2019 (7) TMI 549 - HC - Income Tax

Refund of income tax - Petitioner filed a revised return which also gave rise to refund claim - revenue ignoring process the return u/s 143(1) instead issued a notice of scrutiny assessment u/s 143(2) - HELD THAT - Petitioner was informed that the refund cannot be issued in view of Section 143(1D) since notice u/s 143(2) of the Act is already issued. A reference is also made to a draft assessment order for the year under consideration which if ultimately finalized would give rise to a tax demand from the Petitioner instead of department paying refund. We would notice as per different decisions of this Court and other High Courts none of these grounds will be sufficient to enable the Respondents to withhold the refund arising out of the said return for the assessment year 2015-16. see Group M. Media India (P) Ltd. V/s. UOI 2017 (1) TMI 1149 - BOMBAY HIGH COURT ; Tata Projects Limited V/s. Dy. CIT 2017 (12) TMI 1525 - BOMBAY HIGH COURT ; Tata Teleservices Ltd. V/s. CBDT 2016 (5) TMI 724 - DELHI HIGH COURT As per the settled law the Respondents cannot avoid processing the return u/s 143(1) and granting refund to the Petitioner if due as per such return. The Respondents have not cited justifiable reasons why such refund cannot be released. Respondents are directed to process the return u/s 143(1) and release refund if due with statutory interest as payable within one month from the date of receipt of copy of this order.

Summary

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.