Commissioner of Income Tax, Patiala vs Smt. Vidya Wati

Following question has been referred for opinion of this Court by the income tax Appellate Tribunal, Chandigarh Bench, Chandigarh, arising out of ITA No. 34/Chd./81, in respect of assessment year 1974-75:-

"Whether on facts and in the circumstances of the case, the Appellate Tribunal was right in law in concluding that the Appellate Assistant Commissioner was in error in holding that the assessee was not entitled to any refund of pre-paid taxes including advance tax?"

Facts noticed in the statement of case by the Tribunal are that:-

"Assessment is in respect of Smt. Vidya Wati though Smt. Padma Wati, her daughter and legal heir, as Vidya Wati died and Padma Wati was the legal heir as per will. The assessment year involved is 1974-75 for which the relevant previous year ended on 31-3-1974. The assessee had filed its return showing total income of Rs. 60,103 on 23-7-1974 and paid a sum of Rs. 23,500 as tax in advance. In the course of proceedings, the assessee Vidya Wati died. The deceased Vidya Wati left a will in favour of Padma Wati, her daughter, and as long as on 21-2-1977 Padma Wati had sent a letter informing about the death of Vidya Wati and had also filed a power of attorney. However, an ex parte assessment came to be framed u/s 144 in respect of Vidya Wati but on Sohan Lal, husband of Padma Wati and son-in-law of Vidya Wati, as per legal heir, on the basis of the same return which was filed by late Vidya Wati. Though, a notice dated 19-2-1977 was issued to Vidya Wati after her death care of Sohan Lal and the case was fixed for 25-2-1977 and on 26-2-1977 the ex parte assessment was framed. Neither up to the dates when ex parte assessment was framed i.e., up to 26-2-1977 nor up to 31-3-1977, any notice was served on Padma Wati in respect of the case except a letter on record from Shri RN Puri, IAC, dated 18-2-1977 is available which speaks of death of Vidya Wati. Sohan Lal, however, made an application challenging this assessment stating that the said assessment may be cancelled since the provisions of section 146(1)(ii) were not fulfilled. He mentioned that he had written a letter on 1-4-1977 that he is not legal heir of deceased Vidya Wati and assessment made on him is illegal and it has been made on him as legal heir of Vidya Wati, which he is not, and that he had filed an appeal before the Appellate Assistant Commissioner. The income tax Officer reopened the said assessment on 31-3-1977, as a result of which the appeal filed by Sohan Lal against the said assessment came to be dismissed by the Appellate Assistant Commissioner being found as infructuous. Subsequently, on 8-3-1979, another assessment was framed on Vidya Wati through Padma Wati, her daughter, the legal heir, which when came to be disputed by the assessee, was found time-barred and the same as such was annulled by the Appellate Assistant Commissioner when the matter was carried before her by Padma Wati as legal heir of Vidya Wati in her first appeal. The Appellate Assistant Commissioner, however, annulled the assessment but made an observation that the assessee is not entitled to any refund of pre-paid taxes like advance tax and self-assessment tax."

We have heard learned counsel for the revenue and perused the record of the case.

We find that the question is covered against the assessee by judgment of the Hon''ble Supreme Court in CIT v. Shelly Products [2003] 261 ITR 367 1 wherein it was observed:-

"We find considerable force in the submission of the revenue and it must be upheld. We have earlier noticed the scheme of the Act. Section 4 of the Act creates the charge and provides, inter alia, for payment of tax in advance or deduction of tax at source. The Act provides for the manner in which advance tax is to be paid and penalises any assessee who makes a default or delays payment thereof. Similarly, the deduction of tax at source is also provided for in the Act and failure to comply with the provisions attracts the penal provisions against the person responsible for making the payment. It is, therefore, quite apparent that the Act itself provides for payment of tax in this manner by the assessee. The Act also enjoins upon the assessee the duty to file a return of income disclosing his true income. On the basis of the income so disclosed, the assessee is required to make a self-assessment and to compute the tax payable on such income and to pay the same in the manner provided by the Act. Thus the filing of the return and the payment of tax thereon computed at the prescribed rates amounts to an admission of tax liability which the assessee admits to have incurred in accordance with the provisions of the Finance Act and the income tax Act. Both the quantum of tax payable and its mode of recovery are authorised by law. The liability to pay income tax chargeable u/s 4(1) of the Act thus, does not depend on the assessment being made. As soon as the Finance Act prescribes the rate or rates for any assessment year, the liability to pay the tax arises. The assessee is himself required to compute his total income and pay the income tax thereon which involves a process of self-assessment. Since all this is done under the authority of law, there is no scope of contending that article 265 is violated."

In view of the above, the question referred is answered in favour of the revenue and against the assessee. Reference is disposed of accordingly.