K.Lakshminarayana, Yanam V. THE ACIT, Kakinada

ITSSA 1/VIZ/2014

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 1403 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-11-2015
• Assessment Year: misc
• Appeal Filed On: 04-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: TH LUCAS PETER
• Keywords: Invalid notice; Block assessment
• Section: 244A; 132; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . . . . , . . . . , $ $ $ $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./ I.T(SS)A.NO. 01/VIZ/2014 ( / BLOCK PERIOD : 1989-1990 TO 29/01/199 ) K. LAKSHMINARAYANA (HUF) , D.NO. 7-1-011, PYDIKONDALA STREET, YANAM. VS. ACIT, CIRCLE - 1, KAKINADA. [ PAN : AABHK 6029 G ] ( & & & & / APPELLANT) ( '(& '(& '(& '(& / RESPONDENT ) & ) / APPELLANT BY : SHRI G.V.N. HARI AR '(& ) / RESPONDENT BY : TH. LUCAS PETER CIT(DR) ) - / DATE OF HEARING : 16/11/2015 ) - / DATE OF PRONOUNCEMENT : 18 /12/2015 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), VISAKHAPATNAM DATED 07/02/2014 AND PERTAINS TO BLOCK PERIOD FROM 1989-90 TO 29/01/1999. 2 . BRIEF FACTS OF THE CASE, ARE THAT THERE WAS A SEA RCH OPERATION UNDER SEC. 132 OF THE ACT, IN THE CASE OF K. LAKSHM I NARAYANA, 2 IT(SS)A NO.01/VIZ/2014 INDIVIDUAL, ON 29/01/1999. CONSEQUENT TO SEARCH OP ERATION, THE ASSESSING OFFICER ISSUED NOTICE UNDER SEC. 158BD OF THE ACT TO THE ASSESSEE AND DIRECTED HIM TO FILE THE BLOCK RETURN WITHIN 15 DAYS FROM THE DATE OF NOTICE. THE ASSESSEE IN RESPONSE TO TH E NOTICE UNDER SEC. 158BD, FILED BLOCK RETURN ON 26/08/1989 DECLARING U NDISCLOSED INCOME OF RS. 11,94,190/- WITH TAX LIABILITY OF RS. 6,82,001/ -, WHICH WAS PAID BY WAY OF ADJUSTMENT OF CASH SEIZED DURING THE COURSE OF SEARCH AND ALSO SELF-ASSESSMENT TAX. THE A.O. COMPLETED ASSESSMENT UNDER SEC. 158BC READ WITH SEC. 158BD ON 27/03/2001 AND DETERMINED T OTAL INCOME OF RS. 1,93,64,028/- AND TAX LIABILITY OF RS. 1,20,61,870/ -. 3 . AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE F ILED AN APPEAL BEFORE THE HON'BLE ITAT, VISAKHAPATNAM. THE HON'BLE ITAT, VISAKHAPATNAM AFTER CONSIDERING THE ASSESSEES PLEA HAS ANNULLED THE ASSESSMENT ORDER FOR THE REASON THAT THE ASSESSING OFFICER HAS NOT GIVEN 15 DAYS CLEAR TIME FOR FILING THE RETURN. THEREFOR E, THE NOTICE ISSUED UNDER SEC. 158BD IS INVALID CONSEQUENTLY, ANNULLED THE ASSESSMENT ORDER. THE ITAT, FURTHER HELD THAT THE ASSESSING O FFICER HAS NOT RECORDED HIS SATISFACTION BEFORE ISSUING NOTICE UND ER SEC. 158BC OF THE ACT, THEREFORE, THE