Madhya Pradesh High Court
Commissioner Of Income Tax vs Udhoji Shri Krishandas on 24 February, 2004
Equivalent citations: (2004)189CTR(MP)26, [2004]268ITR244(MP), 2004(1)MPHT438
Author: Dipak Misra
Bench: Dipak Misra
ORDER
K.K. Lahoti, J.:
1. The following two questions have been referred by the Division Bench for adjudication before the Larger Bench :--
"(1) In view of the judgment passed by the Apex Court in the case of Modi Industries Ltd. (supra), whether the Tribunal is justified in law in holding that Assessee was entitled to interest under Sections 214 and 244(1-A) of the Income Tax Act in respect of the A.Ys. 1972-73 to 1976-77 ?
(2) Whether the Tribunal was justified in law in holding that the assessce was entitled to the benefit of interest under Section 244(1-A) on refunds in respect of any amount of tax including self assessment tax paid or given credit in assessment completed after 31-3-1975?"
2. The facts which are essential to be stated in both the cases are as under:--
(A) Income Tax Reference No. 35/1994 :
(Commissioner of Income Tax, Jabalpur v. Udhoji Shri Krishandas, Satna) In this reference assessment years involved are 1972-73 to 1976-77. M/s Udhoji Shri Krishna Das Agarwal is a registered partnership firm in which following were partners in the relevant year : Ranjana Agarwal, Jagannath Prasad Agrawal, Ramdulari Agrawal, Narsinghdas Agrawal, Udhoji Agrawal, Dwarkadas Agrawal, Hari Om Agrawal, Asha Shanti Agrawal, Balmukund Agrawal and Arun Kumar Agrawal. For the assessment years 1972-73,1973-74 and 1974-75 the Income Tax Officer completed assessment in the cases of all the partners under Section 141A of Income Tax Act, 1961 (hereinafter referred to as the 'Act') and excess advance tax was refunded together with interest under Section 214 of the Act. On completion of regular assessment of these three years under Section 143(3), taking share income subject to rectification under Section 155, no refund was due to the assessee. For the assessment years 1975-76 and 1976-77 on completion of regular assessment under Section 143(3) no refund was due to the assessee and demands raised as per assessment were paid. For the assessment years 1972-73 and 1974-75 assessments were completed in the case of firm on 5-10-1978 and 25-10-1979. These assessments were annulled by the Commissioner of Income Tax (Appeals) as barred by time. The aforesaid order of Commissioner was upheld by the Tribunal by order dated 19-3-1980 and the same attained finality. The assessees approached the Income Tax Officer to pass consequential order under Section 154 of the Act for revising the computation of total income, so as to reduce the share of profit from the said firm for both the years to no profit and further to refund the excess of tax paid. The Income Tax Officer rejected the application of assessees holding that after retaining the advance tax demand from the gross amount refundable, no amount became refundable, and therefore no amount was to be refunded for any of those two years. Aggrieved by the said order of Income Tax Officer the assessees went in appeal before the Appellate Assistant Commissioner of Income Tax, why by order dated 19-4-1982 held that the assessment orders were required to be rectified under Sections 154 and 155(1) of the Act in view of annulment of assessment in the case of firm. The Assistant Income Tax Commissioner accordingly directed the Income Tax Officer to exclude the share of profit from said firm from the computation of total income in the case of partners and to refund the amount of tax, which could be attributed to have been paid are recoverable by the Department in respect of such share of profit of the firm, whether by way of advance tax, self-assessment tax, T.D.S. paid after the completion of regular assessment. No appeal was filed by the Department against the said order of Assistant Income Tax Commissioner before the Tribunal.
