Law: Income Tax Act, 1961

Section: 143,147&237

Income-tax---Reassessment---Assessment---Return---Refund---Return filed alongwith application for refund is a valid return---Reassessment proceedings cannot be initiated so long as assessment proceedings are not terminated-­Application for refund by trust alongwith return---Trust claiming refund o basis of tax ducted at source ---ITO making a note that question of giving credit for tax deducted at source could be considered in case of beneficiaries and that question of refunding additional surcharge would have to be considered---Note was inconclusive and it was not also communicated trust---Assessment proceedings had not been terminated---Reassessment proceedings could not be initiated---Indian Income Tax Act, 1961, Ss. 143 147 & 237---[CIT v. Trustees of H.E.H. The Nizam's Second Supplement Family Trust (1985) 151 ITR 562 reversed]. It is settled law that unless the return of income already filed i disposed of notice for reassessment under section 148 of the Income Tax Ac 1961, cannot be issued, i.e., no reassessment proceedings can be initiated s long as assessment proceedings pending on the basis of the return already filed are not terminated. A return of income filed in the form prescribed alongwith an application for refund under section 237 of the Act is a valid return. Filing of return in the form prescribed under section 139 of the Act alongwith the application for refund is not an empty formality. It assumes importance if such return had not been filed earlier. The trustees of H.E.H. the Nizam's Second Supplemental Family Trust filed an income-tax return for the assessment year 1962-63 on behalf of the beneficiaries on April 2, 1964. Alongwith the return they filed an application under section 237 for refund of tax deducted at source on Government securities and dividends. The trustees reminded the Income-tax Officer for disposal of the refund application. The Income-tax Officer gave a reply on July 22, 1964, stating that the refund could not be granted to the trustees unless the references on the same question for the preceding assessment years filed by the trustees were disposed of by the High Court. A reminder was again sent by the trustees on…

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