INCOME TAX ACT, 1961

Section 237 Section 143(3) Section 154

Refund - Allowability - Tax on capital gain wrongly admitted and paid voluntary in relevant year, though not taxable in that year -

Assessee entered into a lease agreement in respect of property at No. 149, Luz Church Road, Mylapore, Chennai, and handed over possession. The lessee, namely, ECM Foundation (P) Ltd., ('ECM') put up construction and run a hospital. Thereafter, the writ petitioner along with ECM entered into a sale agreement with Devaki Hospital (P) Ltd. for the sale of the above property on 27-8-1992 for a sale consideration of Rs. 1.45 Crores. According to the petitioner, the transfer had taken place, as observed in paragraph 7 of the order of the appellate Tribunal on 27-8-1992 and capital gains were assessable only in the relevant assessment year 1993-94 and not in assessment years 2001-02 or 2002-03 and hence, voluntary admission made by the assessee on wrong advice, shall be ignored. Since no tax is payable in 2002-03, the amount remitted shall be refunded. Tribunal, after considering the petition, by its Order, dated 9-9-2011, had observed that the relief sought for had to be granted by the assessing authority, if it was justifiable and dismissed the petition, as there was nothing to review or for rectification of any mistakes. Held: The income, which was assessable to tax, was not assessed in the relevant year, but, admitted by assessee on a later date, cannot be said not assessable and it shall be refunded. In the instant case the assessee paid the tax which was admittedly payable. Even the assessment order was set aside, it will not have any impact on the self-assessment made by the assessee. The Tribunal had considered the addition of income under section 45(5)(b) as incorrect and nullified it. But, the assessment order on the admitted income was not nullified. Only because, there was an observation that the relevant year of assessment is 1993-1994 in view of section 53-A of Transfer of Property Act, it will not confer any legal right on the assessee to claim refund. Admittedly, the income is assessable to tax and it was not assessed due to the statement made by the assessee that the transfer was not complete in terms of the sale agreement. The assessee cannot blow hot and cold or approbate and reprobate that what is not paid on due date cannot be assessed at all. It is true to state that there is no estoppel against law. The assessment authority had not assessed the income which was not assessable to tax. Hence, the claim for refund of tax paid on admitted income was not sustainable. If at all, the petitioenr is aggrieved, she should have filed an appeal against the assessment Order, dated 25-2-2011. Apart from this, the order impugend had been passed in terms of the Office Memorandum issued in cases of claim for refund and following the ratio laid down by the Supreme Court in Shelly Products case.

Followed:CIT v. Shelly Products & Anr. (003) 5 SCC 461 : 2003 TaxPub(DT) 1281 (SC). Relied:UOI v. Azadi Bacho Andolan & Anr. (2003) 263 ITR 706 (SC) : 2003 TaxPub(DT) 1429 (SC), McDowell and Company Limited v. CTO ((1985) 3 SCC 230 : 1985 TaxPub(DT) 1186 (SC), Sail DSP VR Employees Association v. UOI ((2003) 128 Taxman 704 (Cal) : 2003 TaxPub(DT) 1051 (Cal-HC) and CIT v. Bhaskar mitter ((1994) 73 Taxman 437 (Cal) : 1994 TaxPub(DT) 4459 (Cal).