TaxTMI 
TaxTMI 
TaxTMI 
2017 (12) TMI 365
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.... solutions, etc. The returns filed by the petitioner under the Act for the previous years were subjected to scrutiny assessment, and orders were passed under Section 143 (3) of the Act. It is stated that, as result of the scrutiny assessment undertaken in the prior years, the losses claimed by the petitioner, in its tax return have marginally reduced. 2.1) It is stated that, the income, the petitioner earns from carrying out its business, are generally subject to withholding tax at a gross level, predominantly under Section 194 J and Section 194 C of the Act. As the petitioner was incurring loss for successive assessment years, Applications were filed with the respondent for every year to issue NIL deduction certificates under Section 197 of the Act. Though the respondent had issued such certificate for the respective assessment years, the time between the date of Application till the date of issuance of certificate, resulted in taxes being deducted by the customers in the interim period, leading to accumulation of Tax Deducted at Source (TDS) credit. 2.2) The petitioner would further state that, on account of the substantial tax losses, there has been no tax liability for the pe....
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....uage used in Section 143 (1 D), it could be inferred that the Assessing Officer has discretionary powers to process the returns and grant resultant refund due to the assessee, even in the case, where, scrutiny assessment has been initiated by issuing notice under Section 143 (2) of the Act. Therefore, the respondent ought to have expedited the refund due to the petitioner/assessee. 5. It is submitted that, for the assessment year 2014-15, the respondent committed an error, and demanded interest under Section 234 (3) at Rs. 46,47,82,586/-, and thereby, denied the refund. The petitioner filed a Petition under Section 154 of the Act, for rectification of the error for the assessment year for the years 2014-15, and the respondent accepted the mistake, stating that, loss was not considered in the assessment order, and accordingly, passed an order on 20.04.2017, stating that the petitioner is entitled to refund of Rs. 54,47,71,095/-. Therefore, the petitioner, for the subsequent assessment year, had approached the Authority, well in advance, to process the return of income under Section 143 (1) of the Act, to enable the petitioner to secure refund. 6. Further, it is submitted that, the....
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....cessing the return filed under Section 143 (1) based on the CBDT Instruction No.1, dated 13.01.2015, but has done so, in the light of the embargo under Section 143 (1 D). 10. It is further submitted that the respondent has never acted arbitrarily and has objectively analyzed the matter and has given certificate under Section 197 for lower deduction of tax at source to the petitioner after duly considering the profitability situation of the petitioner. It is further submitted that, for the assessment year 2015-16 , it has been selected for scrutiny, and notice under Section 143 (2) was issued on 03.07.2017, and in view of the embargo created by Section 143 (1 D) of the Act, return has not been processed under Section 143 (1). 11. Heard Mr. P. S. Raman, the learned Senior Counsel appearing for Mr. R. Sivaraman, the learned counsel for the petitioner, Mrs. Hema Murali Krishnan, the learned Senior Standing Counsel for the respondent, and perused the material placed on record. 12. The petitioner has filed these two Writ Petitions for a direction to expedite the refund claim made by the petitioner by processing their return of income for the assessment years 2015-16 and 2016-17 under ....
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....ing as scrutiny proceedings may result in demand for taxes on finalisation of the assessment subsequently" (emphasis supplied). The circular then proceeds to state as under: "4. Considering the unambiguous language of the relevant provision and the intention of law as discussed above, the Central Board of Direct Taxes, in exercise of the powers conferred on it under section 119 of the Act hereby clarifies that the processing of a return cannot be undertaken after notice has been issued under sub-section (2) of section 143 of the Act. It shall, however, be desirable that scrutiny assessments in such cases are completed expeditiously. 5. This may be brought to the notice of all concerned for strict compliance." 16. Indeed, as already noticed at the time the present petition was filed, a aggregate figure of the refund that the Petitioner was owed for the four AYs i.e. 2012-13 to 2015-16 was to the tune of Rs. 733.73 crores. This is a very substantial figure considering the huge losses that the Petitioner has been suffering over the years. Section 119 of the Act, on the strength of which the impugned Instruction has been issued by the CBDT, no doubt enables the CBDT to issue "suc....