3. As per the direction of Assistant Income Tax Commissioner dated 19-4-1982 the share income was excluded from the computation of total income and the entire tax was refunded. So far as the assessment years 1973-74, 1975-76 and 1976-77 are concerned, assessments were completed in the case of firm and share income was included in the income of partner assessees. In the assessment year 1975-76, the share income of partners was reduced as a result of appellate order and because of reduction in the share income, the assessed income in the cases of partners came below the returned income.. Thereafter the assessees filed applications for all the five years under Section 154 before the Income Tax Officer to allow interest under Sections 214(1), 214(2), 244/244(1-A) of the Act. The Income Tax Officer rejected the applications on the ground that there was no mistake apparent on the face of the record. Thereafter assessees preferred appeal before the Appellate Assistant Income Tax Commissioner. The Appellate Assistant Commissioner held that the assessees were entitled for payment of interest on excess paid tax under Sections 214 and 244(1-A) of the Act, which has not been allowed by the Income Tax Officer. Accordingly he directed the Income Tax Officer to examine the claims of assessees and to calculate the interest as per Sections 214 and 244(1-A) and to make payment of same accordingly. The Department challenged the order of Appellate Assistant Income Tax Commissioner before the Tribunal. The Tribunal upheld the orders of Appellate Assistant Income Tax Commissioner and dismissed the Department's appeal. Thereafter the Department filed applications under Section 256(1) of the Act for reference to the High Court for opinion. This application was allowed by the Tribunal and two questions were referred to this Court for opinion.
(B) Income Tax Reference No. 57/1994 :
(Commissioner of Income Tax, Jabalpur v. Shri Narayandas Agrawal, Satna) In this case the assessment years involved are 1972-73 to 1976-77. Other facts are similar to the facts of the case in Income Tax Reference No. 37/1994 (Commissioner of Income Tax, Jabalpur v. Udhoji Shri Krishandas, Satna).
4. Both the cases on reference came for hearing before the Division Bench on 28-4-2003. While hearing the cases, it was submitted before the Court that the references are covered by the Division Bench judgment of this Court in the case of Commissioner of Income Tax, Jabalpur v. Udhoji Shri Kishan Das, Satna (1995 M.P.LJ. 228) and Anr. Division Bench relying on the said decision has answered the reference in favour of the revenue in M.C.C. No. 259/93. The Counsel appearing on behalf of Revenue submitted before the Division Bench that the decisions rendered in the case of M/s. Udhoji Shri Kishan Das (supra) was based on three decisions, namely Chloride India Ltd. v. CIT, West Bengal, (1977) 106 ITR 38 (Cal.), T.U.S.C. Ltd. v. CIT, (1980) 126 ITR 125 (Mad.) and Bardolia Textile Mills v. Income Tax Officer, Circle II, Surat, (1985) 151 ITR 389 (Guj.) and all the three decisions have been overruled by the Apex Court in the case of Modi Industries Limited, Modinagar and Ors. v. Commissioner of Income Tax, Delhi and Anr. [(1995) 6 SCC 396]. As the decision of Mis. Udhoji Shri Kishan Das (supra), is based on the aforesaid three decisions, which have been over-ruled by the Apex Court, in the circumstances, the reference deserves to be answered in favour of Revenue. The Division Bench while considering the aforesaid considered that the decision in M.C.C. No. 259/1993 was decided after the decision of Apex Court in the case of Modi Industries Limited (supra). It has also observed that the various applications were filed before the Court for reviewing the order passed by M.C.C. No. 259/1993. The review matter came for hearing before the Division Bench in M.C.C. No. 718/96. The Division Bench referred to total scenario and passed an order, the relevant portion of which we think it seemly to reproduce :--
"Considering the totality of circumstances, we are of the considered opinion that the matter has to be adjudicated by a Larger Bench. Propriety and Judicial discipline so commands. Accordingly we frame the question for adjudication by the Larger Bench as follows:--
"(1) In view of the judgment passed by the Apex Court in the case of Modi Industries Ltd. (supra), whether the Tribunal is justified in law in holding that Assessee was entitled to interest under Sections 214 and 244(1-A) of the Income Tax Act in respect of the A. Ys. 1972-73 to 1976-77 ?
(2) Whether the Tribunal was justified in law in holding that the assessee was entitled to the benefit of interest under Section 244(1-A) on refunds in respect of any amount of tax including self assessment tax paid or given credit is assessment completed after 31-3-1975?"
The matter be placed before the Hon'ble Chief Justice for constitution of the appropriate Larger Bench."
5. Considering the aforesaid, the Division Bench found that once the Division Bench has answered the reference after the judgment rendered by the Apex Court in the case of Modi Industries Limited (supra), the matter has to be adjudicated by a Larger Bench because propriety and judicial discipline so command. Accordingly, after framing the aforesaid question for adjudication the Division Bench recommended the matter to be adjudicated by the Larger Bench. That is how the matters have been placed before us.
