1960 PLP 1107 (PTD)

MUHAMMAD MUNIR, C. J.‑This is a case stated by the Income tax Appellate Tribunal under section 66, subsection (1) of the Income‑tax Act at the instance of the assessee, Messrs Thakar Das Chela Ram of Multan, who on their income from cloth business were being assessed as a Hindu Undivided family, first under the Income‑tax Act of 1918 and subsequently under the Income‑tax Act of 1922, up to and including the year of assessment 1941‑

42. Assessment for the year 1941‑42 on the income of the previous year 1st April 1940 to 31st March 1941 was made on 14th April 1941 without any objection by the assessee and a tax of Rs. 1,872‑13‑0 was paid on 4th December 1941. The assessment went un-appealed. During the assessment proceedings for the year 1942‑43, the assessee made a claim under section 25‑A of the Act alleging that the family property had been partitioned on 31st March 1941 and that the cloth business had been taken over on the date of disrup tion by the severed members of the family as partners of a firm. By his order, dated the 21st July 1942, the Income‑tax Officer recognized the partition and the succeeding firm was registered under section 26‑A of the Act. On 12th June 1944, the assessee made an application purport ing to be one under section 25 (4) and section 35 of the Income tax Act, claiming a refund on the income for the period 1st April 1940 to 31st March 1941. The ground of the claim was thus stated in paragraphs (4) and (5) of that application :‑ "(4) That when the ownership in the cloth business changed in favour of the firm on 31st March 1941, there was succession. Section 25 (4) and section 25 (3), therefore, came into action. This is patent from the record. "(5) That under sections 25 (4) and 25 (3), as amplified by 1943 Income‑tax Reports, 247, no tax on the cloth business for the period 1st April 1940 to 31st March 1941 was to be assessed and the tax so recovered was to be refunded under section 35, read with section 48 and sections 25 (4) and 25 (3). The appli cation under section 48 is also attached." You are, therefore, requested to kindly refund tax of Rs. 1,872‑13‑9 recovered for 1941‑42 vide 23 (3) order, dated 401 October 1941." The claim in the application under section 48 was stated to rest on similar grounds. The Income‑tax Officer refused refund, holding that the claim was not admissible under any of the sections relied upon. The assessee appealed to the Appellate Assistant Commissioner but he upheld the order of the Income‑tax Officer. An appeal to the Income‑tax Appellate Tribunal met a similar fate. As the question involved is one of law, the Tribunal have stated the case and requested us to return a reply to the following question: "Whether, in the circumstances of the case, the claim to refund of tax, paid by the applicant for the assessment year 1941‑42, is admissible in law, having regard to the provisions contained in section 48 (4) or section 25 (5) of the Act ? " Since the decision of the point turns on the interpretation of sections 25 and 48, the relevant provisions of those sections need examination. Subsection (4) of section 25 says:‑ "Where the person who was at the commencement of the Indian Income‑tax (Amendment) Act, 1939, carrying on any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income‑tax Act, 1918, is succeeded in such capacity by another person, the change not being merely a change in the constitution of a partnership, no tax shall be payable by the first mentioned person in respect of the income, profits and gains of the period between the end of the previous year and the date of such succession, and such person may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, proms and gains of the said period. Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and, if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference." Subsection (3) of the same section directs inter alia that no claim to the relief afforded under subsection (4) shall be entertain ed unless it is made before the expiry of one year from the date on which the business, profession or vocation was discontinued or the succession took place, as the case may be, section 48 of the Act which opens the chapter on refunds is as follows: "48 (1) If any individual, Hindu Undivided Family, company, local authority, firm or other association of persons, or any partner of a firm or member of an association individually satisfies the Income‑tax Officer or other authority appointed by the Central Government in this behalf that the amount of tax paid by him or on his behalf or treated as paid on his behalf for any year exceeds the amount with which he is properly chargeable under this Act for that year, he shall be entitled to a refund of any such excess." Subsection (4) of that section, which places certain restrictions on the right to claim refund is as follows :‑ "Nothing in this section shall operate to validate any objection or appeal which is otherwise invalid or to authorize the revision of any assessment or other matter which has become final and conclusive, or the review by any officer of a decision of his own which is subject to appeal or revision, or where any relief is specifically provided else where in this Act, to entitle any person to any relief other or greater than that relief or to entitle any person to claim a refund of tax payable before the commence ment of the Indian Income‑tax (Amendment) Act, 1939, which he would not be entitled to claim but for the passing of that Act." In the present case, as the firm had succeeded to the cloth business on 31st March 1941, the tax payable on the income for the period from the end of the previous year to the date of succes sion, namely, from 1st April 1940 to 31st March 1941, was clearly exempt from tax under subsection (4) of section