ASSESSMENT FRAMED CONSEQUENT TO INVALID NOTICE IS VOID AND AB INITIO . THEREAFTER, THE ASSESSING OFFICER PASSED THE CONSEQUENTIAL ORDER TO GIVE EFFECT TO THE HON'BLE I TATS ORDER DATED 3 IT(SS)A NO.01/VIZ/2014 11/04/2011 AND DETERMINED THE TOTAL INCOME OF RS. 1 1,94,190/- AS ADMITTED BY THE ASSESSEE IN THE BLOCK RETURN. THE ASSESSING OFFICER HAD ADJUSTED THE TAX LIABILITY AGAINST THE TOTAL TAX PA ID BY THE ASSESSEE OF RS. 26,85,432/- AND DETERMINED THE REFUND OF RS. 19,68, 918/-. 4 . AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE P REFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE CONTENDED THAT THE ASSESSING OFFICER WAS ERRED IN DETERMINED THE TOTAL INCOME OF RS. 11,94,190/-, AS THE ITAT HELD THAT THE NOTICE ISSUED UNDER SEC. 158BC IS INVALID, THEREFORE, THE RETURN FILED IN RE SPONSE TO INVALID NOTICE IS NON-EXIST IN THE EYES OF LAW. THE ASSESSEE FURT HER SUBMITTED THAT SEC. 240 OF THE ACT WOULD NOT APPLY TO THE BLOCK ASSESSM ENT FRAMED UNDER SEC. 158BC OF THE ACT, AS THE BLOCK ASSESSMENT IS A SEPARATE PROVISION GOVERNED BY CHAPTER XIB OF THE ACT, DIFFERENT FROM THE REGULAR PROVISIONS OF THE INCOME TAX ACT, 1961. THE AUTHORIZED REPRES ENTATIVE OF THE ASSESSEE ALSO ADVANCED AN ALTERNATIVE ARGUMENT THAT IF THE ABOVE ARGUMENTS ARE NOT ACCEPTABLE, THEN, THE TAX VOLUNTA RILY PAID BY THE ASSESSEE COULD ALONE BE ADJUSTED AND THE BALANCE SH OULD BE REFUNDED TO THE ASSESSEE. TO THIS EFFECT, THE ASSESSEE PLACED RELIANCE UPON BY THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MICRO LABS LTD. (348 ITR 75). 4 IT(SS)A NO.01/VIZ/2014 5 . THE CIT(A), AFTER CONSIDERING THE SUBMISSIONS MAD E BY THE ASSESSEE AND ALSO RELIED UPON THE DECISION OF THE H ON'BLE SUPREME COURT IN THE CASE OF CIT VS. SHELLY PRODUCTS AND ANOTHER (261 ITR 367), HELD THAT WHEN AN ORDER OF ASSESSMENT IS SET ASIDE OR AN NULLED, NO FURTHER ASSESSMENT CAN BE MADE. THE ASSESSEE WOULD BE ENTI TLED ONLY TO THE AMOUNT OF TAX PAID IN EXCESS OF THE LIABILITY INCUR RED BY HIM ON THE BASIS OF INCOME RETURNED AND NOT THE TAX PAID BY HIM BY W AY OF ADVANCE TAX OR SELF-ASSESSMENT TAX. THE CIT(A) FURTHER HELD TH AT MERELY BECAUSE THE ORDER HAS BEEN ANNULLED, IT CANNOT BE CONTENDED THA T THE DEPOSIT OF ADVANCE TAX OR SELF-ASSESSMENT TAX IS NOT AUTHORIZE D BY LAW. THE LIABILITY TO PAY INCOME TAX CHARGEABLE UNDER SEC. 4(1) DOES N OT DEPEND ON THE ASSESSMENT BEING MADE. THEREFORE, FOR THE REASONS STATED ABOVE, CONFIRMED THE ASSESSMENT ORDER. AGGRIEVED BY THE CIT(A)S ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 6 . THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUB MITTED THAT CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN DETERMINING UNDISCLOSED INCOME OF RS. 11,94,190/ -. THE AUTHORIZED REPRESENTATIVE FURTHER SUBMITTED THAT IN VIEW OF TH E FACT THAT THE ITAT, VISAKHAPATNAM HAS QUASHED THE ASSESSMENT ORDER AS N OTICE ISSUED BY THE ASSESSING OFFICER UNDER SEC. 158BD IS INVALID . THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE FURTHER SUBMITTED TH AT BLOCK ASSESSMENT 5 IT(SS)A NO.01/VIZ/2014 IS A SEPARATE PROVISION GOVERNED BY SEC. 158BC TO S EC. 158BH OF CHAPTER XIVB OF THE ACT. THEREFORE, ALL OTHER PROV ISIONS OF THE ACT ARE NOT APPLICABLE TO THE BLOCK ASSESSMENT PROCEEDINGS, HENCE, THE CIT(A) WAS NOT CORRECT IN APPLYING THE PROVISIONS OF SEC. 240 OF THE ACT. ALTERNATIVELY, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE PLEADED THAT IN CASE THE ABOVE ARGUMENT IS NOT ACCEPTABLE, THEN THE TAX VOLUNTARILY PAID BY THE ASSESSEE ALONE COULD BE ADJ USTED AND THE BALANCE SHOULD BE REFUNDED TO THE ASSESSEE. IN SUPPORT OF HIS CONTENTION, THE A.R. RELIED UPON THE JUDGMENTS OF HON'BLE KARNATAKA HIGH COURT IN THE CASES OF K. NAGESH VS. ACIT (2015) 125 DTR 50 (KAR.) AND ALSO CIT VS. MICRO LABS LTD. (SUPRA). 7 . ON THE OTHER HAND, DEPARTMENTAL REPRESENTATIVE ST RONGLY SUPPORTED THE ORDER OF THE CIT(A). 8 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MAT ERIALS AVAILABLE ON RECORD. IN THIS CASE, THERE WAS A SEA RCH OPERATION UNDER SEC. 132 OF THE ACT IN THE CASE OF K. LAKSHMI NARAY ANA (IND). CONSEQUENT TO THE SEARCH OPERATION, THE ASSESSEES CASE WAS NOTIFIED AND ACCORDINGLY, NOTICE UNDER SEC. 158BD WAS ISSUED AND ASKED HIM TO FILE BLOCK RETURN WITHIN 15 DAYS FROM THE DATE OF R ECEIPT OF NOTICE. IN RESPONSE TO THE NOTICE UNDER SEC. 158BD, THE ASSESS EE HAS FILED THE BLOCK RETURN AND DECLARED UNDISCLOSED INCOME OF RS. 11,94,190/- AND 6 IT(SS)A NO.01/VIZ/2014 PAID THE ADMITTED TAX. THE ASSESSING OFFICER COMPL ETED THE ASSESSMENT AND DECLARED DETERMINED INCOME OF RS. 1,93,64,028/- . ON APPEAL BEFORE THE ITAT, THE ITAT VISAKHAPATNAM BENCH HAS ANNULLED THE ASSESSMENT ON THE GROUND THAT THE NOTICE ISSUED BY THE ASSESSI NG OFFICER UNDER SEC. 158BD IS INVALID, AS THE ASSESSING OFFICER FAILED T O GIVE 15 DAYS CLEAR TIME FOR FILING THE RETURN OF INCOME AS REQUIRED BY THE ACT. THEREFORE, HELD THAT THE ASSESSMENT ORDER PASSED CONSEQUENT TO INVALID NOTICE WAS NULL & VOID. THE ASSESSING OFFICER, WHILE GIVING E FFECT TO THE ITATS ORDER, DETERMINED TOTAL INCOME AT RS.11,94,190/- AS RETURNED BY THE ASSESSEE IN RESPONSE TO NOTICE UNDER SEC. 158BD. T HE ASSESSE CONTENDED THAT RETURN FILED CONSEQUENT TO INVALID N OTICE WAS NON-EXIST IN LAW, THEREFORE, THE ONLY VALID RETURN EXIST WAS RET URN FILED UNDER SEC. 139(1) OF THE ACT. THEREFORE, THE ASSESSING OFFICE R WAS NOT RIGHT IN DETERMINING THE TOTAL INCOME ON THE BASIS OF INVALI D RETURN FILED UNDER SECTION 158BD. 9 . WE HAVE EXAMINED THE ORDER OF THE ITAT. THE ITAT QUASHED THE ASSESSMENT ORDER ON THE GROUND THAT THE NOTICE ISSU ED UNDER SEC. 158BD IS INVALID, CONSEQUENTLY THE ASSESSMENT FRAME D IS VOID AND AB INITIO . IT MAY BE NOTED THAT THE HON'BLE SUPREME COURT IN THE CASE OF SHELLY PRODUCTS AND ANOTHER (SUPRA), HAS HELD THAT WHEN AN ORDER OF ASSESSMENT WAS SET ASIDE OR ANNULLED, NO FURTHER AS SESSMENT CAN BE 7 IT(SS)A NO.01/VIZ/2014 MADE. THE ASSESSEE WOULD BE ENTITLED FOR THE AMOUN T OF TAX PAID IN EXCESS OF THE TAX LIABILITY INCURRED BY HIM ON THE BASIS OF RETURN FILED. MERELY BECAUSE THE ORDER HAS ANNULLED, IT CANNOT BE CONTENDED THAT THE TAX VOLUNTARILY PAID BY THE ASSESSEE IS NOT AUTHORI ZED BY LAW. THE LIABILITY TO PAY INCOME TAX CHARGEABLE UNDER SEC. 4 (1) DOES NOT DEPEND ON THE ASSESSMENT BEING MADE. EVEN THOUGH, THE ASS ESSMENTS ARE ANNULLED THE FACTS REMAINS THAT THE ASSESSEE HAS VO LUNTARILY FILED THE RETURN, ADMITTED THE UNDISCLOSED INCOME AND PAID TH E TAX. ONCE THE ASSESSEE VOLUNTARILY ADMITS THE UNDISCLOSED INCOME AND CHOOSE TO PAY TAX ON THE BASIS OF ADMITTED INCOME, THEN HE CANNOT CLAIM THAT THE RETURN FILED IN RESPONSE TO NOTICE UNDER SEC. 158BD IS NOT EXIST IN THE EYES OF LAW. 10 . CHAPTER XIVB OF THE ACT PRESCRIBES SPECIAL PROCED URE FOR ASSESSMENT OF SEARCH CASES. AS PER SEC. 158BC AND 158BD, THE ASSESSING OFFICER REQUIRED TO ISSUE NOTICE TO THE A SSESSEE TO FILE THE BLOCK RETURN BY GIVING NOT LESS THAN 15 DAYS AND NO T MORE THAN 45 DAYS TIME FOR FILING THE RETURN. IN THE PRESENT CASE, F ROM THE FACTS IT IS CLEAR THAT THE ASSESSING OFFICER HAS NOT GIVEN MINIMUM 15 DAYS TIME FOR FILING RETURN AS REQUIRED BY THE ACT. THEREFORE, THE ITAT HELD THAT NOTICE IS INVALID AND ASSESSMENT ORDER IS NULL & VOID. THE P ROVISIONS OF SEC. 158BC PRESCRIBED THE PROCEDURE OF BLOCK ASSESSMENT. THE INVALID NOTICE 8 IT(SS)A NO.01/VIZ/2014 WILL ONLY AFFECT THE VALIDITY OF THE ASSESSMENT FRA MED BY THE ASSESSING OFFICER, BUT, IT WOULD NOT AFFECT UNDISCLOSED INCOM E ADMITTED BY THE ASSESSEE IN THE BLOCK RETURN. 