{"id":253202,"date":"2000-02-16T00:00:00","date_gmt":"2000-02-15T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/trustees-of-h-e-h-the-nizams-vs-commissioner-of-income-tax-on-16-february-2000"},"modified":"2017-06-26T09:16:16","modified_gmt":"2017-06-26T03:46:16","slug":"trustees-of-h-e-h-the-nizams-vs-commissioner-of-income-tax-on-16-february-2000","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/trustees-of-h-e-h-the-nizams-vs-commissioner-of-income-tax-on-16-february-2000","title":{"rendered":"Trustees Of H.E.H. The Nizam’S … vs Commissioner Of Income Tax on 16 February, 2000"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Trustees Of H.E.H. The Nizam’S … vs Commissioner Of Income Tax on 16 February, 2000<\/div>\n
Author: D Wadhwa<\/div>\n
Bench: D.P.Wadhwa, S.S.M.Quadri<\/div>\n
           PETITIONER:\nTRUSTEES OF H.E.H.  THE NIZAM'S SUPPLEMENTAL FAMILY TRUST\n\n\tVs.\n\nRESPONDENT:\nCOMMISSIONER OF INCOME TAX\n\nDATE OF JUDGMENT:\t16\/02\/2000\n\nBENCH:\nD.P.Wadhwa, S.S.M.Quadri\n\n\n\n\nJUDGMENT:\n<\/pre>\n
      D.P.  WADHWA, J.\n<\/p>\n
      The   question  that  calls   for\t consideration\t is:
\nWhether,  on the facts and in the circumstances of the case,
\nthe  assessment\t made  by  the Income-tax  Officer  for\t the
\nAssessment  Year  1962-63  under Section  143(3)  read\twith
\nSection 147<\/a> of the Income Tax Act, 1961 is valid in law?\n<\/p>\n
      The  case\t concerns  the H.E.H.\tthe  Nizam’s  second
\nSupplemental  Family Trust.  The trustees of the trust filed
\nincome\ttax return for the Assessment Year 1962-63 on behalf
\nof  the\t beneficiaries\ton April 2, 1964.   Along  with\t the
\nreturn\tthey  filed an application under Section 237<\/a> of\t the
\nIncome Tax Act, 1961 (for short the ‘Act’) for refund of tax
\nof Rs.20,050.52 deducted at source on interest on Government
\nsecurities  and dividends.  Section 237<\/a> of the Act  provides
\nfor refund and it is as under:\t–\n<\/p>\n
      “237.   If any person satisfies the Assessing  Officer
\nthat  the  amount  of tax paid by him or on  his  behalf  or
\ntreated\t as paid by him or on his behalf for any  assessment
\nyear exceeds the amount with which he is properly chargeable
\nunder  this  Act  for that year, he shall be entitled  to  a
\nrefund of the excess.”\n<\/p>\n
      Under Rule 41 of the Income Tax Rules, 1962 (for short
\nthe  ‘Rules’)  a claim for refund is to be made in Form\t No.\n<\/p>\n
30.  This Rule is as under:  –\n<\/p>\n
      “41.(1)  A claim for refund under Chapter XIX shall be
\nmade in Form No.30.\n<\/p>\n
      (2)  The claim under sub-rule (1) shall be accompanied
\nby  a return in the form prescribed under section 139<\/a> unless
\nthe claimant has already made such a return to the Assessing
\nOfficer.\n<\/p>\n
      (3)  Where  any part of the total income of  a  person
\nmaking\ta  claim for refund of tax consists of dividends  or
\nany  other income from which tax has been deducted under the
\nprovisions  of sections 192<\/a> to 194<\/a>, section 194A<\/a> and section
\n195<\/a>,  the  claim  shall be accompanied by  the\tcertificates
\nprescribed under section 203<\/a>.\n<\/p>\n
      (4)  The claim under sub-rule (1) may be presented  by
\nthe claimant in person or through a duly authorised agent or
\nmay be sent by post.”\n<\/p>\n
      The claim for refund is to be accompanied by return of
\nincome\tin the form prescribed under Section 139<\/a> of the\t Act
\nunless\tthe  claimant has already made such a return to\t the
\nIncome-tax Officer.\n<\/p>\n
      Since  there  was\t no  response  from  the  Income-tax
\nOfficer\t the  trustees\treminded him on June  17,  1964\t for
\ndisposal  of the refund application.  The Income-tax Officer
\ngave  a reply on July 22, 1964 stating that the refund could
\nnot  be granted to the trustees unless the references on the
\nsame  question\tfor the preceding assessment years filed  by
\nthe trustees were disposed of by the High Court.  A reminder
\nwas  again sent by the trustees on September 23, 1966 to the
\nIncome-tax  Officer  for grant of refund but again no  reply
\nwas  given  by the Income-tax Officer.\tThereafter a  notice
\nunder  Section\t148<\/a> of the Act was received by the  trustees
\nfrom  the  Income-tax Officer requiring them to file  return
\nfor  the Assessment Year 1962-63.  Return was filed on\tJuly
\n3,  1970 declaring an income of Rs.6, 26,200\/- as long\tterm
\ncapital\t gain.\t It  would appear that on the same  day\t the
\nreturn\twas accepted on the income returned by the trustees.
