2020 (12) TMI 132 - HC - Income Tax

Refund withheld u/s 241A - HELD THAT - At this stage petitioner wishes to withdraw the present writ petition to challenge the action under Section 241A of the Act. With the aforesaid liberty, the present writ petition and pending application stand disposed of. All the rights and contentions of the parties are left open.

Summary

Issues:
1. Release of income tax refund for Assessment Year 2018-2019.
2. Withholding of refund under Section 241A of the Income Tax Act, 1961.
3. Withdrawal of the writ petition challenging the action under Section 241A.

Analysis:

1. The petitioner filed a writ petition seeking directions to release the income tax refund of ?1,97,27,981 for the Assessment Year 2018-2019. The Centralized Processing Center (CPC), Bangalore had processed the refund under Section 143(1) of the Income Tax Act, 1961, admitting the total refund liability. Despite a scrutiny notice, respondent no. 2 had neither passed a final assessment order under Section 143(3) nor an order withholding the refund under Section 241-A of the Act. The petitioner relied on previous judgments emphasizing that the Assessing Officer cannot withhold a refund without a speaking order under Section 241A of the Act. Consequently, the Court issued notice to the respondents, who accepted it, and allowed time for filing a counter-affidavit. The matter was listed for further hearing.

2. In response to the Court's order, respondent No. 2 filed an affidavit stating that the petitioner's refund had been withheld under Section 241A of the Income Tax Act, 1961, following due process of law. Subsequently, the petitioner's counsel expressed a desire to withdraw the writ petition challenging the action under Section 241A. The Court granted permission for withdrawal with liberty, disposing of the petition and pending application. The judgment clarified that all rights and contentions of the parties remained open, and the Court refrained from expressing any opinion on the merits of the dispute.

3. The petitioner's decision to withdraw the writ petition challenging the withholding of the refund under Section 241A marked the conclusion of the legal proceedings. The Court's acceptance of the withdrawal, with liberty, signified the resolution of the matter without expressing any opinion on the underlying controversy. The judgment emphasized that all rights and contentions of the parties were preserved despite the withdrawal, ensuring that the legal positions of both parties remained unaffected by the decision to end the litigation. The order was uploaded on the website promptly, and a copy was forwarded to the respective counsels via email, thus concluding the case.