The petitioner is an assessee on the file of the Income Tax Authorities. It is stated that he has been filing returns regularly and assessments were also completed up to the assessment year 2006-2007. In the Writ Petition, the petitioner is aggrieved by the inaction on the part of the respondent in completing the assessment for the assessment year 2000-2001 for which year, according to the petitioner, he had filed a return of income on 31-8-2000 claiming a refund of Rs. 18,65,376/-. The case of the petitioner is that he had paid the said amount by way of advance tax on amounts that were received under a non-compete agreement entered into between M/s.Peninsula Polymers Limited, of which the petitioner was a Director, and M/s. Terumo Corporation. When, despite the filing of the return showing the amount of Rs.18,65,376/- as due to the petitioner by way of refund, no steps were taken by the respondents to refund the said amount, the petitioner by Ext.P4 representation dated 20-4-2007 requested the respondents to sanction the refund. It would appear that, pursuant to the said representation, the first respondent by Ext.P5 communication dated 21-6-2007, called for the original acknowledgment that was issued in connection with the filing of the return. Under cover of Ext.P6 letter dated 4-7-2007, the petitioner produced the original of the acknowledgment before the first respondent. Thereafter, a reminder was sent on 23-08-2007, a copy of which is produced as Ext.P7 in the writ petition. Since no response was forthcoming from the respondents, the petitioner again represented by way of Ext.P8 letter dated 21-9-2007 before the 2nd respondent/Commissioner. Even this did not yield any response from the respondents. The petitioner, thereafter, preferred a complaint before the Income Tax Ombudsman, but the said complaint was also rejected by Ext.P11 order. It is under these circumstances, that the petitioner approaches this Court through the present Writ Petition seeking a direction to the respondents to refund to the petitioner the excess amount of tax paid by him for the assessment year 2000-2001, together with interest thereon. 2. A statement has been filed on behalf of the respondents wherein it is stated that the petitioner had filed the return of income for the year 2000-2001 before the Income Tax Officer, Range -II, Thiruvananthapuram, whereas he ought to have filed it with the Income Tax Officer Range, I, Thiruvananthapuram, who was the jurisdictional Income Tax Officer. Reliance was placed on the decision in Industrial Trust Limited v. CIT - (91 ITR 550) to contend that a return of income submitted to an Income Tax Officer, who had no jurisdiction, over the assessee is an invalid one. The respondents also dispute the acknowledgment, shown on the return stated to have been filed by the petitioner, by pointing out that the signature of the Receiving Officer is not there on the acknowledgment. It is also pointed out that the remedy of the petitioner, while seeking a refund of the advance tax paid, lies in resorting to the procedure under Sections 237 to 245 of the Income Tax Act, and not by approaching the Writ Court in proceedings under Article 226 of the Constitution of India.
3. I heard Sri. Vikram Ramakrishnan, learned counsel appearing on behalf petitioner and Sri. Jose Joseph, the learned Standing counsel for the respondents .