\nThe  trustees  thereafter raised an objection by writing  to
\nthe  Income-tax\t Officer  on July 3, 1970,  after  they\t had
\nreceived the assessment order, that the return filed by them
\non  April  2, 1964 along with refund application  was  still
\npending\t and,  therefore,  the proceedings  initiated  under
\nSection 147<\/a> of the Act were invalid.  They also claimed that
\nthe assessment made pursuant to the notice under Section 148<\/a>
\nwas  equally  invalid.\tTo this the Income-tax Officer\tsent
\nhis  reply on July 16, 1970 stating that the return filed on
\nApril 2, 1964 was disposed of on November 10, 1965 by a note
\nrecorded  by the Income-tax Officer in his file.  This\tnote
\nwas  recorded on November 10, 1965 in the file pertaining to
\nAssessment Year 1963-64 and was to the following effect:  –\n<\/p>\n
      “In  view of the Supreme Court judgment in the case of
\nH.E.H.\t Nizam,\t the  question\tof  giving  credit  for\t tax
\ndeducted  at  source can be considered in the hands  of\t the
\nbeneficiaries.\t Hence,\t no credit for the tax\tdeducted  at
\nsource is to be allowed here.  The question of refunding the
\nadditional surcharge will have to be considered.”\n<\/p>\n
      Against  the order of reassessment dated July 3,\t1970
\ntrustees  filed\t an  appeal before the\tAppellate  Assistant
\nCommissioner  questioning the same.  The Appellate Assistant
\nCommissioner  took the view that the Income-tax Officer\t had
\nnot  passed the final orders on the return filed on April 2,
\n1964  along with application seeking refund.  He, therefore,
\nheld  that  the reassessment made by the Income-tax  Officer
\npursuant  to  the  notice under Section 148<\/a> of the  Act\t was
\ninvalid\t and cancelled the same.  The Revenue then took\t the
\nmatter\tin  appeal  to the Income  Tax\tAppellate  Tribunal.
\nFollowing two questions were raised before the Tribunal:  –\n<\/p>\n
      “(1) Whether the return filed by the assessee on April
\n2,  1964,  along with the refund application was  one  filed
\nunder section 139(1)<\/a> of the Income-tax Act?\n<\/p>\n
      (2) Even if it is assumed that the return filed by the
\nassessee  along\t with  the   refund  application   commences
\nassessment  proceedings,  whether the proceedings should  be
\ntreated\t to have been finalised by the Income-tax Officer at
\nleast by his note dated November 10, 1965, if not earlier by
\nhis  letter  dated  September  26, 1964,  addressed  to\t the
\nassessee,  and\tas  the\t proceedings  for  the\trefund\twere
\nterminated  by\tthe  Income-tax Officer by  his\t note  dated
\nNovember  10,  1965,  there is no bar for  the\treassessment
\nproceedings  for the same year and, hence, the\treassessment
\nproceedings  in respect of the income of such year would  be
\nvalid?”\n<\/p>\n
      There was difference of opinion between the Accountant
\nMember\tand the Judicial Member comprising the Tribunal\t and
\nthe matter was referred to the third member in the following
\nmanner:\t –\n<\/p>\n
      “Whether, on the facts and in the circumstances of the
\ncase,  the  order  of  assessment made by  the\tIncome-\t tax
\nOfficer for the Assessment Year 1962-63 under Section 147<\/a> of
\nthe Income-tax Act, 1961, is valid in law.”\n<\/p>\n
      The  Accountant Member was of the view that the return
\nfiled  by  the assessee along with its refund claim did\t not
\nset in motion any assessment proceedings and consequentially
\nthere\twere  no  assessment   proceedings  which   remained
\nundisposed  of by the Income-tax Officer at the time when he
\ninitiated   proceedings\t under\tSection\t  147<\/a>  of  the\tAct.