11 . THE PROVISIONS OF SEC. 240 PRESCRIBED THE PROCEDU RE FOR REFUND OF TAX AS A RESULT OF ANY ORDER PASSED IN APPEAL. AS PER THE SAID SECTION, WHERE AS A RESULT ANY ORDER PASSED IN APPEAL OR OTH ER PROCEEDINGS UNDER THE ACT, REFUND OF AMOUNT BECOMES DUE TO THE ASSESS EE. THE RELEVANT PROVISION READS AS UNDER:- 240. REFUND ON APPEAL, ETC.- 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 O FFICER SHALL, EXCEPT AS OTHERWISE PROVIDED IN THIS ACT, REFUND TH E AMOUNT TO THE ASSESSEE WITHOUT HIS HAVING TO MAKE ANY CLAIM IN TH AT BEHALF: PROVIDED THAT WHERE, BY THE ORDER AFORESAID, (A) AN ASSESSMENT IS SET ASIDE OR CANCELLED AND AN ORDER OF FRESH ASSESSMENT IS DIRECTED TO BE MADE, THE REFUND, IF A NY, SHALL BECOME DUE ONLY ON THE MAKING OF SUCH FRESH ASSESSM ENT; (B) THE ASSESSMENT IS ANNULLED, THE REFUND SHALL BE COME DUE ONLY OF THE AMOUNT, IF ANY, OF THE TAX PAID IN EXCESS OF THE TAX CHARGEABLE ON THE TOTAL INCOME RETURNED BY THE ASSE SSEE. 12 . THE PLAIN READING OF PROVISO (B) TO SEC. 240 OF THE ACT IS VERY CLEAR THAT IN CASE THE ASSESSMENT IS ANNULLED, THE REFUND SHALL BECOME DUE ONLY OF THE AMOUNT, IF ANY, OF THE TAX PAID IN EXCE SS OF THE TAX CHARGEABLE ON THE TOTAL INCOME RETURNED BY THE ASSE SSEE. IN THE PRESENT CASE, ON PERUSAL OF THE BLOCK RETURN FILED BY THE ASSESSEE ON 26/08/1999 ALONG WITH STATEMENT OF TOTAL INCOME, IT IS ABUNDANTLY CLEAR 9 IT(SS)A NO.01/VIZ/2014 THAT THE ASSESSEE HAS VOLUNTARILY ADMITTED THE UNDI SCLOSED INCOME AND DISCHARGED THE TAX LIABILITY BY PAYING TAX AND ALSO ADJUSTMENT OF CASH SEIZED DURING THE COURSE OF SEARCH. ONCE THE ASSES SEE CHOOSES TO FILE THE RETURN AND PAID THE ADMITTED TAX, THEN, HE CANN OT CLAIM THAT RETURN FILED IS NON-EXIST, BECAUSE OF THE REASON THAT THE NOTICE IS HELD AS INVALID. THEREFORE, IN OUR CONSIDERED OPINION, THE ASSESSEE WOULD BE ENTITLED FOR REFUND OF TAX PAID IN EXCESS OF THE TAX CHARGEABLE ON THE BASIS OF INCOME RETURNED. 13 . NOW COMING TO THE CASE-LAWS RELIED UPON BY THE AS SESSEE. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE RELIED UP ON THE DECISION OF HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MICRO L ABS LTD. (SUPRA). WE HAVE EXAMINED THE CASE-LAWS REFERRED BY THE ASSES SE, IN THE LIGHTS OF THE FACTS OF THE PRESENT CASE. THE HON'BLE KARNA TAKA HIGH COURT HAS NOT LAID DOWN ANY RATIO WITH REGARD TO NON-APPLICAB ILITY OF PROVISO TO SEC. 240 OF THE ACT TO BLOCK ASSESSMENT. THE