TaxTMI 
TaxTMI 
2020 (3) TMI 606
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....he business of trading, manufacturing/assembly of telecommunication carrier equipment for sale to independent customers, providing implementation, commissioning and support services related to telecommunication systems. Petitioner is regularly assessed to tax. For the AY 2017-18, Petitioner filed its return of income declaring loss of Rs. 1,21,82,59,981/- and claim refund of Rs. 4,69,12,90,300/-. The return was revised on 28.03.2018 under Section 139(5) of the Act, for claiming higher TDS credit and refund of Rs. 4,83,61,57,240/-. The return was selected for scrutiny by issuing notice dated 27.08.2018 under Section 143(2) of the Act. Petitioner filed its revised return for the second time in response to communication dated 29.01.2018 issued by CPC, Bengaluru, under Section 143(1)(a) of the Act. Thereafter, Petitioner filed an application on 13.04.2016 under Section 197 of the Act for obtaining lower tax deduction certificates @3.12%. Pursuant thereto, the revenue issued a certificate on 04.07.2016 asking the deductors to deduct tax @5% on payments to be made to the Petitioner. As a result of delay in issuance of the certificate, TDS of Rs. 4,89,54,62,680/- was deducted by the deduc....
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....e limit to process the return for this year under proviso to section 143(1) of the Act was 31.03.2018. Petitioner paid several personal visits to the office of Respondent no.1 enquiring about the status of processing of the return. All efforts were in vain. No refund was granted and as a result, Petitioner submitted a representation to Respondent No.1 / AO on 03.01.2018, continued to visit his office and follow up with his staff. This also did not yield any positive outcome. 6. Petitioner, after having exhausted the remedy of following up with the Respondents, filed a grievance with CPGRAM on 4.09.2018, requesting to issue directions to process the tax return and issue the refund at the earliest. The grievance of the Petitioner was disposed of on 27.09.2018 stating that the tax return has been transferred to Respondent No. 1 on 22.01.2017. Petitioner was finally to follow up with him for further clarification. After orally discussing the resolution of the above CPGRAM, Petitioner filed a fresh grievance with CPGRAM on 12.10.2018 requesting to direct Respondent No. 1 to process the return and issue the refund at the earliest. The above grievance application was disposed on 25.10.20....
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.... that there was an order passed against Petitioner under Section 241A of the Income Tax Act. During the course of arguments, the proposal seeking approval for withholding the refund under Section 241A issued by Assistant Commissioner of Income Tax, Circle-8(2), New Delhi along with the approval accorded by the office of Principal Commissioner of Income Tax-3, were handed over and the same were taken on record. Analysis and Findings 9. There are four assessment years that form the subject matter of the present order, viz. AY 2011-12, AY 2016-17, AY 2017-18 and AY 2018-19. Although AY 2011-12 is not the subject matter of any of the petitions, yet we are issuing directions for refund for the reasons given hereinafter. Revenue has informed that an amount of Rs. 84 crores is due as refund by virtue of the judgment passed by this Court dated 25.09.2018, whereby penalty under Section 271G has been deleted. Petitioner contends that the tax officer has not passed an order giving effect to the order of this Court and the refund has not been issued. Mr. Bhatia, on instructions, assures this Court that the refund order has now been processed and the same would be issued. Taking his statement....
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....er chosen to ignore the said decision, or is oblivious of the same. We would now recapitulate and fortify the same. In respect of AY 2016-17, Section 241A may not be relevant, as the said provision was introduced by the Finance Act, 2017 with effect from 1.04.2017. For the subject assessment year, the relevant provision would be Section 143(1D) of the Act which existed prior to the amendment introduced by the Finance Act, 2017. Nonetheless, it does not mean that for the relevant assessment year, revenue could withhold the processing of return and refuse refunds, solely on the ground that the scrutiny assessment had been initiated pursuant to the notice under Section 143(2) of the Act. This Court in TATA Tele Services vs. CBTD (2016) 386 ITR 30 (Delhi) and Bombay High Court in the case of Group M.Media India (P) Ltd. vs. Union of India 2016 388 ITR 594 (Bombay) have examined the position that existed prior to 01.04.2017. In TATA Tele Services Ltd. (supra) the court was considering the challenge to an Instruction no. 1 of 2015 dated 13.01.2015 issued by Central Board of Direct Taxes (CBDT), whereby the Board sought to issue Instructions to clarify doubts expressed in view of the word....
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....that the said instruction shall not hereafter be relied upon to deny refunds to the Assessees in whose cases notices might have been issued under Section 143(2) of the Act. The question whether such return should be processed will have to be decided by the AO concerned exercising his discretion in terms of Section 143(1D) of the Act." 12. From the above extract, it is clear that the Court has interpreted the law to mean that in a case where notice under Section 143(2) of the Act has been issued, that, by itself, does not prevent the revenue from processing the returns. Thus, notice under Section 143(2) is not a limiting factor to the issue of refund under Section 143(1). In fact, the judgment relied upon by the revenue in the case of Vodafone Mobile Services Ltd. vs. Assistant Commissioner of Income Tax [2019] 260 Taxman 417 (Delhi) is also in the same vein. Mr.Bhatia has argued that the decision in Vodafone (supra) distinguishes the decision of TATA Tele Services (Ltd.) and the decision of the Bombay High Court in Group M Media India (P) Ltd. (supra). We do not find the interpretation sought to be propounded by Mr. Bhatia to be correct. In Vodafone Mobile Services Ltd. vs. Assist....
