2019 (10) TMI 400 - HC - Income Tax

Refund orders with interest - HELD THAT - The department does not dispute that the demands for other assessment years of the petitioner are presently not enforceable. That being the position, the refund of the petitioner arising out of the order of assessment for the said assessment year 2014-15, cannot be withheld, that too on the ground of technical difficulty of the system not accepting such a declaration of stay of the demands and giving effect to such position . The computer system and auto generation or any difficulty in doing so in a particular case, cannot override the correct legal position. In the present case, the correct legal position is that the petitioner must receive the refund. Whatever the technical difficulties in releasing the refund, the department must sort it out. If for some reason of technical glitch the system in the present case fails to permit the payment of refund, the concerned authorized officer must manually do so. We, therefore, direct the respondents to release the petitioner s refund amount of ₹ 224,28,74,090/- with statutory interest, which shall be done within a period of two weeks from the date of receipt of this order.

Summary

Issues:
1. Direction to Income Tax authorities for refund of excess tax deducted.
2. Withholding of refund due to technical glitch in the system.

Issue 1: The petitioner, a public limited company providing telecommunication services, sought a direction for the refund of an amount of ?224,28,74,090 with statutory interest. The petitioner had suffered a deduction of tax at source exceeding ?210 crores for the assessment year 2014-15. The assessment order resulted in a refund, but it was not released despite multiple communications from the petitioner. The department initially raised concerns about pending demands for other assessment years, but the petitioner clarified that those demands were either reversed or stayed by appellate authorities or tribunals. The department did not contest that the demands for other assessment years were presently unenforceable. The petitioner's counsel argued that there was no legal basis to withhold the refund, and the department acknowledged that the refund was not released due to a computer glitch at the central processing center. The court held that the correct legal position mandated the refund to be issued, regardless of technical difficulties, and directed the respondents to release the refund amount within two weeks.

Issue 2: The department acknowledged that the petitioner's refund claim was not processed due to a computer glitch causing the system to not accept the stay on demands by the appellate authority. The court emphasized that technical difficulties should not override the correct legal position. It directed the department to resolve any system issues hindering the refund release and instructed that if the system failed to permit the payment, the authorized officer must manually process the refund. The court highlighted that similar challenges might be faced by other taxpayers and urged the department to address this larger issue to prevent such disputes from reaching the High Court for resolution. The petition was disposed of with these observations and directions.