Law:

Section:

Section 141 of the Income-tax Act, 1961 [Corresponding to section 23B of the Indian Income-tax Act, 1922] - Provisional assessment - Assessment year 1954-55 - Whether if regular assessment is a void proceeding and, therefore, nonest, amount paid towards provisional assessment continues to bear that character and cannot be deemed to have been paid towards regular assessment - Held, yes - Whether where regular assessment under section 23(4) was held to be without jurisdiction, amount of tax paid by assessee pursuant to provisional assessment continued to be valid payment and therefore, assessee was not entitled to refund of that amount - Held, yes FACTS The ITO made a provisional assessment of tax under section 23B of 1922 Act, determining the tax payable which was duly paid. Thereafter, the proceedings for regular assessment were initiated and an assessment order under section 23(4) of 1922 Act was passed and a notice of demand was issued after adjusting the amount paid by the assessee in pursuance of the assessment under section 23B of the 1922 Act. On writ petition filed by the assessee, the assessment order under section 23(4) of 1922 Act was quashed by the court on the ground that as the assessee had filed a voluntary return, a notice under section 22(4) of 1922 Act could not be issued and the non-compliance with such a notice could not justify an assessment under section 23(4) of 1922 Act. Thereafter, the ITO resumed the assessment proceedings and issued a notice under section 23(2) of 1922 Act. The assessee raised an objection that the assessment proceedings were barred by limitation. A prayer was also made for refund of the tax paid under section 23B of 1922 Act. The objections were overruled by the ITO. On writ the court quashed the order of the ITO as time barred. Thereafter, the assessee applied to the ITO for expediting the refund of the tax paid under section 23B of 1922 Act. The ITO rejected the application on the ground that this High Court had merely set aside the assessment under section 23(4) of 1922 Act and had not declared the order under section 23B of 1922 Act invalid. The Commissioner, endorsed the view taken by the ITO and declined to…

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