Assessing Officer's Independence in Refund Issuance Under Section 143(2)

The High Court held that the Assessing Officer must independently decide on refund issuance without being constrained by a notice under Section 143(2). Emphasizing that CBDT instructions should not prejudice the assessee, the court directed the Respondents to process the return under Section 143(1) and release the refund with statutory interest within one month, disposing of the writ petition.

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Issues:
1. Processing of income tax return for Assessment Year 2015-16
2. Granting refund with interest as per statutory provisions

Issue 1: Processing of income tax return for Assessment Year 2015-16
The petitioner, a company under the Companies Act, filed its income tax return for the assessment year 2015-16, giving rise to a refund. Despite filing a revised return and repeated requests, the Assessing Officer issued a notice of scrutiny assessment under Section 143(2) of the Income Tax Act instead of processing the return under Section 143(1). The petitioner argued that the Assessing Officer was duty-bound to process the return and grant the refund, citing relevant statutory provisions and court decisions. The Department opposed the petition, stating that the refund could not be issued due to the notice under Section 143(2) and a potential tax demand from a draft assessment order.

Issue 2: Granting refund with interest as per statutory provisions
The High Court referred to previous judgments and highlighted that the Assessing Officer's discretion to process the return under Section 143(1) and grant a refund should not be fettered by a notice under Section 143(2). The court emphasized that instructions from the CBDT should not prejudice the assessee and that the Assessing Officer must independently decide on refund issuance. Additionally, the court noted that once the time limit for processing the return under Section 143(1) expires, the Assessing Officer should respond to the assessee's refund request promptly. The court directed the Respondents to process the return under Section 143(1) and release the refund with statutory interest within one month from the date of the order, ultimately disposing of the writ petition.

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