HON'BLE HI GH COURT TOOK THE VIEW THAT THE ADJUSTMENT OF TAX PAID UNDER KVSS CAN NOT BE CONSTRUED AS VOLUNTARY PAYMENT OF TAX FOR THE PURPOSES OF SEC. 2 40 OF THE ACT. BUT, IN THE PRESENT CASE ON HAND, THE ASSESSEE HAS VOLUNTAR ILY PAID THE TAX AND CHOOSES TO FILE THE RETURN IN RESPONSE TO THE NOTIC E UNDER SEC. 158BC, THEREFORE, THE FACTS OF THE PRESENT CASE ARE TOTALL Y DIFFERENT FROM THE CASE-LAW REFERRED BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. 10 IT(SS)A NO.01/VIZ/2014 THE ASSESSEE ALSO RELIED UPON THE HON'BLE KARNATAKA HIGH COURTS JUDGMENT IN THE CASE OF K. NAGESH (SUPRA). THE HON 'BLE KARNATAKA HIGH COURT IN THE SAID CASE HELD THAT WORD RETURN IN S EC. 240 OF THE ACT SHOULD BE UNDERSTOOD AS A RETURN IN TERMS OF SEC. 1 39 OF THE ACT. IF THE RETURN FURNISHED IS NOT IN CONFORMITY WITH SEC. 139 , IT CEASES TO BE A RETURN UNDER THE ACT. THE WORD RETURN, THUS MEAN S A LEGAL AND VALID RETURN. THE RELEVANT PORTION IS REPRODUCED HEREINU NDER:- 17. CONSIDERING THE SCHEME OF THE ACT, THE WORD RE TURN IN SECTION 240 OF THE ACT, SHOULD BE UNDERSTOOD AS A RETURN IN TERMS OF SEC. 139 OF THE ACT. IF THE RETURN FURNISHED IS NOT IN CONFORMITY WITH SEC. 139, IT CEASES TO BE A RETURN UNDER THE A CT. THE WORD RETURN, THUS MEANS, A LEGAL AND VALID RETURN. TH E UNDERSTANDING OF THE TRIBUNAL THAT THE WORD RETURN EMPLOYED IN THIS PROVISION INCLUDES BOTH VALID AS WELL AS INVALID RETURN IS NO T JUSTIFIABLE. IF SUCH AN INTERPRETATION IS GIVEN TO THE WORD RETURN , IT WOULD DEFEAT THE INTENT OF THE PROVISION ITSELF. IT IS CLEAR FR OM THE SAID PROVISION THAT THE ASSESSEE IS ENTITLED TO THE TAX PAID IN EX CESS OF THE TAX CHARGEABLE ON THE TOTAL INCOME DECLARED BY THE ASSE SSEE IN HIS RETURN. NO TAX SHALL BE LEVIED OR COLLECTED EXCEPT WITH AUTHORITY OF LAW, AS ENJOINED BY ART. 265 OF CONSTITUTION OF IND IA. IF THE RETURN ITSELF IS DECLARED TO BE INVALID BY THE AUTHORITIES AS WELL AS BY THE TRIBUNAL, SUCH RETURN DOES NOT EXIST I.E. IT IS VOI D AB INITIO AND NON- EST IN THE EYE OF LAW WHICH HAS NO LEGAL SANCTITY. IF THAT IS SO, THEN THE INVALID RETURN HAS TO BE IGNORED AND WE HAVE TO EXAMINE THE REFUND TO BE PAYABLE BY THE DEPARTMENT UNDER THE PR OVISO (B) TO SEC. 240 OF THE ACT ON THE BASIS OF THE VALID RETUR N I.E. THE ORIGINAL RETURN FILED BY THE ASSESSEE ON 31 ST AUGUST, 1992 DECLARING HIS TOTAL INCOME OF RS. 57,810/-. FOR WHATEVER REASONS, IF T HE AUTHORITIES WERE BARRED FROM FRAMING THE ASSESSMENT / NOT AMENA BLE TO SELF ASSESSMENT, THEN