JUDGMENT Rajes Kumar, J.
1. The Income Tax Appellate Tribunal has referred the following question of law under Section 256(1) of the Income Tax Act, 1961 (hereinafter referred to as"Act") for the assessment year 1989-90 for opinion to this Court.
"1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in directing the Assessing Officer to refund the advance tax paid by the assessee, pursuant to the assessment order made Under Section 143(3)/148 dated 29.11.1991?"
2. The brief facts of the case are as follows:-
The assessee/opposite party hereinafter referred to as assessee') furnished a return declaring an income of Rs. 320/- pursuant to notice under Section 148 of Income Tax Act, 1961. The assessee also paid an advance tax of Rs. 1 Lac on 30.3.1989 and the said amount of advance tax paid by the assessee was claimed as refundable in the return of income filed on 25.10.1991. The Assessing Officer completed the assessment under Section 143(3)/148 in which, he observed that since the total income is deductible under Section 80 HHC, there is no escapement of income. He therefore, dropped the proceedings vide order dated 29.11.1991. The Assessing Authority, however, did not determine the amount refundable to the assessee.
3. The Deputy Commissioner (Appeal) dismissed the assessees appeal and held that Section 147 is meant only to bring to charge the escaped amount of income to tax and it is not meant to serve as a foundation of any claim such as a refund by an assessee.
4. Aggrieved by the order of Deputy Commissioner (Appeal), assessee filed an appeal before the Tribunal, which was allowed and the Tribunal has directed to refund the advance tax paid by the assessee as the assessee's declared income was not chargeable to tax and there was no tax due. Tribunal held as follows:-
"Once, the A. C. has passed an assessment order under Section 143 read with Section 148 in which he did not disturb the income declared by the assessee at Rs. 320/-. It was incumbent upon the A. C. to issue a refund voucher in respect of the advance tax paid by the assessee. The various judgments relied upon by the assessee clearly supports the assessee's contention that the mention of expression like 'proceedings dropped' and 'proceedings filed' would amount to completion of assessment. Once, the notice under Section 148 was issued and the proceedings of hearing were conducted thereafter, the provisions of the I.T. Act, so far as, may be applied accordingly as if such return were a return required to be furnished under Section 139. This is clear from a reading of the plain language of Section 148 of I. T. Act, 1961. Even otherwise, the assessee could claim a refund under Section 237 read with Section 239 within a period of 2 years prescribed in Section 239 of I. T. Act, 1961 was reduced to 1 year by the Finance Act, 1992, w.e.f. 1.4.1993. Since, the assessee was called upon to furnish a return by issue of a notice under Section 148, the assessee claimed the refund by furnishing a return of income in compliance with the said notice under Section 148. The claiming of such refund by filing a return pursuant to notice under Section 148 substantially complied with the requirements of Section 237 & 239 except that it also requires the assessee to claim the refund in the prescribe form No. 30. This is merely a technical lapse. The revenue cannot withhold the amount of advance tax paid by the assessee, when on making the assessment under Section 143(3)/148 it was found that no tax is due from the assessee. The law does not permit the revenue to derive benefit by way of unjust enrichment by not refunding the amount of advance tax after arriving at the conclusion that the assessee had no taxable income. In the interest of fairness and justice, the department ought to have refunded the advance tax paid by the assessee. The A. C. is directed to refund the advance tax paid by the assessee, as the assessee's declared income was in fact accepted by the assessment order under Section 143(3)/148 vide order dated 29.11.1991"
5. Heard Sri A. N. Mahajan, learned Standing Counsel appearing on behalf of revenue and Sri Shailendra Kumar Jauhari and Sri Khitij Shailendra, learned Counsel for the assessee.
6. Learned Standing Counsel submitted that in the present case, the assessee is not entitled for refund because no assessment was made and the amount deposited was by way of advance tax. In support of his contention, he relied upon the decision of Apex Court in the case of C.I.T. v. Shally Products reported in 261 I.T.R., 367.
7. We do not agree with the submissions of learned Standing Counsel. In present case, in the rerun filed in pursuance of notice under Section 148 of the Act the assesses has not admitted any liability of tax and the refund of the amount which was deposited by way of advance tax, was claimed.
8. In the case of C.I.T. v. Shally Products (supra), the Apex Court held that the assessee was not entitled to claim the refund of tax paid by way of advance tax or on self assessment to the extent of liability of tax admitted. In the said case. The assessee filed return admitting certain liability of tax and in pursuance thereof, assessment was made which was subsequently set aside and nullified, but the Assessing Authority failed to make fresh assessment. The Apex Court held that the assessee is entitled for the refund of the excess amount of tax, but not entitled for refund, which was admitted. In this view of the matter the view of the Apex Court does not help to the revenue rather help to the assessee.
9. Section 237 of the Act contemplates refund which reads as follows:-
Section 237-Refunds:-
"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 be shall be entitled to a refund of the excess."
10. Under Section 237 of the Act, if the Assessing Officer is satisfied that the amount of tax paid by the assessee for any assessment year exceeds the amount with which he is properly chargeable under this Act for that year, the assessee be given refund of the excess amount. In the present case, admittedly, no amount has been held chargeable, therefore, the entire amount deposited towards advance tax was in excess and was refundable. The argument of learned Standing Counsel that in the present case, proceedings under Section 148 of the Act was drooped, therefore, there was no assessment and as such, the assessee was not entitled for refund, has no merit. In the case of Esthuri Aswathiah v. Income Fax Officer, Mysore State, their Lordships of the Supreme Court held that 'no proceedings' terminated to the assessment proceedings, and that it should be construed as meaning that the assessee had no assesseable income. In the case of M.C.T. Muthuraman v. C.I.T. reported in 50 I.T.R. 656, the Madras High Court held as follows:-
"We are of opinion that the proceedings for 1953-54 and 1954-55 were lawfully terminated by the Income Tax Officer. It is true that Section 23 does not in express terms provide for closing the assessment proceedings with an order that no assessment would be levied. Though, the assessee had offered an item of income for assessment as his, the Income Tax Officer came to the conclusion that it was the Hindu undivided family that was liable to be assessed on that income and not the assessee. It was a conclusion, whether it was right or wrong, that he had jurisdiction to reach; and, once be reached that conclusion, he could not tax the assessee. In Esthuri Aswathiah v. Income Tax Officer, Mysore State, their Lordships of the Supreme Court pointed out that the order 'no proceedings' terminated the assessment proceedings, and that it should be construed as meaning that the assessee had no assessable income. The assessment proceedings that commenced with the returns filed by the assessee were lawfully terminated when they were closed with the entry 'N.A.' Thereafter, the finality of the termination of those assessment proceedings could be vacated only by recourse to Section 34, as this was not a case for the application of Section 35."
11. The aforesaid view has been subsequently followed by the Madras High Court in the case of V.S. Sivalingam Chettiar v. Commissioner of Income Tax-I held Madras High Court reported in 62 I.T.R. 678 and by the Rajasthan High Court in the case of Manak Lal Purwal v. C.I.T. reported in 155 I.T.R. 648. In this case, Rajasthan High Court as held that the order for filing the proceedings is held to be order of assessment.
12. In view of the above decision, we are of the view that in the present case, order for dropping the proceedings amounts to order of assessment in pursuance of return filed in pursuance of notice under Section 148 of the Act and assessee was entitled for refund of excess amount deposited.
13. For the aforesaid reasons, we answer the question referred to us in the affirmative i.e. in favour of the assessee and against the revenue. However, there shall be no order as to costs.