2020 (7) TMI 724 - HC - Income Tax

Withholding of grant of refund - order under Section 143 (3) has been passed and the scrutiny assessment has concluded - HELD THAT - This Court in similar circumstances in M/S. Fis Payment Solutions Services India Pvt. Ltd 2020 (3) TMI 1243 - DELHI HIGH COURT has observed that withholding of refund prima facie appears to be without any justification. We direct the respondents to refund the amounts for the assessment year along with interest as applicable, to the petitioner within six weeks from today. In case the respondents have any valid justification for withholding the refund, or any part thereof, they shall file their counter affidavits positively within the same period clearly stating as to why the refund/partial refund is not due. No further time shall be granted for the said purpose.

Summary

Issues:
Granting of refund under Section 241A of the Income Tax Act, 1961 after the conclusion of scrutiny assessment.

Analysis:
The petitioner filed a writ petition aggrieved by the inaction of the respondents in granting a refund of a specific amount determined under Section 143(3) of the Income Tax Act, 1961 for the assessment year 2017-2018. The petitioner contended that the respondent had withheld the refund without providing any reason or explanation. The petitioner argued that as per Section 241A of the Act, the Assessing Officer can withhold the refund only until the assessment is made during the pendency of the scrutiny assessment, not after the conclusion of the assessment. The petitioner cited a previous case where the court observed that withholding the refund appeared to be without justification.

The court directed the respondents to refund the amounts for the assessment year along with applicable interest to the petitioner within six weeks. The court also instructed that if the respondents had valid justifications for withholding the refund, they must file counter affidavits within the same period, clearly stating the reasons for withholding the refund or any part thereof. The court emphasized that no further time would be granted for this purpose and scheduled the next hearing for a specific date.

This judgment highlights the importance of adhering to the provisions of Section 241A of the Income Tax Act, 1961 regarding the withholding of refunds and the necessity for providing valid justifications for any delay or denial of refunds to taxpayers. The court's decision serves as a reminder to the tax authorities to act promptly and transparently in processing refund claims and to provide clear explanations for any actions taken in relation to refund disbursements.