2022 (12) TMI 1388 - HC - Income Tax

Court Orders Explanation for Refund Holdup Under Tax Act Section 241A

The court directed the respondents to provide reasons for withholding the refund as required under Section 241A of the Income Tax Act, 1961. The ... Withholding the amount qua which refund is sought - grievance of the petitioner/assessee is that despite intimation concerning refund being received via communication the amount mentioned therein along with the applicable interest has not been remitted - HELD THAT:- Respondents accepts notice on behalf of the respondents/revenue. He in particular, will place before us the record disclosing the reasons for withholding the amount qua which refund is sought. In case the instructions are received to resist the petition, a counter affidavit will be filed before the next date of hearing. List the matter on 03.02.2023. Issues Involved:1. Refund not remitted despite intimation.2. Withholding of refund without reasons.3. Applicability of Section 241A of the Income Tax Act, 1961.Issue 1: Refund not remitted despite intimationThe petitioner/assessee raised a grievance that despite receiving communication regarding a refund, the amount along with interest has not been remitted. The refund pertains to the assessment year 2020-21. The respondents/revenue cited an email as the reason for withholding the refund, mentioning a letter received from FAU. The petitioner's counsel argued that no reasons were provided for withholding the refund, emphasizing the requirement under Section 241A of the Income Tax Act, 1961 to record reasons. The petitioner's counsel referred to a previous judgment by a coordinate bench to support this contention.Issue 2: Withholding of refund without reasonsThe petitioner's counsel contended that the withholding of the refund without providing reasons is in violation of Section 241A of the Income Tax Act, 1961. The counsel highlighted the need for the concerned officer to record reasons for such actions. The respondents' counsel accepted notice and agreed to provide instructions, specifically mentioning that the record disclosing the reasons for withholding the refund would be presented. It was decided that in case instructions were received to resist the petition, a counteraffidavit would be filed before the next date of hearing.Issue 3: Applicability of Section 241A of the Income Tax Act, 1961The petitioner's counsel argued that Section 241A of the Income Tax Act, 1961 mandates the recording of reasons for actions such as withholding a refund. The counsel relied on a previous judgment by a coordinate bench to support this argument. The respondents' counsel agreed to provide instructions and assured the court that the reasons for withholding the refund would be disclosed. The matter was listed for the next hearing date to further address the issue.This judgment primarily revolves around the petitioner's complaint regarding the non-remittance of a refund despite intimation, the withholding of the refund without reasons, and the applicability of Section 241A of the Income Tax Act, 1961, emphasizing the necessity of recording reasons for such actions to ensure transparency and compliance with legal provisions.