THE DEPARTMENT IS PRECLUDED FROM W ITHHOLDING THE TAX AND INTEREST PAID BY THE ASSESSEE ON THE RE VISED RETURN WHICH IS HELD TO BE INVALID IN THE EYES OF LAW. EV EN ASSUMING, THE ASSESSEE HAS ADMITTED CERTAIN TAXES IN AN INVALID R ETURN, SUCH ADMITTED TAX CANNOT BE RETAINED BY THE DEPARTMENT U NLESS IT IS SUPPORTED BY LAW. IN THE ABSENCE OF ANY SUCH PROVI SIONS, 11 IT(SS)A NO.01/VIZ/2014 WITHHOLDING OF THE TAXES ADMITTED IN AN INVALID RET URN AMOUNTS TO TAX COLLECTED WITHOUT AUTHORITY OF LAW OFFENDING AR T. 265 OF THE CONSTITUTION. 14 . WITH DUE RESPECT TO THE HON'BLE KARNATAKA HIGH COU RT, WE PREFERRED TO FOLLOW THE RATIO LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF SHELLY PRODUCTS AND ANOTHER (SUPRA), AS THE LAW LAID DOWN BY THE SUPREME COURT IN THE CONTEST OF ANNULLED ASS ESSMENT IS STILL PREVAILS. THE HON'BLE SUPREME COURT IN THE SAID CA SE CATEGORICALLY HELD THAT EVEN THOUGH THE ASSESSMENT IS SET ASIDE OR ANN ULLED CONSEQUENT TO INVALID NOTICE, THE LIABILITY TO PAY TAX IS BASED O N THE RETURN FILED BY THE ASSESSEE. THE HON'BLE SUPREME COURT FURTHER HELD T HAT MERELY BECAUSE THAT THE ORDER HAS BEEN ANNULLED, IT CANNOT BE CONT ENDED THAT THE DEPOSIT OF ADVANCE TAX OR SELF ASSESSMENT TAX IS NO T AUTHORIZED BY LAW. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE ARE OF THE OPINION THAT THE ASSESSING OFFICERS ACTION IN DETERMINING THE INCOME BASED ON RETURN FILED BY THE ASSESSE AND REFUND OF EXCESS TAX IS IN CONFORMITY WITH THE PROVISIONS OF SEC. 24 0 OF THE ACT. THE CIT(A), AFTER CONSIDERING THE RELEVANT FACTS RIGHTL Y UPHELD THE VIEW TAKEN BY THE ASSESSING OFFICER. WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE ORDER OF THE CIT(A). THEREFORE, WE INCLINED TO UPH OLD THE ORDER OF CIT(A) AND REJECT THE GROUND RAISED BY THE ASSESSEE . 12 IT(SS)A NO.01/VIZ/2014 15 . THE NEXT ISSUE CAME UP FOR OUR CONSIDERATION, IS WHETHER THE ASSESSING OFFICER WAS RIGHT IN GRANTING INTEREST UN DER SEC. 244A UP TO THE DATE OF REFUND ORDER. DURING THE COURSE OF HEA RING, THE A.R. SUBMITTED THAT THE ASSESSING OFFICER HAS PASSED THE REFUND ORDER ON 23/01/2012, WHICH WAS SERVED ON THE ASSESSEE ONLY O N 07/03/2012. SINCE, THERE IS DELAY IN SERVICE OF REFUND ORDER TH E INTEREST PAYABLE UNDER SEC. 244A OF THE ACT SHOULD HAVE BEEN GRANTED UP TO THE DATE OF ISSUE OF REFUND. BUT, THE ASSESSING OFFICER HAS GR ANTED INTEREST ONLY UPTO THE DATE OF DETERMINATION OF REFUND I.E. 23/01 /2012 WHICH IS NOT CORRECT. 