# M/s Harihar Nath Agarwal v. Assistant Commissioner of Income Tax and another

- **Citation:** (2003) 3 ILRA 944
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2003-09-22
- **Case number:** Civil Misc. Writ Petition No. 483 (Tax) of 1994
- **Bench:** M. Katju, Umeshwar Pandey
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-harihar-nath-agarwal-v-assistant-commissioner-of-income-tax-and-another-40227
- **Pages:** 3

## Headnote

Constitution
of
India,
Article
226Taxation Law-assessment by I.T.O.-set
aside by C.I.T. (Appeals)-no fresh orders
passed by I.T.O. within six monthsCentral Govt. shall refund amount so
deposited-alongwith
simple
interestfrom date of deposit, till date of refund.

Held- Para 11 & 12

In Hari Nandan Agarwal (HUF) Vs. ITO
(1986) 159 ITR 816 a Division Bench of
this Court held that where an order of
assessment is set aside and the matter
was restored to the Income Tax Officer
for passing a fresh order of assessment
the assessee is entitled to get a refund of
the
amount
deposited
by
him
in
pursuance of the assessment order. The
same view was taken by a Division
Bench of this Court in Purshottam Dayal
Varshney Vs. CIT (1974) 94 ITR 187 in
which it was held that in view of Section
240 of the Income Tax Act if the I.T.O.
does not grant the refund within a period
of six months from the date of appellate
order the Central Government shall pay
to the assessee simple interest at certain
rate per annum on the amount of refund
from the date immediately following the
expiry of the period of six months to the
date on which the refund is granted. The
period
of
six
months
should
be
calculated from the date of the appellate
order setting aside the assessment and
not from the date of the appellate order
setting aside the assessment and not
from the date on which the I.T.O. makes
a fresh assessment.

Following the aforesaid decisions this
petition is allowed. A mandamus as
prayed for is granted. The respondent
shall refund the amount prayed for with
interest at 12% per annum from the
date of deposit till the date of refund.
This refund must be made within two
months from today.
Case laws discussed:
(1986) 159 ITR 816
CIT (1974) 94 ITR 187

## Text

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944 INDIAN LAW REPORTS ALLAHABAD SERIES [2003
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: ALLAHABAD 22.09.2003

BEFORE
THE HON'BLE M. KATJU, J.
THE HON'BLE UMESHWAR PANDEY, J.

Civil Misc. Writ Petition No. 483 (Tax) of 1994

M/s Harihar Nath Agarwal
...Petitioner
Versus
Assistant Commissioner of Income Tax
and another

 ...Respondents

Counsel for the Petitioner:
Sri V. Gulati

Counsel for the Respondents:
Sri S. Srivastava, S.C.

Constitution
of
India,
Article
226Taxation Law-assessment by I.T.O.-set
aside by C.I.T. (Appeals)-no fresh orders
passed by I.T.O. within six monthsCentral Govt. shall refund amount so
deposited-alongwith
simple
interestfrom date of deposit, till date of refund.

Held- Para 11 & 12

In Hari Nandan Agarwal (HUF) Vs. ITO
(1986) 159 ITR 816 a Division Bench of
this Court held that where an order of
assessment is set aside and the matter
was restored to the Income Tax Officer
for passing a fresh order of assessment
the assessee is entitled to get a refund of
the
amount
deposited
by
him
in
pursuance of the assessment order. The
same view was taken by a Division
Bench of this Court in Purshottam Dayal
Varshney Vs. CIT (1974) 94 ITR 187 in
which it was held that in view of Section
240 of the Income Tax Act if the I.T.O.
does not grant the refund within a period
of six months from the date of appellate
order the Central Government shall pay
to the assessee simple interest at certain
rate per annum on the amount of refund
from the date immediately following the
expiry of the period of six months to the
date on which the refund is granted. The
period
of
six
months
should
be
calculated from the date of the appellate
order setting aside the assessment and
not from the date of the appellate order
setting aside the assessment and not
from the date on which the I.T.O. makes
a fresh assessment.

Following the aforesaid decisions this
petition is allowed. A mandamus as
prayed for is granted. The respondent
shall refund the amount prayed for with
interest at 12% per annum from the
date of deposit till the date of refund.
This refund must be made within two
months from today.
Case laws discussed:
(1986) 159 ITR 816
CIT (1974) 94 ITR 187

(Delivered by Hon'ble M. Katju, J.)

1. This writ petition has been filed
for a mandamus directing the respondents
to refund a sum of Rs. 3,23,226/- with
interest from 1.4.1986 till the date of
actual refund in relation to the assessment
year 1984-85.

Heard learned counsel for the parties.

2. The petitioner was assessed in the
status of A.O.P. and tax was charged at
the maximum marginal rate under the
Income Tax Act. True copy of the
assessment order is Annexure 1 to the
writ petition. Against this order the
petitioner filed an appeal which was
allowed by the C.I.T. (Appeals) which set
aside the order of the I.T.O. and directed
him to pass a fresh order. True copy of the
order of the C.I.T. (Appeals) is Annexure
2 to the writ petition. Against this order
the Department filed an appeal before the
Income Tax Appellate Tribunal which
dismissed the appeal. True copy of the
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3 All] M/s Harihar Nath Agarwal V. Assistant Commissioner of Income Tax and another
945
order of the Tribunal is Annexure 3 to the
writ petition.

