COMMISSIONER OF INCOME TAX, BHOPAL versus M/S. SHELLY PRODUCTS AND ANR.

Citation: [2003] SUPP. 1 S.C.R. 79 · Decided: 08-05-2003 · Supreme Court of India · Bench: N. SANTOSH HEGDE · Disposal: Appeal(s) allowed

Judgment (excerpt)

COMMISSIONER OF INCOME TAX, BHOPAL 
v. 
MIS. SHELLY PRODUCTS AND ANR. 
MAY 8, 2003 
[N. SANTOSH HEGDE AND B.P. SINGH, JJ.] 
Income Tax Act, I96I; Sections 4, I30, 140A, I43, 144, I90, I92, I93, 
I94, I99, 207 to 211 and 240 with amendments and Circular dated 23rd 
January, 1990: 
Seif-assessment/payment of advance tax by the assessee-Order of regular 
assessment annulled by the Appellate Authority/Tribunal-Failure of the 
authorities to pass fresh order of assessment-Refund of the tax with interest 
allowed by the Tribunal and affirmed by the High Court on appeal-Held: 
A 
B 
c 
Seif-assessment of the total income and income tax thereon was done by the D 
assessee as per provisions of the Finance Act/Income Tax Act-Hence it 
amounts to admission of tax liability-Since payment of1he advance tax is 
done under the authority of law, retention of advance tax by the Revenue is 
not violative of Article 265 of the Constitution of India-Constitution of India, 
1950-Article 265. 
Payment of advance tax-Failure of the Authorities to pass fresh order 
of assessment-Effect of-Held: When the authorities failed to pass a fresh 
order of assessment, it amounts. to deemed acceptance of the return of the 
income tax-Authorities denuded to veri.fY further correctness and completeness 
E 
of the return-Debarred jiwn raising demand of further tar-Authorities are 
under obligation to refimd on its own the tax paid in excess of liability but F 
cannot make recovery of balance amount from the assessee even if the tax 
paid was less than the liability-Payment of excess tax due to mistake/ 
inadvertence/ignorance of assessee-Authority could grant appropriate relief-
Constitution of India, 1950-Article 265. 
Amendment-Insertion of Proviso (b) to Section 240-Ef!ect of -Held: 
Proviso is clarificatory in nature-Seeks to clari.fY meaning of certain provisions 
of the Principal Act regarding refund of tax paid in excess of liability by 
making explicit that which was implicit-Hence, a declarat01y Act and could 
be applied retrospectively-Interpretation of Statutes. 
·G 
79 
H 
80 
SUPREME COURI REPORTS (2003 J SUPP. I S.C.R. 
A 
Words and Phrases: 
'Self assessment', 'advance Im' and ·refund of tax '-Meaning of 
The question which arose for consideration in these appeals was 
whether the advance tax and self-assessment tax paid by the assessee could 
B be refunded on the sole ground of the failure of authorities to pass an order 
of assessment. 
It was contended for the Revenue that when an order of assessment 
was annulled/set aside and further assessment was not made, assessee 
would be entitled to refund of the tax paid consequent to final assessment 
C and not the advance tax on self-assessment; and that with the introduction 
of proviso (b) to Section 240 of the Act which is a declaratory provision 
of the law it could be effected retrospectively to the assessment in question. 
On behalf of the assessee, it was submitted that when the Revenue 
failed to pass a fresh order of assessment as required by law, assessee was 
D entitled to claim refund of the advance tax paid by him and its refusal by 
the Revenue would be violative of Article 265 of the Constitution of India. 
Answering the question in negative, the Court 
HELD: 1.1. An assessee who has defaulted or delayed payment of 
advance tax or the instalment of advance tax is liable to pay interest. The 
E provisions of the Act cast an obligation on the assessee to pay the advance 
tax by making the deposits in instalments as required by the provisions 
of the Act, and after taking into account the tax paid in advance, to pay 
the balance of the tax and interest, if any payable, while filing the return 
of income. Similar is the provision with regard to the income tax deducted 
F at source. 1t· cannot be contended that the deposit of advance tax or 
deduction of income tax at source is not authorized by law in view of the 
clear mandatory provisions of the Act. (88-C-Df 
1.2. The Income Tax Act enjoins upon the assessee the duty to file a 
return of income disclosing his true income. On the basis of the income 
G 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 return and the payment 
of tax thereon computed at the prescribed rates amounts to an admission 
of tax liability which ~he assessee admits to have incurred in accordance 
with the provisions of t

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