6. Learned Counsel appearing for Revenue submitted that the scope of Section 214 of the Act and Section 244(1-A) of the Act is entirely different. Section 214 provides the refund of tax on regular assessment and after regular assessment any amount is found refundable, the assessee is entitled for interest from the date of its payment to the date of regular assessment. It further provides that in case of provisional assessment under Section 141A no interest shall be paid for the period after the date of such provisional assessment. Sub-section (1-A) of Section 214 provides that on completion of regular assessment the amount on which the interest was paid under Sub-section (1), if reduced, the interest shall be reduced accordingly and_ excess, if any, paid shall be deemed to be tax payable by the assessee. Subsection (2) provides that the interest shall be payable upto the date on which the refund was made. Contending aforesaid learned Counsel appearing for Revenue canvassed that the scope of Section 214 is very specific and it applies upto the date of provisional assessment or the regular assessment, as the case may be and the assessee would not be entitled for any amount of tax, if on appeal or revision or by any order of superior authority or Court assessee is found entitled for refund of lax. He further propounded that the scope of Section 244(1-A) is entirely different. It meets out the exigency where the assessee is found entitled for the refund as a result of any amount having been paid by him in pursuance of any order of penalty or such amount or part having been found in appeal or other proceedings under the Act to be in excess of amount which such assessee is liable to pay as lax or penalty as the case may be, the assessee is entitled for simple interest on the amount so found to be in excess from the date on which such amount was paid to the date to which the refund is granted. Contending aforesaid learned Counsel for revenue submits that the scope of both the sections arc different and the Tribunal was not justified in law in holding that the assessee was entitled to interest under Sections 214 and 244(1-A) of the Act. So far as the second question that the entitlement of assessee for the interest under Section 244(1-A) on refund of tax for which assessee is found entitled for refund after 31-3-1975 has to be considered as per Section 244(1-A) and accordingly the reference deserves to be answered in favour of Revenue.
7. Learned Counsel appearing for assessee has supported the order passed by the Tribunal and contended that in view of consistent view of this Court and various other High Courts, restricted meaning to the term 'regular assessment' can not be given. Section 214 contemplates interest payable upto the date of assessment while Section 244 contemplates interest payable during a period after passing of order in appeal or other proceedings, i.e., a future period. The word 'regular assessment' in Section 214 may be construed in respect oi' assessment by the Assessing Officer including the order modifying the assessment by the appellate or revisional authority and if otherwise it is construed it will lead to absurdity. Even if the assessment is modified by the appellate or revisional authority the assessee is entitled to interest under Section 214 of the Act. The situation will be embarrassing where the Assessing Officer passes an erroneous order, which is corrected by the superior authority, but the assessee would be denied interest. Contending aforesaid, learned Counsel for assessee submits that the aforesaid reference deserves to be answered in favour of assessee.
8. To appreciate the contentions of the learned Counsel for the parties, it is necessary to look into the relevant provisions of Section 214, which was in existence at the relevant time read as under:--
214. Interest payable by Government.-- (1) The Central Government shall pay simple interest at (twelve per cent) per annum on the amount by which the aggregate sum of any instalments of advance-tax paid during any financial year in which they are payable under Sections 207 to 213 exceeds the amount of the tax determined on regular assessment, from the 1st day of April next following the said financial year to the date of the regular assessment for the assessment year immediately following the said financial year, and where any such instalment is paid after the expiry of the financial year during which it is payable by reason of the provisions of Section 213, interest as aforesaid shall also be payable on that instalment from the date of its payment to the date of regular assessment:
Provided that in respect of any amount refunded on a provisional assessment under Section 141A, no interest shall be paid for any period after the date of such provisional assessment.
(1-A) Where on completion of the regular assessment the amount on which interest was paid under Sub-section (1) has been reduced, the interest shall be reduced accordingly and the excess, if any, paid shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly.
(2) On any portion of such amount which is refunded under this Chapter, interest shall be payable only up to the date on which the refund was made.