3. It is alleged in paragraph 4 of the
writ petition that in pursuance of the order
of the C.I.T. (Appeals) dated 21.3.1988
the I.T.O. was required to pass a fresh
order within two years from the date of
the order of the C.I.T. (Appeals), but the
I.T.O. did not pass any such order, and
hence the assessment has become time
barred.

4. The petitioner wrote a letter dated
17.1.1994 to the A.C.I.T. (Investigation)
Circle II, Agra that since the assessment
proceedings has become time barred on
31.3.1990, hence the tax deposited by him
should be returned to him with interest.
True copy of the letter is Annexure 4 to
the writ petition. The petitioner sent
reminders after reminders but to no avail.
Hence this petition.

5. A counter affidavit has been filed
and we have perused the same. In
paragraph 3 of the same it is stated that
the assessee originally filed return of
Rs.2,45,450/- in the status of a Trust.
Subsequently, the return was revised
declaring an income of Rs.6,89,720/- to
which
a
sum
of
Rs.
6,00,000/-
representing the deposit in the name of
M/s Ankur Trust and Ankur Co. was
surrendered. Along with the revised return
the assessee filed an application stating
that the Trust was not genuine, and the
earlier return and other papers may be
treated as withdrawn During the course of
assessment proceedings it was further
noticed that there were deposits of
Rs.4,44,000/- in the name of C.D. Trust
and Rs. 3,49,100/- in the name of Lord
Ganesh (P) Trust and unexplained money
amounting to Rs. 2,88,609/- with the
Trust. The above amounts were added to
the assessee's income by the I.T.O. who
also disallowed the interest credited on
those deposits. The I.T.O. observed that
as there was no legal Trust in existence,
the income actually belongs to the
trustees. Accordingly he framed the
assessment on protective basis in the
status of A.O.P. and charged the tax at the
maximum marginal rate as the members
and their shares were found to be
undetermined.

6. The C.I.T. (Appeals) allowed the
assessee's appeal and directed that the
income be assessed substantively and in
the status claimed in the return. In further
appeal
the
Tribunal
held
that
the
substantive assessment in the name of the
real owner of the income should be
assessed.

7. It is alleged that effect has been
given and relief allowed by the C.I.T.
(Appeals) and after giveing relief the
remaining
demand
amounts
to
Rs.
1,84,365/-.
True
copy
of
the
tax
calculation
receipt
dated
2.3.1993
calculated on the basis of the direction
given by the C.I.T. (Appeals) is Annexure
1 to the counter affidavit. In paragraph 7
it is alleged that the assessing officer has
not passed a fresh order after the order of
the C.I.T. (Appeals) but he has given
effect to the order of the appellate
authority.

8. A rejoinder affidavit has also been
filed. In paragraph 3 it is stated that the
assessee has never stated that the Trust
was not genuine or that the earlier return
and other papers may be treated as
withdrawn. True copy of the application
dated 27.3.1986 filed with the revised
return is Annexure 1 to the rejoinder
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946 INDIAN LAW REPORTS ALLAHABAD SERIES [2003
affidavit. The finding of the I.T.O. was
that there was no legal Trust in existence,
but the C.I.T. (Appeals) has set aside the
assessment
order
and
directed
the
assessing officer to recompute the income
of the Trust on substantive basis in the
hands of the real owner of the income.

9. A perusal of paragraph 5 of the
order of the C.I.T. (Appeals) shows that
he has directed:

"The I.T.O. is accordingly directed to
recompute the income of the Trust after
considering the material."

In view of the above observation the
Tribunal rightly observed in paragraph 4
of its order that the:

"issue
of
framing
substantive
assessment in the hands of the real owner
of the income earned during the year
under consideration is wide open in this
case resulting in no apprehension of loss
of revenue to the Department."

10. Since the assessment order was
set aside by the C.I.T. (Appeals) by his
order dated 21.3.1988 a fresh assessment
could have been made latest by 31.3.1990
vide Section 153 (2A) of the Income Tax
Act but no fresh order was made by that
date and hence the petitioner is right in
saying that the same has become time
barred.

11. In Hari Nandan Agarwal (HUF)
Vs. ITO (1986) 159 ITR 816 a Division
Bench of this Court held that where an
order of assessment is set aside and the
matter was restored to the Income Tax
Officer for passing a fresh order of
assessment the assessee is entitled to get a
refund of the amount deposited by him in
pursuance of the assessment order. The
same view was taken by a Division Bench
of this Court in Purshottam Dayal
Varshney Vs. CIT (1974) 94 ITR 187 in
which it was held that in view of Section
240 of the Income Tax Act if the I.T.O.
does not grant the refund within a period
of six months from the date of appellate
order the Central Government shall pay to
the assessee simple interest at certain rate
per annum on the amount of refund from
the date immediately following the expiry
of the period of six months to the date on
which the refund is granted. The period of
six months should be calculated from the
date of the appellate order setting aside
the assessment and not from the date on
which
the
I.T.O.
makes
a
fresh
assessment.

12.

Following
the
aforesaid
decisions this petition is allowed. A
mandamus as prayed for is granted. The
respondent shall refund the amount
prayed for with interest at 12% per annum
from the date of deposit till the date of
refund. This refund must be made within
two months from today.
---------