\nJudicial Member was of the view that on consideration of the
\nentirety  of  the  facts and circumstances of the  case\t the
\nreturn\tfiled  by the assessee on April 2, 1964 was a  valid
\nreturn.\t  On  second question whether proceedings  had\tbeen
\nterminated  by\tthe noting of the Income-tax Officer in\t the
\norder  sheet the Accountant Member held that proceedings, if
\nany,  that commenced with the return, were terminated by the
\nIncome-tax  Officer by his note dated November 10, 1965.  On
\nthe second question the Judicial Member held that on a plain
\nreading of the endorsement made by the Income-tax Officer it
\nwas  very  clear  that no disposal was given to\t the  return
\nfiled  and  the\t said  endorsement related  to\tthe  opinion
\nexpressed  by the Income-tax Officer about giving credit for
\ntax deduction at source.  Third member (Mr.  D.\t Rangaswamy,
\nVice  President)  after examining the whole matter  said  as
\nunder:\t–\n<\/p>\n
      “Since  I have already expressed my agreement with the
\nviews  expressed  by  the Judicial Member  that\t the  return
\naccompanying  an  application for refund is a  return  under
\nsection\t  139<\/a>  and  all\t  the  procedures,  formalities\t and
\nmachineries  applicable\t to  proceedings of a  return  under
\nsection\t 139<\/a> would apply and I have further agreed with\t his
\nview  that there has been no termination of the proceedings,
\nI  hold\t that  both the Judicial Member\t and  the  Appellate
\nAssistant  Commissioner\t were  right  in  holding  that\t the
\nassessment  made  by  the Income-tax  Officer,\tpursuant  to
\nnotice\tunder  section\t147<\/a>  was   invalid  and\t has  to  be
\naccordingly cancelled.”\n<\/p>\n
      Thereafter,  in  conformity  with\t the  views  of\t the
\nmajority of the members the Tribunal dismissed the appeal of
\nthe revenue.\n<\/p>\n
      At the instance of the revenue under Section 256(1)<\/a> of
\nthe  Act  the Tribunal referred the question of law  arising
\nfrom  its order to the Andhra Pradesh High Court as set\t out
\nin  the\t beginning of this judgment for the opinion  of\t the
\nHigh Court.  High Court was of the view that the order dated
\nNovember  10,  1965  of\t the   Income-tax  Officer  on\t the
\nnote-sheet  (reproduced\t above) was an order of disposal  of
\nthe  tax  return  filed by the trustees.  It held  that\t the
\nreturn\tfiled  by the trustees on April 2, 1964\t along\twith
\nrefund\tapplication  was one filed under Section 139<\/a> of\t the
\nAct  and was valid return and as the refund application\t was
\ndisposed  of  by  order\t dated\tNovember  10,  1965  of\t the
\nIncome-tax  Officer,  there was no bar to  the\treassessment
\nproceeding   for   the\tsame   year  and  the\treassessment
\nproceedings were, therefore, valid.\n<\/p>\n
      Now  it is the assessee, which felt aggrieved and\t has
\ncome  to  this\tCourt.\tIt is not disputed that\t the  return
\nfiled  with the refund application under Section 237<\/a> of\t the
\nAct  is\t a  valid  return and  the  Income-tax\tOfficer\t can
\ninitiate  proceedings  for  assessment on the basis  of\t the
\nreturn\tso  filed.   The  only\t question  that\t falls\t for
\nconsideration  for  us is:  if in the circumstances  of\t the
\ncase  it  could\t be  said  that the  note  recorded  by\t the
\nIncome-tax  Officer  in his file on November 10, 1965 is  an
\norder  which  concluded the assessment proceedings  for\t the
\nAssessment  Year  1962-63  before he  initiated\t proceedings
\nunder  Section 147<\/a> of the Act.\tIt is also not disputed that
\nthis  note\/order  of  November\t 10,  1965  terminating\t the
\nassessment  proceedings for the Assessment Year 1962-63\t was
\nnever  communicated  to the trustees till July 16, 1970\t and
\nthat  too  in  a reply to the letter sent by  the  trustees.