244. Interest on refund where no claim is needed.-- (1) Where a refund is due to the assessee in pursuance of an order referred to in Section 240 and the Income-tax Officer does not grant the refund (within a period of three months from the end of the month in which such order is passed), the Central Government shall pay to the assessee simple interest at (twelve per cent) per annum on the amount of refund due from the date immediately following the expiry of (the period of three months aforesaid) to the date on which the refund is granted;
(1-A) Where the whole or any part of the refund referred to in Sub-section (1) is due to the assessee, as a result of any amount having been paid by him after the 31st day of March, 1975, in pursuance of any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty, as the case may be, under this Act, the Central Government shall pay to such assessee simple interest at the rate specified in Sub-section (1) on the amount so found to be in excess from the date on which such amount was paid to the date on which the refund is granted:
Provided that where the amount so found to be in excess was paid in instalments, such interest shall be payable on the amount of each such instalment or any part of such instalment, which was in excess, from the date on which such instalment was paid to the date on which the refund is granted :
Provided further that no interest under this sub-section shall be payable for a period of one month from the date of the passing of the order in appeal or other proceeding:
Provided also that where any interest is payable to an assessee under this sub-section, no interest under Sub-section (1) shall be payable to him in respect of the amount so found to be in excess.
(2) Where a refund is withheld under the provisions of Section 241, the Central Government shall pay interest at the aforesaid rate on the amount of refund ultimately determined to be due as a result of the appeal or further proceeding for the period commencing after the expiry of (three months from the end of the month in which the order referred to in Section 241 is passed) to the dale the refund is granted.
9. In M/s Udhoji Shri Kishan Das (supra) the Division Bench considered the following reference :--
"Whether on the facts and in the circumstances of the case, the Tribunal was correct in interpreting the word 'regular assessment' in the light of ruling of Calcutta High Court in 106 ITR 38 and Madras High Court in 126 ITR 1251 ?"
Considering the judgments of various High Courts the Division Bench in Paragraph 11 held thus :--
"The Tribunal was justified in coming to the conclusion that the assessee is entitled to interest under Section 214 relying on the decisions in 106 ITR 30 and 126 ITR 125. The question referred is answered in the affirmative, i.e., in favour of the asscssee and against the Revenue."
The Division Bench followed the Full Bench judgment of Gujarat High Court and in agreement with the aforesaid judgment answered the reference in favour of assessee. In Para 8 of the judgment the Division Bench held as under :--
"This view is consistent with I he scheme of refund and interest contained in Sections 214 and 244 of the Act. The former contemplates interest payable upto the date of regular assessment while the latter contemplates interest payable during a period after passing of an order in appeal or other proceedings, that is, a future period. To hold that the words 'regular assessment' in Section 214 should be understood as meaning only assessment by the assessing officer and not as including the order modifying the assessment order by appellate or revisional authority will lead to absurd results. Take a case where the assessing authority arrives at a correct decision and fixed the taxable income at such an amount as to entitle the assessee to obtain refund of part of the advance tax paid and the order is not interfered with by the appellate or revisional authority. In such a case the assessee would be entitled to interest on the refundable amount till the date of regular assessment. Take a case where the assessing officer by an erroneous view of law or facts holds that tax payable is equal to the advance tax paid in which case no refund would be due and the appellate authority'corrccts the error committed by the assessing officer and reduces the quantum of taxable income in which case the assessee would be entitled to refund. If this modified assessment is to be regarded as falling outside the purview of the words 'regular assessment' the assessee would not be entitled to interest under Section 214. This would mean that where the assessing officer passes a correct order, the assessee will be entitled to interest but where he pass6s an erroneous order which is corrected by a superior authority, the assessee would be denied interest. There is nothing in the scheme of the provisions relating to refund and interest which justifies such a restricted meaning being given to the words 'regular assessment' occurring in Section 244(1). 'Regular assessment' means assessment under Section 143(3) or 144 of the Act. Where assessment has been made under Section 143(3) or 144 of the Act it is regular assessment whether the final order of assessment is the one passed by the Assessing Officer or the one passed by the Assessing Officer as modified in appeal or revision."
The same view was followed in M.C.C. No. 718/96 by the Division Bench in the subsequent case.
10. To appreciate the contention of parties the provision of Section 214 of the Act may be seen. Section 214 prior to 1-4-1985 as stood in the statute book was as under:--
"214. Interest payable by Government.-- (1) The Central Government shall pay simple interest at (twelve per cent) per annum on the amount by which the aggregate sum of any instalments of advance-tax paid during any financial year in which they are payable under Sections 207 to 213 exceeds the amount of the tax determined on regular assessment, from the 1st day of April next following the said financial year to the date of the regular assessment for the assessment year immediately following the said financial year, and where any such instalment is paid after the expiry of the financial year during which it is payable by reason of the provisions of Section 213, interest as aforesaid shall also be payable on that instalment from the date of its payment to the dale of regular assessment:
Provided that in respect of any amount refunded on a provisional assessment under Section 141A, no interest shall be paid for any period after the dale of such provisional assessment.
