Santuka Agencies v. ITO & Ors.

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The Tax Publishers2013 TaxPub(DT) 0042 (Ori-HC) : (2012) 254 CTR 0434 : (2012) 078 DTR 0001 INCOME TAX ACT, 1961 --RefundEntitlement Assessing officer's power of investigation--Assessee was prima facie entitled to refund on the basis of return. Assessing officer, within a year, sought clarifications regarding certain particular income shown in the retrn. Assessee did not respond thereto. However, three years after enquiry assessee sought refund from assessing officer. Three years thereafter assessee, via writ petition, approached court questioning assessing officer's power of enquiry as made. *Held:* Though there is no specific power to assessing officer to make enquiry however, such a power is implicit and inherent in section 237 regarding entitlement of refund assessee is, therefore, directed to approach assessing officer with supporting evidence. In the writ petition, the petitioner has not explained why he remained silent from the date of filing of return from 1-9-2003 till July, 2008 when he made representation. The petitioner has also not explained why it belatedly approached this Court in October, 2011. On the ground of delay and laches, though this writ petition is liable to be dismissed, we are not doing so in view of the averments made in para 10 of the counter-affidavit filed by the Income Tax Department to the effect that the petitioner has an alternative efficacious remedial measure available right now to produce relevant reconciliation of gross receipts from interest income/from contract works/from commission as per TDS certificate with the figure shown in P&L a/c for the financial year 2003-04 and after submission of such clarification/supporting documents it can be ascertained about petitioner's entitlement to get the amount of refund on the basis of TDS certificate. [Para 9] Plain reading of section 237 makes it clear that a person is entitled to claim refund of tax, if the tax paid by him or on his behalf for any assessment year exceeds the tax which he is liable to pay for that assessment year. Section 237 further stipulates that only if any person satisfies the assessing officer that he is entitled to a refund then such refund shall be granted. Therefore where there is a dispute as to the entitlement of assessee to get refund, the assessing officer has to cause necessary enquiry and after giving opportunity to the assessee shall come to a conclusion. Though there is no specific provision empowering the assessing officer to investigate such a claim, such a power is implicit and inherent in the assessing officer as would be evident from a plain reading of section 237. [Para 10] In the instant case, specific case of the opposite parties is that on verification of tax audit report and P&L a/c it reveals that there is no separate head of receipts in the credit side of the P&L a/c in respect of interest income and contract works receipts in relation to which the TDS certificate has been submitted and refund is claimed. The further discrepancy is that the commission amount credited to the P&L a/c shows total commission of Rs. 18,35,783 whereas as per TDS certificate the commission amount was Rs. 17,31,891. Therefore, the assessing officer had written a letter to the petitioner vide letter No. ITO/W-2(2)/CTC/2004-05 dt. 1-6-2004 to clarify the discrepancy. [Para 12] Opposite parry in para 7 of their counter-affidavit stated that the said letter was received by assesseeon 1-7-2004. There is no material evidence on record to show that the assessee had produced any reconciliation statement of interest and contractual receipts as per TDS certificate compared to turnover credited in the P&L a/c as per the audited statement. No rejoinder was filed by the petitioner denying the facts stated in para 7 of the counter-affidavit. [Para 13] In view of the provisions of section 237 and averments made in paras 6 and 7 of the counter-affidavit, it cannot be said that there is any laches on the part of opposite party-Department in not granting refund to the petitioner as claimed in its return. [Para 14] In view of the above, the petitioner is directed to appear before opposite party No. 1 ITO, Ward-2(2), Cuttack within a period of four weeks from today. If the petitioner appears before the assessing officer and satisfies him with supporting documents about his entitlement to get refund in terms of section 237, the assessing officer is directed to grant refund immediately along with interest in accordance with law. [Para 16] SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 0042 (Ori-HC) : (2012) 254 CTR 0434 : (2012) 078 DTR 0001

INCOME TAX ACT, 1961

--RefundEntitlement Assessing officer's power of investigation--Assessee was prima facie entitled to refund on the basis of return. Assessing officer, within a year, sought clarifications regarding certain particular income shown in the retrn. Assessee did not respond thereto. However, three years after enquiry assessee sought refund from assessing officer. Three years thereafter assessee, via writ petition, approached court questioning assessing officer's power of enquiry as made. Held: Though there is no specific power to assessing officer to make enquiry however, such a power is implicit and inherent in section 237 regarding entitlement of refund assessee is, therefore, directed to approach assessing officer with supporting evidence.

In the writ petition, the petitioner has not explained why he remained silent from the date of filing of return from 1-9-2003 till July, 2008 when he made representation. The petitioner has also not explained why it belatedly approached this Court in October, 2011. On the ground of delay and laches, though this writ petition is liable to be dismissed, we are not doing so in view of the averments made in para 10 of the counter-affidavit filed by the Income Tax Department to the effect that the petitioner has an alternative efficacious remedial measure available right now to produce relevant reconciliation of gross receipts from interest income/from contract works/from commission as per TDS certificate with the figure shown in P&L a/c for the financial year 2003-04 and after submission of such clarification/supporting documents it can be ascertained about petitioner's entitlement to get the amount of refund on the basis of TDS certificate. [Para 9] Plain reading of section 237 makes it clear that a person is entitled to claim refund of tax, if the tax paid by him or on his behalf for any assessment year exceeds the tax which he is liable to pay for that assessment year. Section 237 further stipulates that only if any person satisfies the assessing officer that he is entitled to a refund then such refund shall be granted. Therefore where there is a dispute as to the entitlement of assessee to get refund, the assessing officer has to cause necessary enquiry and after giving opportunity to the assessee shall come to a conclusion. Though there is no specific provision empowering the assessing officer to investigate such a claim, such a power is implicit and inherent in the assessing officer as would be evident from a plain reading of section 237. [Para 10] In the instant case, specific case of the opposite parties is that on verification of tax audit report and P&L a/c it reveals that there is no separate head of receipts in the credit side of the P&L a/c in respect of interest income and contract works receipts in relation to which the TDS certificate has been submitted and refund is claimed. The further discrepancy is that the commission amount credited to the P&L a/c shows total commission of Rs. 18,35,783 whereas as per TDS certificate the commission amount was Rs. 17,31,891. Therefore, the assessing officer had written a letter to the petitioner vide letter No. ITO/W-2(2)/CTC/2004-05 dt. 1-6-2004 to clarify the discrepancy. [Para 12] Opposite parry in para 7 of their counter-affidavit stated that the said letter was received by assesseeon 1-7-2004. There is no material evidence on record to show that the assessee had produced any reconciliation statement of interest and contractual receipts as per TDS certificate compared to turnover credited in the P&L a/c as per the audited statement. No rejoinder was filed by the petitioner denying the facts stated in para 7 of the counter-affidavit. [Para 13] In view of the provisions of section 237 and averments made in paras 6 and 7 of the counter-affidavit, it cannot be said that there is any laches on the part of opposite party-Department in not granting refund to the petitioner as claimed in its return. [Para 14] In view of the above, the petitioner is directed to appear before opposite party No. 1 ITO, Ward-2(2), Cuttack within a period of four weeks from today. If the petitioner appears before the assessing officer and satisfies him with supporting documents about his entitlement to get refund in terms of section 237, the assessing officer is directed to grant refund immediately along with interest in accordance with law. [Para 16]