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....3 (1D) of the Act." 13. In the light of the above decision, the Assessing Officer cannot fall back on the Instructions given by CBDT, and refuse to process the return under Section 143 (1). In fact, this Instruction has been cited by the petitioner to state that, it is one of the grounds, on which, the return has not been processed under Section 143 (1) of the Act. 14. The respondent has filed a counter affidavit, clearly stating that, he has not been influenced or guided by the CBDT's Instructions and is aware that Instruction has been quashed. It is the case of the respondent that, in exercise of his discretionary powers and in the light of the legal embargo under Section 143 (1 D) of the Act, the return cannot be processed under Section 143 (1). 15. Some what similar stand was taken before the Hon'ble High Court of Bombay, in the case of Group M. Media India (P) Ltd. (supra) and the action of the Officer in not processing the refund claim under Section 143 (1) was noted and the Court observed as follows :- " The action of the officer on the ground urged seems to be in complete variance with the higher echelons of administration of the tax administration being an ass....
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....he year 2016-17 is concerned. 18. Thus, considering the law laid down by the Hon'ble High Courts of Delhi, Bombay and Gujarat respectively, in the aforementioned decisions and taking note of the fact that the petitioner had suffered at the hands of the Assessing Officer for the assessment year 2014-15, as the Assessing Officer committed a glaring error by treating the petitioner's loss, as if it is an income and demanding tax for the assessment year 2015-16, thereby, wiping out the refund claim made by the petitioner, which error, the petitioner was able to set right only in 2017, and the Assessing Officer having accepted the mistake and passed an order under Section 154 of the Act, and granted refund of Rs. 54,47,71,095, it would be a fit case, where, appropriate direction should be issued to the respondent. 19. In Corrtech International (P) Ltd. (supra), a more or less, identical issue arose for consideration before the Hon'ble High Court of Gujarat, wherein, the petitioner prayed for a direction to the respondent to release the refund in their favour for the assessment years 2015-16 and 2016-17. In the said case, revised the returns were filed on 13.04.2017 and in ....
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....as been substituted by a new proviso under which, it is clarified that the proviso under said sub-section shall not apply to any return furnished for the assessment year commending on or after 01.04.2017. Section 241 A which was inserted simultaneously, now enables the Assessing Officer to withhold the refund in favour of the assessee, which becomes due in terms of sub-section (1) of section 143, if he is of the opinion that, having regard to the fact that a notice has been issued under sub-section (2) of section 143 that the grant of refund is likely to adversely affect the Revenue, he would, however, do so by recording reasons in writing and with previous approval of the Principal Commissioner or Commissioner and withhold such refund is till the date the assessment is made. We may recall that section243, which was omitted w.e.f. 01.06.2001, previously enabled the Assessing Officer to withhold the refund, which becomes due and payable in terms of sub-section (1) of section 143 under certain circumstances, including in a situation where a notice has been issued or is likely to be issued under sub-section (2) of section 143 of the Act and the Assessing Officer is of the opinion that....
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....ocessing the return under sub-section (1) of section 143 read with proviso is not yet over. We do not propose to issue any direction in this respect for curtailing the statutory time limit envisaged therein. " 21. The factual difference, in the instant case is that, for the assessment year 2015-16, the case was selected for scrutiny and notice under Section 143 (2) of the Act was issued on 04.07.2016. Apart from that, the time limit of one year from the end of the financial year is over, and the question of issuing an intimation under Section 143 (1) does not arise, as there is a statutory prohibition under second proviso to Section 143 (1). This is so, because, the return of income was filed by the assessee on 28.11.2015, and the period of one year expired on 31.03.2017. Apart from that, the Application/representation, dated 13.07.2017, given by the petitioner for grant of refund was received by the respondent on 20.07.2017, after issuance of notice under Section 143 (2) of the Act. However, that does not mean the return needs to be endlessly kept pending. In fact, this aspect was also considered in Group M. Media India (P) Ltd. (supra), wherein, the Court observed that, CBDT has....