\nAccording to the High Court the note, which is an order, did
\nterminate the assessment proceedings.  High Court was of the
\nview  that the first part of the order gave reasons and\t the
\nsecond\tpart  of the order clearly spoke of  the  conclusion
\nwhen  read:  “Hence no credit for tax deducted at source  is
\nto be allowed here”.\n<\/p>\n
      `\t It is settled law that unless the return of  income
\nalready\t filed is disposed of notice for reassessments under
\nSection\t  148<\/a>  cannot  be   issued,  i.e.,  no\treassessment
\nproceedings   can  be  initiated  so  long   as\t  assessment
\nproceedings pending on the basis of the return already filed
\nare  not  terminated.\tAccording  to\tthe  Revenue  it  is
\nimmaterial whether the order is communicated or not and that
\nthe  only  bar\tto  the\t reassessment  proceedings  is\tthat
\nproceedings  on\t the return already filed should  have\tbeen
\nterminated.   In  support of this contention  reference\t was
\nmade  to  certain  decisions  of the High  Courts  and\tsome
\nobservations  made by this Court in a case, which we note as
\nunder:-\n<\/p>\n
      In  M.Ct.\t Muthuraman vs.\t Commissioner of Income-Tax,
\nMadras<\/a>\t[(1963) 50 ITR 656] the assessment proceedings which
\nhad  commenced\twith the returns filed by the assessee\twere
\nlawfully  terminated  when they were closed with  the  entry
\n“N.A.”\t (not  assessed).   The\t  orders   terminating\t the
\nassessment   proceedings  were\tnot   communicated  to\t the
\nassessee.   The\t Income\t Tax Officer  issued  notices  under
\nSection\t 34<\/a>  of the Income Tax Act, 1922  (corresponding  to
\nSection\t 147<\/a>  of the Income Tax Act, 1961).  The Court\theld
\nthat the assessment proceedings were lawfully terminated and
\nthat “the orders terminating the assessment proceedings were
\nnot  apparently communicated to the assessee did not  affect
\nthe legality of those orders or their finality”.\n<\/p>\n
      In  V.S.\t Sivalingam  Chettiar vs.   Commissioner  of
\nIncome\tTax,  Madras<\/a>  [(1966) 62 ITR 678]  again  a  similar
\nquestion  arose\t before\t the  Madras  High  Court.   It\t was
\ncontended  that\t the conclusion of the Madras High Court  in
\nM.Ct.\tMuthuraman’s  case that “the orders terminating\t the
\nassessment  proceedings were not apparently communicated  to
\nthe  assessee did not affect the legality of those orders or
\ntheir finality” was without reasons.  But the Court rejected
\nthis contention and held :  “But we are satisfied, if we may
\nsay  so with respect, that that is the correct view to take.
