2016 (3) TMI 1078 - HC - Income Tax

Denial of refunds where scrutiny proceedings have been initiated - Held that - The Court today has been shown a copy of the communication dated 19th February 2016 addressed to the Petitioner by the Assistant Commissioner of Income Tax Centralized Processing Center ( CPC ) Bangalore confirming that the Petitioner s return for AY 2015-16 has been processed. It is stated that the Petitioner has agreed for the adjustment proposed of ₹ 1.94 crore (Rs. 1.76 crore for AY 2008-09 and ₹ 0.17 crore for AY 2011-12) through the on-line option. Considering that the Petitioner has already been communicated the order of processing of return on 19th February 2016, the Court directs that the refund be issued for AY 2015-16 not later than 28th March 2016. As far as AY 2012-13 is concerned, the deadline of finalization of the assessment order expires on 31st March 2016. The Petitioner has already informed the Assessing Officer (AO) that the Petitioner will be filing an appeal before the Commissioner of Income Tax (Appeals) in the event the assessment order is adverse to it. It is accordingly directed that the refund in respect of AY 2012-13 shall be issued to the Petitioner without unnecessary delay and in any event not later than 10th April 2016. To consider the main issue urged in the writ petition, list for hearing on 11th May 2016.

Summary

Issues:
Challenge to Instruction No. 1 of 2015 issued by CBDT and denial of refunds during scrutiny proceedings.

Analysis:
The writ petition sought to quash Instruction No. 1 of 2015 and a letter denying refunds during scrutiny proceedings. The Petitioner argued that the instruction exceeded the scope of Section 143(1D) of the Income Tax Act, as it mentioned that returns "cannot" be processed if Section 143(2) notices were issued. Additionally, the Petitioner claimed refunds for the Assessment Years (AYs) 2012-13, 2013-14, 2014-15, and 2015-16 totaling &8377; 733,73,93,553 along with interest. The Court directed the processing of the AY 2015-16 return without delay, emphasizing the need for timely assessment orders for AYs 2013-14 and 2014-15.

The Revenue filed a Special Leave Petition challenging the Court's order, which was dismissed by the Supreme Court. The Supreme Court urged the High Court to expedite the disposal of the writ petition within three months. The High Court extended the time for completing assessments by a month and allowed the Revenue to decide on issuing Section 143(2) notices. The Petitioner's return for AY 2015-16 was processed, and a refund adjustment was agreed upon. The Revenue assured the release of the refund for AY 2015-16 promptly.

For AY 2012-13, the assessment order deadline was set for 31st March 2016. The Petitioner indicated intent to appeal adverse orders and requested timely refunds. The Court directed the issuance of the AY 2012-13 refund by 10th April 2016. The Revenue highlighted the need for further assessment for AYs 2013-14 and 2014-15, with a Supreme Court directive to complete assessments within a month from 9th March 2016.

The Court scheduled a hearing on the main issue raised in the writ petition for 11th May 2016, and orders were to be provided to the parties' counsel promptly.