4. On a consideration of the facts and circumstances of the case and also the submissions made across the Bar, I find that in the instant case, the petitioner had filed a return before the Income Tax Officer, Range-II, Trivandrum on 31st August, 2000. In Ext. P2 acknowledgment, that is filed along with the Writ Petition, there is a seal of the Income Tax Office Division - II, Trivandrum, seen affixed at the bottom of the acknowledgment form and also a signature of the receiving official. The petitioner also produced a copy of the original of the acknowledgment that was issued to his brother which shows a similar seal and signature in respect of a return that was filed before the same office. Incidentally, the petitioner's brother was the Managing Director of the same Company and the return was filed by him in almost identical circumstances. The Department does not have a case of non-receipt of the said return and the proceedings against the petitioner's brother culminated in Ext.P9 order of the Appellate Tribunal against which the Department has since preferred an appeal before this Court which is stated to be pending. For the purpose of the instant case, however, the fact that the petitioner's brother had also filed a return, which was received and acted upon by the Department, would suggest that Ext.P2 acknowledgment was also issued in respect of a return that was filed by the petitioner but not acted upon by the Department. It is trite that when a return is filed in terms of Section 139 of the Income Tax Act, it is incumbent upon the Assessing Officer to act on the said return in the manner provided under Section 143 (1) of the Income Tax Act. In other words, the Assessing Officer has to either accept the return, or reject the same and proceed against the assessee for completing an assessment under Section 143 (3) of the Income Tax Act. The provisions of the Act do not envisage a situation where the assessing officer can ignore, or refuse to act upon, a return received by him. In the instant case, where the return indicated that a refund was due to the petitioner on account of advance taxes paid by him, which were not actually payable in so far as the receipt in question was a capital receipt that was not liable to tax under the Income Tax Act, the Assessing Officer ought to have dealt with the return and determined whether the refund claimed in the return was actually payable to the assessee or not. In the instant case, no such action appears to have been taken by the Assessing officer on the ground that the return itself was never received in the office. As already noted, the case of the respondents in the statement filed by them is not that no return was filed by the petitioner, but rather that the return was filed in the wrong office. Even that stand is not supported by the surrounding circumstances since, as already noted, a similar return filed by the petitioner's brother before the same office appears to have been acted upon by the respondents. The fact remains, however, that on account of the non processing of the return, the issue of refund if any, due to the petitioner never came to be determined by the Assessing Officer. As regards the contention of the Department that the provisions under Sections 237 to 245 of the Income Tax Act ought to have been resorted to by the petitioner for claiming refund, I am of the view that the said procedure could not have been resorted to by the petitioner, since there was no assessment, and consequently no tax paid based on an assessment, for the assessment year 2000- 2001. It is trite that in cases covered by Sections 237 to 245, the correctness of an assessment cannot be gone into by the officer concerned while determining the issue as to whether refund is due to the assessee or not. It follows, therefore, that the said procedure can be followed only in cases where there is already an assessment and, thereafter, the assessee approaches the Department for a refund that is due to him in terms of the assessment order. In the instant case, that factual situation does not arise.
5. The upshot of the aforesaid discussion is that while on the one hand, the petitioner has effected payments of advance tax in respect of a receipt that was not taxable in his hands and the Department has accepted the said payment of tax without demur, the assessing officer, on the other hand, did not choose to act upon the return filed by the assessee claiming refund of the excess tax paid and further, even assuming that the assessee had not filed any return, did not choose to proceed against the petitioner, as an assessee in default, for the particular year. It must also be noticed that, while it was open to the petitioner to approach the Department for refund of the amounts paid in excess, immediately after the end of the assessment year, the petitioner also did not choose to approach the Department till 2007, almost 6 years after the end of the assessment year. Thus, this is a case where both the petitioner/assessee as well as the respondent/Department are to blame for the non-completion of an assessment for the assessment year 2000-2001.
6. The question then arises as to what is to be done with regard to the excess payments made by the assessee, by way of advance tax for the assessment year in question. The facts in the instant case reveal that the payments were in fact made, which is not disputed by the Department, and the said payments relate to amounts that were not payable by way of tax, in view of the settled position in law, as noted by the Supreme Court in Guffic Chem P.Ltd. v. CIT - (2011) 4 SCC 254, that amounts received under a non-compete agreement are not taxable under the Income Tax Act up to the assessment year 2003-2004. I am of the view that the ends of justice would be met by directing the respondent to refund the amount of Rs. 1865376/-, that was paid by petitioner in excess for the assessment year 2000-2001, to the petitioner within a period of three months from the date of receipt of a copy of this judgment. Taking into consideration the conduct of the petitioner, in not pursuing his claim in a timely manner, I am inclined to hold that the respondents will not be liable to pay any interest on the said amount to the petitioner.
Resultantly, this Writ petition is allowed to the extent indicated above.
ani/ Sd/-A.K.JAYASANKARAN NAMBIAR JUDGE /truecopy/ P.S.toJudge