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....ner has undertaken two schemes of amalgamation involving merger of certain group companies in order to restructure its business operations and increase operational efficiencies. In light of the above fact, assessments for the AY 2012-13 and 2013-14 are under special audit and any demand that would arise from the processing of the said assessment years are to be allowed to be adjusted against the refund claims. The petitioner's position is that it is not in a good financial condition. 48. There is some merit in the revenue's argument that substantial outstanding demand are pending against the petitioner. Further, the likelihood of substantial demands upon the assessee after the scrutiny for the AYs is completed, cannot be ruled out. The Revenue should have the right to adjust the demands against the refunds that may arise but have not yet been determined due to ongoing scrutiny proceedings. 49. As far as the argument that the expiry of the one year period, per second proviso to Section 143(1) resulting in finality of the intimation of acceptance, this court is of opinion that the deeming provision in question, i.e. Section 143(1)(d) only talks of two eventualities: "s....
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....). We also do not find any prudence in the manner the respondents have acted by withholding the petitioner's refund. Indisputably, petitioner is a regular taxpayer being assessed by the department year after year. We are not able to discern any application of mind by the revenue in declining the refund. It is an unjust and arbitrary approach to withhold refunds-in anticipation of additions/disallowances that may be made after completion of assessment proceedings, particularly, since in the facts of the present case, there is no history of high tax demand. This becomes evident from the fact that for the subject assessment year 2016-17 in which the petitioner has a refund claim of Rs. 4,21,18,02,760/-, the draft assessment order - though not finalised, raises a demand of not more than 120 crores. In these circumstances, the AO ought to have exercised his discretion objectively in good faith, by considering the relevant material and basing his decision thereon in a logical manner. The respondents have failed to process the returns amounting to more than Rs. 1300 crores due to the petitioner from the department accumulated over the years. On these refunds, interest costs under Section ....
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....served that Section 241A enjoins the AO to process the determined refunds and the discretion vested in him has to be exercised judiciously. The relevant portion of the said judgment read as under: "28. With this backdrop, we now consider the situation at hand. Here the return has been filed on 25.10.2017 for AY 2017-2018 and, therefore, the amended provisions would be applicable. In our considered opinion, the AO has completely misunderstood the refund mechanism and the import of Section 241A of the Act. The legislative intent is clear and explicit. The processing of return cannot be kept in abeyance, merely because a notice has been issued under section 143(2) of the Act. Post amendment, sub-section (1D) of section 143 is inapplicable to returns furnished for the AY commencing on or after 1st Day of April 2017. The only provision that empowers the AO to withhold the refund in a given case presently, is section 241A. Now the refunds can be withheld only in accordance with the said provision. The aforesaid provision is applicable to such cases where refund is found to be due to the Assessee under the provisions of Sub-Section (1) of Section 143, and also a notice has been issued u....
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.... provision would be completely contrary to the intent of the legislature. The AO has been completely swayed by the fact that since the case of the assessee has been selected for scrutiny assessment, he is justified to withhold the refund of tax. 32. The power of the AO has been outlined and defined in terms of the Section 241A and he must proceed giving due regard to the fact that the refund has been determined. The fact that notice under section 143(2) has been issued, would obviously be a relevant factor, but that cannot be used to ritualistically deny refunds. The AO is required to apply its mind and evaluate all the relevant factors before deciding the request for refund of tax. Such an exercise cannot be treated to be an empty formality and requires the AO to take into consideration all the relevant factors. The relevant factors, to state a few would be the prima facie view on the grounds for the issuance of notice under section 143(2); the amount of tax liability that the scrutiny assessment may eventually result in vis-a-vis the amount of tax refund due to the assessee; the creditworthiness or financial standing of the assessee, and all factors which address the concern of....
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....he Income Tax Act, 1961 in the case of the assessee company M/s Ericsson India Pvt. Ltd. for the A.Y. 2017-18- reg. Kind reference is invited to the above. 2. In this regard, it is submitted that the case of the assessee company M/s Ericsson India Pvt. Ltd. has been selected for scrutiny under CASS for the AY 2018-19. The assessee company's case has issues which led to huge additions in past including TP additions. The assessee company has claimed a refund of Rs. 349,41,45,020/- which could not be issued as of now having regard to the fact that a notice under section 143(2) of the Act has already been issued to the assessee company and the grant of refund is likely to adversely affect the revenue. 3. In view of the above facts, you are requested to kindly grant approval to withhold the refund for the AY 2018-19 in the case of the above mentioned assessee company under Section 241A of the Income Tax Act, 1961 till the date on which the assessment is made. 4. Submitted for your kind approval and further necessary directions please." Sd/- 17. The aforesaid orders, are legally unsustainable and not in consonance with the observations made by us in Maple Logistics Private Limi....