(1-A) Where on completion of the regular assessment the amount on which interest was paid under Sub-section (1) has been reduced, the interest shall be reduced accordingly and the excess, if any, paid shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly."
With effect from 1-4-1985, Sub-section (1-A) was substituted. It reads as follows:--
"(1-A) Where as a result of an order under Section 147 or Section 154 or Section 155 or Section 250 or Section 254 or Section 260 or Section 262 or Section 263 or Section 264, the amount on which interest was payable under sub-section (1) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and in a case where the interest is reduced, the Income Tax Officer shall serve on the assessee, a notice of demand in the prescribed form specifying the amount of the excess interest payable and requiring him to pay such amount; and such notice of demand shall be deemed to be a notice under Section 156 and the provisions of this Act shall apply accordingly."
11. In the present case, the Section 214 as it existed prior to 1-4-1985 is relevant. In Section 214, the word 'Regular Assessment' has been used. The aforesaid expression clearly means and refers to the original assessment made under Sections 143 and 144. It does not speak about any assessment after the year of regular assessment. The word 'Regular Assessment' in Section 214 is clear and it does not mean any other conclusion, except the first or the original assessment by the Assessing Officer. The advance tax is a tax paid by the assessee before the regular assessment and is a pre-assessment collection of tax by way of advance payment of tax. The assessee may calculate on the basis of assessed amount of income of the current year of which regular assessment has to be made and not on the basis of total income of relevant previous year. Under Section 219 of the Act advance tax is treated as payment of tax in respect of income of relevant previous year and credit as such for the amount is given to the assessee in the assessment order. On assessment the amount looses its character of advance tax and becomes income tax payment of previous year. The interest payable under Section 214 on any excess amount standing to the credit of assessee is limited to the date of order of assessment and not to the date of refund. The amount of advance tax which was utilised to set off the tax demand raised in the assessment order is nothing but payment of tax pursuant to the assessment order and would have to be similarly treated. Once the amount of advance tax is treated as payment of income tax and dealt with as such in the assessment order, neither the amount which is retained and adjusted against the income tax liability of the assessee nor the balance amount which has to be refunded can be treated as advance tax any longer. If any further refund becomes due and payable as a result of any appellate order, that refund would be of income tax paid by the assessee or treated as to have been paid by the assessee pursuant to the aforesaid order. Interest under Section 214 is payable only upto the date when the amount of advance tax is treated as payment of income tax and is set off against the income tax demand raised in the assessment order.
12. The excess realisation of advance tax, upon assessment and adjustment becomes refundable under Section 237. No further interest is payable on it under Section 214. Interest, if any, on delayed refund is payable under Section 243: If a further sum of money becomes refundable as a result of any appellate order, that amount has to be refunded under Section 240 and with interest, if any, under Section 244. The refund amount is not treated any more in the Act as a portion of the advance tax paid by the assessee. What is refunded pursuant to an appellate order is a portion of what was treated and dealt with as payment of income tax by the assessee. Its character is in no way different from the tax paid pursuant to notice of demand under Section 156 by an assessee. If the assessment order is set aside by a higher authority in its entirety and a direction is given to pass a fresh assessment order, the position would remain he same. There can not be any question of giving credit for advance tax at the stage of any revised assessment passed in consequence of the order of any higher authority.
13. The underlying idea behind Section 243 has been taken to the logical conclusion by Section 244(1-A) which applies where the assessee pays tax or penalty after 31-3-1975 pursuant to an order of assessment or penalty. If as a result of appeal or other proceeding the payment of tax is determined to be in excess of the amount which the assessee was liable to pay, the department has to pay interest to the assessee on the excess amount from the date on which the tax was paid to the date on which the refund was granted. Payment of tax after 31-3-1975 would include the amount of advance tax which was retained by the Income Tax Officer after 31-3-1975 and was adjusted towards the tax liability of an assessee pursuant to an order of assessment. There is no right to get interest on refund except as provided by the statute. Interpretation of Section 214 or any other section of the Act should not be made on the assumption that interest has to be paid whenever an amount which has been retained by the tax authority in exercise of statutory power becomes refundable as a result of any subsequent proceeding.