16 . ON THE OTHER HAND, DEPARTMENTAL REPRESENTATIVE ST RONGLY SUPPORTED THE ORDER OF THE CIT(A). 17 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MAT ERIALS AVAILABLE ON RECORD. AS PER SEC. 244A OF THE ACT, THE ASSESSEE IS ELIGIBLE FOR SIMPLY INTEREST UPTO THE DATE ON WHICH THE REFU ND IS GRANTED. ON PERUSAL OF THE FACTS, WE NOTICED THAT THE ASSESSING OFFICER PASSED THE REFUND ORDER ON 23/01/2012. THE ASSESSEE CONTENDED THAT THE REFUND ORDER WAS SERVED ON THE ASSESSEE ON 07/03/2012. TH EREFORE, THE ASSESSING OFFICER SHOULD HAVE BEEN GRANTED INTEREST UPTO THE DATE OF ISSUE OF REFUND ORDER I.E. ON 07/03/2012. WE HAVE C ONSIDERED THE SUBMISSIONS AND ALSO GONE THROUGH THE ORDERS PASSED BY THE ASSESSING 13 IT(SS)A NO.01/VIZ/2014 OFFICER. SECTION 244A OF THE ACT, REQUIRES PAYMENT OF INTEREST TILL THE DATE OF GRANT OF REFUND. THE ASSESSING OFFICER DET ERMINED THE REFUND ON 23/01/2012 AND PAID INTEREST UPTO THE DATE OF REFUN D. AS COULD BE SEEN FROM THE RECORDS, THERE WAS A MARGINAL DELAY IN SER VICE OF REFUND VOUCHER TO THE ASSESSEE. THE DELAY IN SERVICE OF R EFUND ORDER DOES NOT WITHIN THE KNOWLEDGE OF THE ASSESSING OFFICER, BECA USE THE ASSESSING OFFICER IS REQUIRED TO TAKE ADMINISTRATIVE APPROVAL FROM THE RANGE HEAD FOR ISSUE OF REFUND. IN SOME CASES, THIS PROCESS W OULD TAKE SOME TIME. IN THIS CASE, THOUGH THERE IS DELAY, WHICH IS MARGI NAL. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , WE ARE OF THE OPINION THAT THE DELAY IN ISSUING THE REFUND DOES N OT SEEMS TO BE ABNORMAL DELAY, HENCE, AS PER THE PROVISIONS OF THE ACT, THE ASSESSING OFFICER HAS GRANTED INTEREST UPTO THE DATE OF REFUN D AS PRESCRIBED UNDER THE ACT. THE CIT(A) AFTER CONSIDERING THE RELEVANT FACTS UPHELD THE ACTION OF THE ASSESSING OFFICER. THEREFORE, WE INC LINED TO UPHELD THE ORDER OF THE CIT(A) AND REJECT THE GROUND RAISED BY THE ASSESSEE. 18 IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2015. SD/- SD/- ( . ) ( . . . . ) ( (( ( V. DURGA RAO ) )) ) ( G. MANJUNATHA) / // / JUDICIAL MEMBER / // / ACCOUNTANT MEMBER 14 IT(SS)A NO.01/VIZ/2014 /VISAKHAPATNAM: 3 / DATED : 18/12/2015 VR/SPS ) ' 4 / COPY OF THE ORDER FORWARDED TO :- 1. & / THE ASSESSEE K. LAKSHMINARAYANA (HUF), D.NO. 7-1-011, PYDIKONDAL A STREET, YANAM. 2. '(& / THE REVENUE ACIT, CIRCLE-1, KAKINADA. 3. 5 / THE CIT, RAJAHMUNDRY. 4. 5 () / THE CIT (A), VISAKHAPATNAM. 5. ' , , / // / DR, ITAT, VISAKHAPATNAM 6 . . . . / GUARD FILE / BY ORDER // TRUE COPY // 9: ( SR.PRIVATE SECRETARY ) , / // / ITAT, VISAKHAPATNAM