Statutory refund entitlement under section 143(1) requires credit with interest under section 244A unless Revenue substantiates withholding.

A refund determined by intimation under section 143(1) is a statutory entitlement that must be paid along with interest under section 244A unless the Revenue demonstrates a valid, substantiated justification to withhold it. The issuance of a scrutiny notice under section 143(2) does not automatically permit withholding; the Revenue must file and prove specific grounds to justify retention. Absent a demonstrable justification on record, the refund and statutory interest are to be credited to the assessee within the period directed by the court, subject to any timely counter-affidavit establishing cause.

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Issues: (i) Whether a refund determined under section 143(1) of the Income-tax Act, 1961 arising from excess tax deducted at source for Assessment Year 2020-21 can be withheld by the Revenue on the ground that a scrutiny notice under section 143(2) has been issued, and whether the refund along with interest under section 244A is required to be credited to the assessee.

Analysis: The petition seeks direction for crediting the refund determined by intimation under section 143(1) and payment of statutory interest under section 244A. The facts show a withholding of the refund on the ground that a scrutiny notice under section 143(2) was issued. Relevant judicial authorities addressing the effect of a section 143(2) notice on a refund determined under section 143(1) were relied upon to assess whether withholding the refund is justified. The proceedings provide the Revenue an opportunity to demonstrate a valid justification for withholding the refund or a part thereof by filing a counter affidavit within the time directed. Absent a demonstrable and substantiated reason, the statutory entitlement to refund and interest under section 244A prevails and the refund is to be credited within the period directed by the Court.

Conclusion: The refund determined under section 143(1) along with interest under section 244A is to be credited to the assessee unless the Revenue files a counter affidavit within the time directed establishing a valid justification for withholding the refund; direction issued in favour of the assessee.

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