14. Section 214 contains unmistakable and irrefutable indications that "regular assessment" therein means the original assessment alone. The amendments made to Section 214 from time to time also go to indicate that regular assessment in Section 214 was used in the sense of the first assessment. Therefore, the interest has to be paid as per Section 214 of the Act, cither from the first day of relevant assessment year to the date of the regular assessment.
15. So far as Section 244(1-A) is concerned, the interest is payable when the tax or penalty paid by an assessee pursuant to an order of assessment has been reduced in appeal or any other proceeding. In such a case, an excess amount of tax or penalty paid by the assessee would have to be refunded and the department has to pay interest on the excess amount from the date on which such amount was paid to the date on which the refund was granted. The scope of Sections 214 and 244(1-A) is different. There can be no question of paying interest both under Section 214 and Section 244(1-A) simultaneously, though the rate of interest being the same under both the provisions. Section 214 deals with payment of interest on the amount of tax found to have been paid in excess of the tax determined as payable on the regular assessment. Interest would have to be paid from the first day of the relevant assessment year to the date of the regular assessment, i.e., the first assessment. If the amount on which the interest was payable was varied subsequent to the first assessment, then the quantum of interest had also to be increased or decreased accordingly. But the period for which the interest had to be paid was not altered by the newly substituted Sub-section (1-A) of Section 214. The Apex Court in the case of Modi Industries Ltd. (supra) considering the various decisions of High Courts, true nature of advance tax, the significance of making the interest payable only from the first day of the assessment year, the scheme of the Act and the scope of Sections 214 and 244(1-A) of the Act, held :--
"(i) Up to 31-3-1975, interest under Section 214 is payable from the first day of April of the relevant assessment year to the date of the first assessment order. The amount on which the interest is to be paid is the amount of advance tax paid in excess of the tax payable by the assessee as calculated in the regular assessment (the first assessment order).The amount on which interest was payable did not vary due to reduction or enhancement of tax as a result of any subsequent proceeding. But with effect from 1-4-1985 while the period for which interest was payable remained constant, the amount on which the interest was payable, varied with the variation in the quantum of refund as a result of any subsequent orders.
(ii) If any tax is paid pursuant to an assessment order after 31-3-1975 (which will include tax deducted at source and advance tax to the extent the same has been retained and treated by the Income Tax Officer as payment of tax in discharge of the assessee's tax liability in the assessment order) becomes refundable wholly or in part as a result of any appellate or other order passed, the Central Government will have to pay the assessee interest on the refundable amount under Section 244(1-A). For the purpose of this section, the amount of advance payment of tax and the amount of tax deducted at source must be treated as payment of income tax pursuant to an order of assessment on and from the date when these amounts were set off against the tax demand raised in the assessment order, in other words the date of the assessment order."
16. Recently, the Apex Court considered the question of interest on refund made under appellate order after 31-3-1975 in the case of Income Tax Officer, New Delhi v. Delhi Development Authority [(2002) 1 SCC 695], and stated thus :--
"On the basis of the above provision it has not been disputed before us that up to 1-4-1989 the interest shall be payable in accordance with Section 244 of the Income Tax Act and for the period beyond that, according to Section 244A of the Income Tax Act. So far as the period prior to 1-4-1989 is concerned, the appellant's case is that interest has been rightly calculated under Section 244(1) of the Act. It is submitted that Sub-section (1-A) of Section 244 will not be applicable since the payment of tax was not made in pursuance of any order of assessment. This contention in our view has no force. It would not be necessary that in all cases, before payment is made, there must always be an actual order of assessment. Tax is payable in advance as well. It is deducted at source also, as in the present case. On perusal of Section 244 what seems to be important is that the amount becomes refundable to the assessee by virtue of an order passed in appeal or any proceedings under the Act. Section 240 of the Income Tax Act deals with refund as a result of any order passed in appeal or proceedings under the Act. It reads as under :--
"240. Where, as a result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to the assessee, the Assessing Officer shall, except as otherwise provided in this Act, refund the amount of the assessee without his having to make any claim in that behalf:
Provided that where, by the order aforesaid,--
(a) as assessment is set aside or cancelled and an order of fresh assessment is directed to be made, the refund, if any, shall become due only on the making of such fresh assessment;
(b) the assessment is annulled, the refund shall become due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee."