25. This was conceded by the Tribunal, the Appellate Assistant Commissioner and the Income‑tax Officer. The claim was, however, disallowed on the ground that it amounted to a claim to the relief afforded under subsection (4) of section 25 and that since it was not made before the expiry of one year from the date on which succession to the business took place, it was barred by subsection (5). The claim was held to be inadmissible under section 48, subsection (1) on the ground that granting it would amount to a reopening of the assessment for 1941‑42 which had become final and con clusive as well as to a review by the Income‑tax Officer of a decision of his own which was subject to appeal or revision, and also because the relief having been specifically provided for in section 25 and being barred by subsection (5) of that section could not beheld admissible by reason of subsection (4) of section

48. Relying on Meyyappa Chettiar v. Commissioner of Income‑tax, Madras (11 I T R 247), the assessee contends that there was no question of the relief being barred by time, because by reason of an express direction to that effect in subsection (4) of section 25, the Income tax Officer could not levy any tax on the income for the period in question and that the levy being a nullity, a refund was claim able notwithstanding subsection (5) of section

25. The argument advanced is the same as was put forward and found favour with the learned Judges of the Madras High Court in the case above cited and is founded on the words "no claim to the relief afforded under subsection (4)" that occur in subsection (5) of section

25. In that case the Income‑tax Officer had refused to grant exemption from tax for the period between the close of the previous year and the date of succession because the assessee had not made a formal claim for such exemption within one year from the date of succession. The position taken by the Income tax Officer there was obviously wrong because the assessment hav ing not been completed he was still under the obligation not to levy tax on the income for the period between the end of the previous year and the date of succession of business. There was, therefore, no question of making any claim in that case. But where the assessment has been completed and tax for the exempted period levied and paid, it is impossible to press into service the ratio decidendi of the Madras case to support the proposition that a claim for refund of a wrongly levied tax is not a "claim to the relief afforded under subsection (4)" within the meaning of sub section (5) of section

25. It is true that subsection (4) of section 25 does not use the word "claim" in respect of the exemp tion for the period between the end of the previous year and the date of succession of the business but the use of the words "further claim" in respect of the alternative claim to have the income of the previous year substituted for the income of that period indi cates quite clearly that the exemption for the aforesaid period is itself a claim. In fact that claim is the primary claim and the further claim mentioned in the subsection only an alternative claim. Therefore, a claim for refund of the tax wrongly levied on the income of the period between the close of the previous year and the date of succession is a "claim to the relief afforded under subsection (4)" within the meaning of subsection (5) and will be barred under the latter subsection if it is not made before the expiry of one year from the date on which the succession to business took place. Under section 50 the ‑period for a claim under section 48 is four years from the last day of the financial year commencing next after the expiry of the previous year. The claim, in the present case, would, therefore, so far as section 48 is concerned, be within time, provided there be nothing to prevent it being admitted under that section. The Income‑tax Act is a complete Code on the law of Income‑tax. It not only exhaustively defines the liability of the subject but also provides the machinery by which the liability may be imposed and enforced and wrong or illegal impo sitions rectified. Therefore, a person who complains of a wrong improper levy and seeks relief from such levy has to point to some specific provision 'which provides for the redress of that wrong and, if the admissibility of the claim to that relief is fettered by certain restrictions, he has further to show that no such restriction operates in this particular case. Now subsection (1) of section 481 recognizes a person's right to "a refund of take if it exceeds the amount with which he was properly chargeable under the Act. I have already held that the tax on the income for the period between the end of the previous year and the date of succession of business was exempt from tax. Therefore imposing tax on that income amounted to an improper charge. But though this may be so, the question still remains whether any of the restrictions in sub section (4) of that section is applicable to this case so as to make the claim inadmissible. There can be no doubt that if the claim is admitted, the assessment for the year 1941‑42 which became final and conclusive when no appeal against that assessment was made, will have to be revised. The grant of refund would also amount to reviewing by the Income‑tax Officer of his own decision which was subject to appeal. And lastly, this particular relief is specifically provided for in subsection (5) of section 25 and therefore could only be claimed within the four corners of that subsection. Since I have held that the claim for refund was a claim for the relief afforded by subsection (4) of section 25, subsection (5) of that section becomes applicable and the claim for relief being hope lessly barred by time cannot be claimed under the general pro visions of section 48, because the granting of such relief would amount to granting any "relief other or greater than the relief specifically provided elsewhere" in this Act within the meaning of subsection (4) of section

48. For these reasons, the reply to the, question referred is in the negative. Reference answered in the negative.