The main legal point established in the judgment is that the Revenue has no authority to retain tax in excess of any amount determined to be payable by the assessee if no order is passed within the prescribed period under Section 153(2A) of the Act.

1. The petitioner has approached this Court by making the following substantive prayers:

(i) issue a writ in the nature of certiorari for quashing the impugned order/letter dt. 12th Jan., 2006 (Annex. P-13) passed by respondent No. 3;

(ii) issue a writ in the nature of mandamus thereby directing the respondents to allow the claim for the refund of Rs. 5,61,380 along with interest for the asst. yr. 1989-90;

2. The petitioner, which is a partnership firm carrying on the business of manufacturing and sale of diesel engines and spares, filed its return of income, for the asst. yr. 1989-90 declaring net assessable income at Rs. 4,55,289. Not satisfied with the return filed by the petitioner, the AO issued notices to the petitioner under Sections 143(2)/142(1) of the IT Act, 1961 (for short the Act) and vide assessment order dt. 31st March, 1992 assessed the income of the petitioner at Rs. 17,45,390. Aggrieved against the assessment order, the petitioner filed an appeal before the CIT(A), who vide order dt. 10th Nov., 1995 accepted the appeal of the petitioner and restored the matter back to AO to redetermine the liability of the petitioner after affording reasonable opportunity of being heard to the petitioner.

3. In compliance to the order of the C-IT(A), the AO vide order dt. 20th March, 1997 decided the issues again. Still aggrieved against the order passed, the petitioner again approached CIT(A), who vide his order dt. 10th Oct., 2000, again while setting aside the assessment order, restored the matter, back to AO to redecide the same and to pass fresh order of assessment. As is evident from the record, a notice was issued to the petitioner for passing fresh order on 15th Feb., 2001 but admittedly no order was passed by the AO in compliance to the order passed by CIT(A).

4. Vide letter dt. 21st Aug., 2002, the petitioner made a request to the concerned ITO for refund of excess tax deposited by the petitioner. Various reminders were also sent on 17th June, 2003, 10th July, 2003, 15th April, 2004, 11th Nov., 2004, followed by a request to the CIT, Ludhiana, on 4th Aug., 2005. It was thereafter that the petitioner was informed vide letter dt. 12th Jan., 2006 that in the absence of any assessment having been made, no refund has become due to the petitioner. Feeling aggrieved against the action of the respondents whereby on the one hand the remand case was not decided by the AO and on the other hand the petitioner was being deprived of his entitlement of refund of the tax paid on the ground that the remand case has not been decided.

5. The respondents had placed on record brief facts of the case under the signatures of Dy. CIT, Phagwara Circle, Phagwara, wherein it is stated that after the issue of notice dt. 5th Feb., 2001 for decision of the remand case in terms of direction given by CIT(A), though the matter was fixed on two occasions namely, 19th Feb., 2001 and 14th March, 2001, but no final order was passed. It has further been stated therein that after the petitioner submitted his representation to CIT-II, Jalandhar, to know the reasons for non-completion of set aside assessment, an inquiry has already been instituted. The stand of the respondents further is that since the remand case of the petitioner has not been decided, he is not entitled to either refund of the amount of tax or the interest thereon. A further plea has been taken that the petitioner has alternative remedy of invoking the provisions of Section 119 of the IT Act seeking waiver of the condition laid down in Section 240, proviso (a) of the Act which debarred the grant of a refund during the period when the assessment is set aside till such time the fresh order of assessment passed by the AO....

6. We have heard Shri Varun Gupta, learned Counsel appearing for the petitioner and Dr. N.L. Sharda, advocate for the Revenue.

7. The relevant provisions of the Act applicable in the present case are extracted below:

Section 153. Time-limit for completion of ass