It will also be beneficial to peruse Section 244 of the Income Tax Act. It is as follows:--
"244. (1) Where a refund is due to the assessee in pursuance of an order referred to in Section 240 and the Assessing Officer does not grant the refund within a period of three months from the end of the month in which such order is passed, the Central Government shall pay to the assessee simple interest as fifteen per cent per annum on the amount of refund due from the date immediately following the expiry of the period of three months aforesaid to the date on which the refund is granted.
(1-A) Where the whole or any part of the refund referred to in Sub-section (1) is due to the assessee, as a result of any amount having been paid by him after the 31st day of March, 1975, in pursuance of any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty, as the case may be, under this Act, the Central Government shall pay to such assessee simple interest at the rate specified in Sub-section (1) on the amount so found to be in excess from the date on which such amount was paid to the date on which the refund is granted: Provided that......"
In the case in hand, as indicated earlier, the direction to refund the amount has been made in the appellate proceedings before the Tribunal. The amount is to be refunded to the assessee. It can not be said that the "refundee" will not be an assessee only for the reason that actually no assessment proceedings had taken place. It would be pertinent to refer to the provision contained under Section 201 of the Income Tax Act which clearly provides that if the principal officer or the company liable to deduct the income tax at source fails to do so, he shall be deemed to be assessee in default in respect of the tax. The definition of the word "assessee" as contained under Sub-section (7) of Section 2 of the Act reads as under :--
"2. (7) 'assessee' means a person by whom any tax or any other sum of money is payable under this Act, and includes--
(a) every person in respect of whom any proceeding under this Act has been taken for the assessment of his income or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or of the amount of refund due to him or to such other person;
(b) every person who is deemed to be an assessee under any provision of this Act;
(c) every person who is deemed to be an assessee in default under any provision of this Act;"
From the above provision, it is clear that the term "assessee" includes actual assessees as well as deemed asscssees under the provision of the Act. It is therefore, not correct to contend that unless there are actual assessment proceedings pertaining to any person, he can not be considered to be an assessee. In the present case DDA was considered to be liable to deduct the tax at source. It failed to do so. Hence, order under Sections 201(1) and 201(1-A) was passed raising the demand and the amount of tax was paid. The order of refund was passed in the appellate proceedings under the Act attracting Section 240 of the Act. Certain decisions were cited at the Bar to show the meaning of the words "assessee" and "assessment" and different stages of the assessment proceedings need not be dealt with in view of clear definition of the word "assessee" under Act as quoted above.
The High Court has rightly provided in Para 12 of its judgment quoted earlier for applying Sub-section (1-A) of Section 244 of the Act for determining interest for the period covered by Assessment Year 1988-89. It is so also for the reason that the amount was paid by way of deductions after 31-3-1975, as provided under Sub-section (1-A) of Section 244 of the Act."
17. In view of aforesaid enunciation of law the position that emerges is that under Section 214 of the Act as it stood in the statute book at the relevant time, the assessee was entitled under Section 214 of the Act interest on advance tax from 1st April of the relevant assessment year to the date of regular first assessment under Section 143 or 144 and not on the revised assessment order pursuant to appellate order. Upto 31-3-1975 interest under Section 214 is payable from the first day of April of relevant assessment year to the date of first assessment order. If any further amount is found refundable as a result of any appellate or other order, then interest under Section 244 is payable on amount of refund. But interest is not payable under both the Sections 214 and 244(1-A) simultaneously.
18. In view of aforesaid, the two questions referred by the Division Bench are answered in the following manner:--
(1) The Tribunal in view of judgment passed by Apex Court in the case of Modi Industries Ltd. (supra) was not justified in holding that the assessee was entitled to interest under Sections 214 and 244(1-A) of the Act.
(2) The Tribunal was justified in law in holding that the assessee was entitled to benefit of interest under Section 244(1-A) on refunds in respect of any amount of tax including self assessment tax paid or given credit in assessment completed after 31-3-1975.
19. In view of aforesaid analysis the first question is answered in the negative and in favour of the Revenue and the second question is answered in the affirmative in favour of the assessee and against the Revenue.
20. Reference answered accordingly.