B.R.K. Finance and Inv. Company Ltd. vs Income Tax Officer

We have heard Sri Shakeel Ahmad for the petitioner. Sri Govind Krishna appears for the income tax Department. The petitioner company, dealing with the business of investment, financing and consultancy, filed its return of income for the Assessment Year 2007-08 on 31.10.2007, u/s 139(1) of the income tax Act (the Act). The admitted tax amounting to Rs. 15,67,798/- was not deposited under self-assessment. An intimation/order dated 28.11.2008, passed on 28.11.2008 u/s 143(1) of the Act, was served on the petitioner on 29.11.2008, creating tax liability on the petitioner company amounting to Rs. 19,62,491/-.

It is stated in paragraph 7 onwards in the writ petition that the petitioner''s business slowed down in subsequent years, and there was scarcity of funds for depositing the demanded tax but the petitioner started making payments towards demanded tax even before intimation/order dated 28.11.2008. It had deposited Rs. 25,000/- on 24.11.2008, and Rs. 1,80,000/- during the period commencing from 24.11.2008 to 12.12.2008. At this stage, an order was passed u/s 226(3) of the Act, attaching the bank account of the petitioner in Bank of Baroda, Birhana Road Branch, Kanpur.

It is submitted that the order u/s 226(3) of the Act was passed within two days of the intimation dated 28.11.2008. The petitioner requested for allowing four quarterly installments by an application dated 02.12.2008, which was not disposed of. It is stated that since the profits were worked out on the basis of book profits under Sections 115JAA and 115JB of the Act, the petitioner was entitled to credit of the tax to be paid upto next seven years.

By this writ petition, the petitioner has prayed for directions to quash the notice dated 01.12.2008, issued u/s 226(3) of the Act, and to quash/read down the provisions of Sections 115JAA and Section 115JB of the Act. The petitioner has also prayed for direction to respondent No. 1 to refund the unadjusted balance and to allow the petitioner to make payment of the demanded tax in 4 quarterly installments.

Sri Shakeel Ahmad appearing for the petitioner submits that for the subsequent Assessment Years i.e. 2008-09, 2009-10, 2010-11 and 2011-12, the liability of tax as a MAT Company was much lower than normal tax paid by the petitioner and thus there was no question of adjustment of tax to be paid in the year 2007-08.

In the counter-affidavit of Abhiram Kushal, income tax Inspector in the Office of income tax Officer (1) Kanpur, in which it is stated in para. 3 as follows:--

That with regard to the contents of para. 6 of the writ petition, it is submitted that the petitioner filed return for the Assessment Year 2007-08, relevant to Financial Year 2006-07 on 31.10.2007. In the return filed by him, admitted liability of Rs. 15,69,359/- under the provisions of Section 115JB of the Income tax Act, 1961. The petitioner was required to pay this tax by 31.03.2007 and in any case before filing of return i.e. 31.10.2007. This is a liability, which has been admitted by the petitioner himself in its return of income filed on 31.10.07. It is submitted that the order u/s 143(1) of the Act has been passed on 28.11.2008, creating a liability of Rs. 19,62,491/- is the matter of fact just and correct. As per the provisions of Section 140A(1), the petitioner is required to pay the admitted liability of tax, determined as per the provisions of income tax Act before furnishing the return. As per the provisions of Section 140A(3), if the assessee fails to deposit the tax, he will be treated as assessee in default. It is only in the case, where the department determines a liability and serves a notice of demand then the assessee is entitled for a period of thirty days to deposit the tax, from the date on which the demand is raised/communicated to him. In this case, it is not that the demand has been raised by the department, it is an admitted liability of the assessee, which it was required to deposit before filing of return i.e. 31.10.2007. Therefore, the allegation of the petitioner that the Department has taken coercive measures by attaching bank account within two days of intimation/order dated 28.11.08, is not correct. In fact, the Department has taken coercive measures after a gap of thirteen months as he was deemed defaulted as per the provisions of section 140A(3) from 31.10.2007. The allegation otherwise mentioned in the paragraph under reply is faraway from record as well provision framed to this effect.

The petitioner has admitted the tax liability of Rs. 15,69,359/- u/s 115JB of the Act in the Assessment Year 2007-08, relevant to Financial Year 2006-07. He was required to pay the tax by 31.03.2007, and in any case before filing of the return on 31.10.2007. The liability was computed, and there was no question of giving time, to pay the tax by giving installments for which there is no provision under the Act or Rules.

Sri Govind Krishna submits that the tax deposited by the petitioner as M.A.T. Company can be carried forward and set off in accordance with provisions of sub-sections (4) and (5) of Section 115JAA of the Act. There is no provision under the Act to refund the tax deposited. Provisions of sub-sections (4) of Section 115JAA, provide that tax credit shall be allowed and set off in a year when tax become payable on the total income computed in accordance with the provisions of the Act other than Section 115JA or Section 115JB, as the case may be. The set off as provided under sub-section (5) is in respect of brought forward tax credit which shall be allowed for any assessment year to the extent of the difference between the tax on his total income and the tax which would have been payable under the provisions of sub-section (1) of Section 115JA or Section 115JB as the case may for that assessment year.

We do not find that the petitioner has made out a case for refund of tax or for quashing/reading down the provisions of Sections 115JAA and Section 115JB of the Act. The amount paid by the petitioner as a MAT Company can be adjusted during the period u/s 115JA. There is no provision under the Act to refund the amount which has been admitted and which has been paid by the petitioner as MAT Company. We may further observe that this writ petition was filed in the year 2008. On 18.12.2008 an order was passed directing the petitioner to deposit 50% of tax and to give security for the remaining 50%. The deposit of 50% has been made and the security has also furnished. The writ petition is dismissed. If the remaining is not deposited, it will be open to the department to encash the security or to proceed against the petitioner u/s 153 of the Act.