Case: Income Tax Officer, New Delhi Vs. Delhi Development Authority

far 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 (1A) of Section 244 will not be applicable since the payment of tax was not made in pursuance of any order or 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 to the assessee without his having to make any claim in that 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 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 at (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. (1A) 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 proceedings 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?--------? 6. In the case in hand, as indicated earlier, the direction to refund the amount has been made in appellate proceedings before the Tribunal. The amount is to be refunded to the assessee. It cannot be said that the ?refundee? will not be an assessee only for the reason that actually no assessment proceeding 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 of 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 :?Section 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.?7. From the above provision, it is clear that term ?assessee? includes actual assessees as well as deemed assessees 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 cannot be considered to be an assessee. In the present case D.D.A. was considered to be liable to deduct the tax at source. It failed to do so. Hence, order under Section 201(1) and 201(1A) was passed raising the demand and amount of tax was paid. The order of refund was passed in 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 the Act as quoted above.8. The High Court has rightly provided in para 12 of its judgment quoted earlier for applying Sub-section (1A) of Section 244 of the Act for determining interest for period covered by the 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 (1A) of Section 244 of the Act.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]6. In the case in hand, as indicated earlier, the direction to refund the amount has been made in appellate proceedings before the Tribunal. The amount is to be refunded to the assessee. It cannot be said that thewill not be an assessee only for the reason that actually no assessment proceeding 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 of 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 wordas contained under Sub-section (7) of Section 2 of the Act reads as under :?Section 2(7) `Assessee? means a person by whom (any tax) or any other sum of money is payable under this Act, andevery 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.?7. From the above provision, it is clear that termincludes actual assessees as well as deemed assessees 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 cannot be considered to be an assessee. In the present case D.D.A. was considered to be liable to deduct the tax at source. It failed to do so. Hence, order under Section 201(1) and 201(1A) was passed raising the demand and amount of tax was paid. The order of refund was passed in appellate proceedings under the Act attracting Section 240 of the Act. Certain decisions were cited at the Bar to show the meaning of the wordst? and different stages of the assessment proceedings need not be dealt with in view of clear definition of the wordunder the Act as quoted above.8. The High Court has rightly provided in para 12 of its judgment quoted earlier for applying Sub-section (1A) of Section 244 of the Act for determining interest for period covered by the 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 (1A) of Section 244 of the Act.