\nWherever  orders  are made under the Act, which\t affect\t the
\nassessee  in some form or other, it has provided for service
\nof notice and the remedy there against.\t Section 29<\/a> requires
\nnotice\tof  demand  to be served on an\tassessee;   but\t the
\nsection makes it a condition that a notice of demand will be
\nrequired to be served only when any tax, penalty or interest
\nis  due\t in  consequence  of any order passed  under  or  in
\npursuance  of  the  Act.  Learned counsel  for\tthe  revenue
\nargues\tthat  it  is visualised by the\tsection\t that  there
\nshould\tbe  an\torder made under the Act  under\t which\ttax,
\npenalty\t or  interest  is due before a notice of  demand  is
\nserved,\t and that this means that service of notice does not
\nbear  on the validity of an order.  In other words, what  he
\npoints\tout is that there should be first a valid order, and
\nthen  only  a notice of demand is required to be served,  so
\nthat service of notice is not a condition to the validity of
\nthe  order  itself.   Though prima facie  the  argument\t may
\nappear\tto be tenable, the question may arise as to  whether
\nproceedings  under section 34<\/a> could be initiated between the
\ndate of an order under the Act and service of notice of that
\norder.\t But an examination of some of the other  provisions
\nof  the Act like sections 24(3)<\/a>, 23(5)<\/a> and (6), 27,  proviso
\n(2)  to section 30(1)<\/a> and the related provisions in  section
\n30<\/a>  lead  us to the conclusion that where orders are  passed
\nunder  or in pursuance of the Act, which are prejudicial  to
\nan  assessee,  notice of the order is required to be  served
\nand, for the purposes of resorting to the remedy, limitation
\nis  to\tcount  from the date of service of  notice  of\tsuch
\norder.\tIn this case, from a purely fiscal point of view, it
\ncan  hardly  be said that the orders made by the  Income-tax
\nOfficer on the returns by the assessee as an individual were
\nin any way prejudicial to him.\tThe orders did not fasten on
\nthe assessee any liability to tax.  Nor did they contain any
\nfinding\t which could by any means be said to be against\t the
\nassessee  as  an  individual.\tAll that  was  held  by\t the
\nIncome-tax  Officer was that the income, which the  assessee
\nclaimed\t to be his as an individual, did not belong to\thim.
\nThat  means that he was not held liable to pay any tax.\t  In
\nthat  sense, as it seems to us, not prejudiced as he was  by
\nthe order passed by the Income-tax Officer, failure to serve
\nnotice\tthereof\t did  not  deprive  these  orders  of  their
\nvalidity.   In our view, on a strict reading of the Act,  it
\ndoes  not  appear to contemplate service of notice  in\tsuch
\ncases.\tNevertheless, we feel that it is desirable from many
\npoints\tof view that the revenue serves notice on  assessees
\nof  such  orders.  It will not only tend to fairness to\t the
\nassessee  but also avoid deserving complaints that an  order
\nof  which  the assessee was not aware of forms the basis  of
\nproceedings under section 34<\/a>.”\n<\/p>\n
      Relying  on  these  two decisions of the\tMadras\tHigh
\nCourt  in M.Ct.\t Muthuraman and V.S.  Sivalingam  Chettiar’s
\ncases  Kerala  High  Court in Commissioner  of\tAgricultural
\nIncome-Tax,  Kerala  vs.  K.H.\tParameswara Bhat<\/a> [(1974)  97
\nITR  190] took somewhat a similar view.\t Kerala Agricultural
\nIncome\tTax Appellate Tribunal under the Agricultural Income
\nTax  Act<\/a>,  1950, however, had taken the view that since\t the
\norder  of “nil” assessment had not been communicated to\t the
\nassessee,  the\tnotice under Section 35<\/a> was ab initio  void.
\nThe  ground for the decision was that as far as the assessee
\nwas   concerned,  the\tassessement  proceedings  originally
\ncommenced  were\t still\tpending because the order  of  “nil”
\nassessment  had not been communicated to the assessee.\tHigh
\nCourt  said  that  the\tview   taken  by  the  Tribunal\t was
\nerroneous.  It said :  “The scheme of the Act indicates that
\nthe  making  of\t an  assessment naturally  by  an  order  is
\ndifferent  from the communication of the assessment order to
\nthe  assessee.\t There is no specific provision in  the\t Act
\nenjoining  that an assessment order must be communicated  to
\nthe  assessee.\t Nor is there any provision in the  relevant
\nRules that assessment orders must be communicated.  All that
\nsection 30<\/a> of the Act requires is that a notice of demand in
\nthe  prescribed\t form  specifying the sum payable  shall  be
\nserved\ton  the\t assessee when a tax or penalty\t is  due  in
\nconsequence  of an order passed under the Act.\tBut it is of
\ncourse\tnot  only desirable but necessary that an  order  of
\nassessment  should be communicated to the assessee.  The Act<\/a>
\nitself\t envisages   service  of   the\t assessment   order.
