/- under Chapter VIA of the Income Tax Act, 1961 and claimed a refund of Rs.2,85,790/-.

The CIT issued show cause notice u/s 263(1) of the Income Tax Act, 1961 to the assessee on 17/2/2014 fixing the case for 27/2/2014. The CIT under Section 263 of the Act held that the claim of the refund of Rs.2,85,790/- of the assessee was not acceptable. The CIT further held that the assessee should have filed the return of income voluntarily within the prescribed time limit after getting his accounts audited. Since the assessee failed to get his accounts audited and to submit the return of his income timely and further he also failed to avail the opportunities allowed to him to file the return in time. The CIT observed that the assessee filed his return only after the issue of notice u/s 148 which is without audit. Thus, the CIT held that as per provisions of Section 148, the proceedings are for safe guarding of the interest of revenue and not for issue of refund. Further as per Section 239(c) of the Income Tax Act, 1961 the claim for refund can be made within one year from the last day of such assessment year i.e. in this case up to 31/3/2010. The CIT further held that the A.O passed the order without proper consideration of facts and without following the law laid down by the legislature and without making proper requisite and desired enquiries. Thus, the CIT directed the Assessing Officer to make fresh assessment.

The Ld. AR submitted that the assessee received payment of Rs. 25,10,728/- during Assessment Year 2008-09, on which tax was deducted at source amounting to Rs.2,81,667/-, this fact was never disputed by the Assessing Officer as well as by the CIT. There was no need to file the return of income as the assessee’s income was not taxable at all. The assessee rightly filed return of income on 28/11/2011 in response to the notice u/s 148 of the Income Tax Act, 1961 declaring an income of Rs. 18,750/- after claiming deduction of Rs. 75,832/- under Chapter VIA of the Income Tax Act, 1961 and claimed a refund of Rs.2,85,790/-. The CIT does not have power to reject the claim of the refund of the assessee as the same is any ways an excess tax amount paid to the Tax Authorities. The Ld. AR further submitted that Section 239(c) of the Income Tax Act, 1961 is not at all applicable in the present case as the claim for refund was made only when Section 148 notice was issued to the assessee.

The Ld. DR relied upon the order of the CIT and submitted that the assessee filed his return only after the issue of notice u/s 148 that to without audit. Thus, provisions of Section 148 are for safe guarding of the interest of revenue and not for issue of refund. The Ld. DR submitted that as per Section 239(c) of the Income Tax Act, 1961 the claim for refund can be made within one year from the last day of such assessment year i.e. in this case up to 31/3/2010. Thus, CIT rightly held that the A.O passed the order without proper consideration of facts and without following the law laid down by the legislature and without making proper requisite and desired enquiries.

We have heard both the parties and perused all the records. There is no dispute that the TDS was deducted from the income of the Assessee. In fact, the TDS was deducted at much higher side. Thus, the assessee is entitled for refund as the assessee has paid the taxes in excess in the form of TDS deducted by the parties who made payment to the assessee. The CIT does not have power to reject the claim of the refund of the assessee as the same is any ways an excess tax amount paid to the Tax Authorities. Section 239(c) of the Act is not at all applicable in the present case as the claim for refund was made only when Section 148 notice was issued to the assessee. There can be no doubt that so long as the view taken by the Assessing Officer is a possible view the same ought not to be interfered with by the Commissioner under Section 263 of the Act merely on the ground that there is another possible view of the matter. Permitting exercise of revisional power in a situation where two views are possible would really amount to conferring some kind of an appellate power in the revisional authority. This should be avoided by the authorities. Thus, the order under Section 263 of the Act passed by the CIT is set aside.

In result, appeal of the assessee is allowed.