2019 (11) TMI 107 - HC - Income Tax

Refund being the excess amount paid as tax in view of tax deduction at source done by the Petitioner s customers - processing of the return under Section 143(1) of the Act, the Respondents be directed to refund the amount due to the Petitioner alongwith interest thereon under Section 244(A) - HELD THAT - Petitioners by various letters date 13 June 2019, 14 June 2019, 10 July 2019, 11 July 2019, 15 July 2019, 17 July 2019 an 8 August 2019 sought an early processing of the return of income u/s 143(1). This particularly in view of the fact that the Petitioner was suffering losses and were facing cash flow difficulty. This problem according to the Petitioner essentially arose on account of the fact that their application u/s 197 of the Act seeking nil deduction of tax in the previous year relevant to the assessment year was not accepted and only partial deduction of tax at source was granted. It is in the aforesaid circumstances that the Petitioner has approached this Court and seeks a directions to the Respondents to expeditiously dispose of their return of income by intimation under Section 143(1). Consequent to the above, grant the refund which will be due on the processing of the return alongwith interest thereon. We note that undue hardship being suffered by the Petitioner only because the Respondents are not discharging their duties under the Act. This as there is no reason forthcoming from the Revenue as to why the delay in processing the refund claim. We direct the Respondent Nos.1 and 2 to process the return of income for the Assessment Year 2018-19 under Section 143(1) of the Act as expeditiously as possible, but definitely within a period of three weeks from today. Further, consequent to the above, pay to the Petitioner the refund, if any due, within a further period of two weeks from the date the return of income is processed.

Summary

Issues:
1. Delay in processing income tax return for Assessment Year 2018-19 under Section 143(1) of the Income Tax Act, 1961.
2. Refund of excess tax paid by the Petitioner.
3. Alleged undue hardship faced by the Petitioner due to delayed processing of the return.

Analysis:

Issue 1: Delay in processing income tax return
The Petitioner filed a loss return of income on 17 October 2018, seeking a refund of approximately ?20.24 crores, representing the excess amount paid as tax due to tax deduction at source by customers. Despite this, the return was not processed, leading to the Petitioner repeatedly requesting, through various letters, an early processing of the return under Section 143(1) of the Act. The delay in processing the return was causing financial hardship to the Petitioner, who was facing cash flow difficulties. The Court noted that the Revenue had not provided any reason for the delay, highlighting the failure of the Respondents to discharge their duties under the Act.

Issue 2: Refund of excess tax
The Petitioner, in response to a notice seeking explanation on a proposed adjustment of ?1.33 lakhs claimed under Section 36(1)(va) of the Act, asserted their entitlement to the deduction claimed. Despite this response, no further action was taken by the Respondents. The Court directed the Respondents to process the return of income for the Assessment Year 2018-19 under Section 143(1) of the Act expeditiously, within three weeks, and to pay any refund due to the Petitioner within two weeks of processing the return.

Issue 3: Undue hardship faced by the Petitioner
The Court acknowledged the undue hardship faced by the Petitioner due to the delay in processing the return of income. Emphasizing that the Petitioner's financial difficulties stemmed from the rejection of their application seeking nil deduction of tax in the previous year, the Court directed the Respondents to promptly process the return and refund the amount due to alleviate the Petitioner's financial strain. The judgment concluded by disposing of the Petition in favor of the Petitioner, with directions to the Respondents to comply with the Court's orders regarding the processing and refund of the income tax return.