\nSub-section  (3) of section 31<\/a> for instance provides that an
\nappeal\tfrom  the  order of assessment\tshall  be  presented
\nwithin\ta period of thirty days from the date of service  of
\nthe  order.   Apart from this, the assessee is\tentitled  to
\nknow the reasoning for imposing tax or penalty on him and he
\nwould  be able to exercise his right of appeal, if any, only
\nif  the order is communicated to him.  But the questgion  is
\nnot  whether  it  is either desirable or necessary  that  an
\norder  of assessment should be communicated, but whether the
\nlack of communication of the order would make the order void
\nor  would  have\t the  result   of  keeping  the\t  assessment
\nproceedings  pending.\tWe conceive that once an  order\t had
\nbeen  passed by the officer, it is not open to him to modify
\nor  alter  that\t order\teven  if  the  order  had  not\tbeen
\ncommunicated to the assessee, without adopting the procedure
\nprescribed by section 35<\/a> or section 36<\/a>.”\n<\/p>\n
      In  Kalyankumar  Ray vs.\tCommissioner of\t Income\t Tax
\n[(1991)\t 191 ITR 634] this Court said that the\t“assessment”
\nis  one integrated process involving not only the assessment
\nof  the total income but also the determination of the\ttax.
\nIt  said that when the Income Tax Officer first draws up  an
\norder\tassessing  the\ttotal\tincome\tand  indicating\t the
\nadjustments  to\t be made, directs the office to compute\t the
\ntax  payable  on that basis and then approves of it,  either
\nimmediately  or some time later, no fault can be found\twith
\nthe  process,  though it is only when both  the\t computation
\nsheets\tare  signed or initialled by the Income-tax  Officer
\nthat  the  process  described  in  section  143(3)<\/a>  will  be
\ncomplete.   Section  143(3)<\/a>  mandates  that  the  Income-tax
\nOfficer\t “shall, by an order in writing, make an  assessment
\nof  the total income or loss of the assessee, and  determine
\nthe sum payable by him on the basis of such assessment”.\n<\/p>\n
      In  Commissioner\tof Income-Tax, Madras vs.   M.K.K.R.
\nMuthukaruppan  Chettiar<\/a>\t [(1970) 78 ITR 69] it was  observed
\nthat  it  was manifest that notice under Section 34<\/a>  of\t the
\nIncome-Tax  Act,  1922 for reassessment could not be  issued
\nunless\tthe  returns  which  had  already  been\t filed\twere
\ndisposed  of.\tIn that case the Income- tax Officer by\t his
\norder  closed  the assessment as “no assessment”  and  added
\nthat  since  there  was\t no  separate  income,\tthe  pending
\nproceedings would be closed as N.A.  and for income-tax year
\n1953-  54  the\tfile would be removed and clubbed  with\t the
\nfamily\tfile F.\t 1005-A.  This Court said that the order  of
\nthe Income-tax Officer should be interpreted in the light of
\nthe  circumstances  in\twhich that order was passed  and  so
\ninterpreted  “it  appears to us that the Income-tax  Officer
\ndid not intend to conclude the proceedings before him”.\n<\/p>\n
      An order under Section 237<\/a> of the Act is appealable as
\nprovided  in clause (k) of sub-section (1) of Section 246<\/a> of
\nthe  Act.   Section  249<\/a> prescribes  limitation\t for  filing
\nappeal.\t  Sub-section (1) of Section 249<\/a> is relevant and  it
\nis  as\tunder :\t “249.\t(1) Every appeal under this  Chapter
\nshall be in the prescribed form and shall be verified in the
\nprescribed  manner (2) The appeal shall be presented  within
\nthirty days of the following date, that is to say (a) where
\nthe appeal relates to any tax deducted under sub-section (1)
\nof section 195<\/a>, the date of payment of the tax, or (b) where
\nthe appeal relates to any assessment or penalty, the date of
\nservice\t of the notice of demand relating to the  assessment
\nor  penalty :  Provided that, where an application has\tbeen
\nmade  under  section  146<\/a> for reopening an  assessment,\t the
\nperiod from the date on which the application is made to the
\ndate  on which the order passed on the application is served
\non the assessee shall be excluded, or (c) in any other case,
\nthe  date  on  which intimation of the order  sought  to  be
\nappealed against is served.”\n<\/p>\n
      There  is\t difference  in\t clauses   (b)\tand  (c)  of
\nsub-section (2) of Section 249<\/a> of the Act.  Return of income
\nfiled  in the form prescribed along with an application\t for
\nrefund\tunder  Section\t237<\/a> of the Act is  a  valid  return.
