Law: Income Tax Act, 1922

Section: 18A,28(lB)(b),49

Income-tax Act (XI of 1922)----Ss. 18-A, 28 (l-B) (b) & 49-E-Set-off against refund--Word "may" in S. 49-E-To be read as "shall" where assessee wants his refund to be adjusted against tax due-Provision of S. 49-E meant for convenience of both Department as well as tax-payer-Assessee proving his entitlement to refund-Income-tax Officer, in such case, held, duty bound to allow set-off under S. 49-E-Such set-off, however, cannot be demanded by assessee if claim of refund barred by time. Dawarkadas v. I.-T. O. 1929 I T R 60; Mukarjee & Co. v. Union of India (1968) I T R 500 (S C) and Hindustan Construction Co. 1956 I T R 241 (S C) ref. ORDER In this appeal relating to assessment year 1978-79 the assessee contests the penalty of Rs. 1,977 imposed under section 28(1-B)(b) for default of payment of advance tax under section 18-A. The base year in this case is the assessment year 1977-78 for which income of the assessee was assessed at Rs. 32,550 on 12-12-1977 and super-tax demand and of Rs. 1,009 was created. The assessee was supposed to make payment of advance tax on this basis which admittedly he failed to do. Consequently the I.-T. O. imposed penalty under section 28(1-B) (b) which was maintained by the A. A. C. The A. R. contested the impugned penalty only on one ground. He submitted that a refund of Rs. 1,476 was due against the Department and it was the duty of the I.-T. O. to make adjustment of this refund against the tax due from the assessee. It was submitted that for the year 1976-77 income was assessed at Rs. 31,480 on 14-9-1976 and super-tax demand of Rs. 898 was created against the assessee. The assessee had already paid tax amounting to Rs. 2,376 leaving a balance of 1,475 which was refundable to the assessee. The argument of the A. R. has considerable force. Under section 49-E of the income-tax Act the I.-T. O. has been empowered to set oft' tax remaining payable by an assessee in lieu of payment of refund. Section 49-E is reproduced below:- 49-E. Where under the provisions of this Act, the E. P. T. Act, 1940 the Finance Act, 1942, the Excess Profit…

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