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2020 (3) TMI 606 - HC - Income TaxWithholding the refund u/s 241A - Approval granted by the Pr.CIT - claim for refund could not be issued, on account of the fact that there was an order passed against Petitioner u/s 241A - refund is primarily on account of issuance of tax deduction (TDS) certificates at considerably higher rate of 5%, in comparison to Petitioner s request of 3.12%. - HELD THAT - The refund of amounts claimed where they appear justified, by itself cannot be said to be adverse to the interest of the revenue. The interest of revenue lies in collecting revenue in a legal and justified manner. It does not lie in retaining the collected taxes in excess of what is justified, since the excess collection cannot even be properly termed as revenue . The excess collection of tax is a liability of the State and it lies in the interest of the revenue of the State to discharge its interest bearing liability without any delay. The sovereign cannot, but, be seen as fair, honest and credible in its dealings with its subjects. Any lapse in this regard tarnishes the image and credibility of the sovereign. It certainly cannot act like any unscrupulous businessman, who is seen to dodge his liabilities by resort to frivolous excuses and devious ways. In absence of any cogent reasons justifying withholding of the refund due to the petitioner under Section 143(1) for AY 2017-18, 2018-19, we find that the proposal as well as the approval granted by Principal Commissioner of Income Tax lacks consideration of the relevant and germane conditions. We, accordingly, set aside the order and direct the respondents to undertake the exercise afresh and pass an order under Section 241A. We, therefore, grant six weeks' time to the respondents to consider the aspect whether the amount found due to be refunded, or any part thereof, is liable to be withheld under Section 241A. The order must reflect due application of mind of the Assessing Officer while making a proposal whether, or not, to withhold any part of the refund amount. Such a proposal should be examined by the Principal Commissioner of Income Tax with due application of mind on all the aforesaid aspects. The entire consideration, with the approval of the Principal Commissioner of Income Tax to the withholding of the refund amount, or any part thereof, should be completed within six weeks from today, failing which, we direct that without awaiting any further orders, the respondents shall transmit the amount of ₹ 48,361,57,240/- (for AY 2017-18), ₹ 421,18,02,760/- (for AY 2016-17) and ₹ 349,41,45,020/- (for AY 2018-19) with interest to the petitioner.
Issues Involved:
1. Refund claims for AY 2017-18, 2016-17, and 2018-19. 2. Delay in processing returns and issuing refunds. 3. Legality of withholding refunds under Section 241A of the Income Tax Act. 4. Application of judicial precedents regarding refund processing. Issue-wise Detailed Analysis: 1. Refund Claims for AY 2017-18, 2016-17, and 2018-19: The petitioner sought refunds for AY 2017-18 (?48,361,57,240), AY 2016-17 (?421,18,02,760), and AY 2018-19 (?349,41,45,020). The refunds were primarily due to higher tax deduction rates and delays in issuing lower tax deduction certificates. For AY 2017-18, the petitioner filed a revised return claiming a higher refund due to increased TDS credit. Similar issues were faced for AY 2016-17 and AY 2018-19, where higher TDS rates led to substantial refund claims. 2. Delay in Processing Returns and Issuing Refunds: The petitioner made multiple representations and grievances to the revenue department, including personal visits and applications through CPGRAM, requesting the processing of returns and issuance of refunds. Despite assurances, the refunds were not processed, leading the petitioner to approach the court. The revenue department cited ongoing scrutiny assessments as the reason for the delay. 3. Legality of Withholding Refunds under Section 241A of the Income Tax Act: The court examined the legality of withholding refunds under Section 241A. It was noted that the revenue had not filed any counter-affidavit and relied on the argument that refunds could not be issued due to pending scrutiny assessments and orders under Section 241A. The court found that the reasons provided by the revenue for withholding refunds were not in line with judicial precedents and lacked cogent reasoning. 4. Application of Judicial Precedents Regarding Refund Processing: The court referred to several judicial precedents, including TATA Tele Services vs. CBDT and Vodafone Mobile Services Ltd. vs. Assistant Commissioner of Income Tax, which clarified that the issuance of a notice under Section 143(2) does not automatically prevent the processing of refunds. The court emphasized that the Assessing Officer must exercise discretion and apply their mind to the facts of each case to determine whether a refund should be issued. Findings and Directions: The court directed the revenue to process the refunds within six weeks, taking into consideration the legal principles established in previous judgments. The court highlighted that withholding refunds solely based on pending scrutiny assessments was unjust and arbitrary. The revenue was instructed to re-evaluate the refund claims and provide reasons for any withholding under Section 241A, ensuring due application of mind and consideration of relevant factors. The petitions were disposed of with directions to the revenue to either issue the refunds or provide justified reasons for withholding them, failing which the refunds should be transmitted to the petitioner along with applicable interest.
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