\nThere  is no stopping the Income Tax Officer to complete the
\nassessment  on the basis of return so filed.  It may be that
\nthe Income Tax Officer may limit the scope of examination of
\nthe  return to satisfy himself regarding the correctness  of
\nthe  amount  claimed as refund.\t For that purpose,  he\twill
\nexamine\t if the tax paid by the assessee exceeds the  amount
\nof  tax for which he is chargeable.  If it is found that the
\nIncome\twas  “nil”, he will direct refund be granted to\t the
\nassessee for any amount of tax paid.  That will certainly be
\nassessment.   Filing of return in the form prescribed  under
\nSection\t 39<\/a> of the Act along with the application for refund
\nis  not\t an empty formality.  It assumes importance if\tsuch
\nreturn\thad not been filed earlier.  We have reproduced\t the
\nnote\/order dated November 10, 1965 on the file pertaining to
\nassessment  year  1963-64.  In the file for assessment\tyear
\n1963-63\t there\tis another note which is as under:   “Please
\nsee my note in 1963-64 file.  Refund to be considered in the
\nhands of the beneficiaries.”\n<\/p>\n
      The  mere glance at this note would show that it could
\nnot be said that the Income Tax Officer gave finality to the
\nrefund since no refund is granted either in the hands of the
\ntrust  or  in  the  hands of the beneficiaries.\t  It  is  an
\ninconclusive  note  where  the Income Tax Officer  left\t the
\nmatter\tat  the stage of consideration even with  regard  to
\nrefund\tin  the hands of the beneficiaries.  This  note\t was
\nalso  not communicated to the trustees.\t When we examine the
\nnote  dated November 10, 1965 on the file of 1963-64 nothing
\nflows  from that as well.  In any case if it is an order, it
\nwould  be  appealable under Section 249<\/a> of the\tAct.   Since
\nperiod\tof limitation starts from the date of intimation  of
\nsuch  an  order,  it  is imperative that such  an  order  be
\ncommunicated  to  the assessee.\t Had the Income-tax  Officer
\npassed\tany final order, it would have been communicated  to
\nthe  assessee within a reasonable period.  In any case, what
\nwe  find is that the note dated November 10, 1965 is  merely
\nan  internal endorsement on the file without there being  an
\nindication  if\tthe  refund  application  has  been  finally
\nrejected.   By\tmerely\trecording that in  his\topinion,  no
\ncredit\tfor  tax  deducted at source is to  be\tallowed\t the
\nIncome\tTax  Officer  cannot  be said  to  have\t closed\t the
\nproceedings  finally.  Decisions referred to by the  revenue
\nare  of\t no help in the present case.  We are, thus, of\t the
\nopinion\t that during the pendency of the return filed  under
\nSection\t 139<\/a> of the Act along with refund application  under
\nSection\t 237<\/a>  of  the Act action could not have\t been  taken
\nunder  Section\t147<\/a>\/148<\/a>\t of  the Act.\tOur  answer  to\t the
\nquestion,  therefore, is in the negative, i.e., against\t the
\nRevenue.  The appeal is accordingly allowed with costs.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Trustees Of H.E.H. The Nizam’S … vs Commissioner Of Income Tax on 16 February, 2000 Author: D Wadhwa Bench: D.P.Wadhwa, S.S.M.Quadri PETITIONER: TRUSTEES OF H.E.H. THE NIZAM’S SUPPLEMENTAL FAMILY TRUST Vs. RESPONDENT: COMMISSIONER OF INCOME TAX DATE OF JUDGMENT: 16\/02\/2000 BENCH: D.P.Wadhwa, S.S.M.Quadri JUDGMENT: D.P. WADHWA, J. The question that calls […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-253202","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nTrustees Of H.E.H. 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