2025 (1) TMI 704 - HC - Income Tax

Non releasing the refund by Respondent-authorities - Whether the assessee-petitioner is entitled to the refund as per the grievance made in the petition or not? - HELD THAT - Assessing Officer has already made adjustment of the refund for the subsequent years as stated here-in- above at Rs. 5,52,16,000/- as stated above. Therefore, ADMITTEDLY, the petitioner is entitled to refund at least of principal amount of Rs. 6,32,16,000/- (Rs. 80,00,000/- Rs. 5,52,16,000) with cost rounded of to Rs. 6.30 Crore. This amount of Rs. 6.30 Crore is subject to enhancement of eligible interest and verification of applicable rate of tax. Accordingly to us, the respondent is liable to refund at least Rs. 6.30 Crore subject to final calculation of refund. We direct Assessing Officer to credit the amount of Rs. 6.30 Crore in the bank account of the petitioner. Let this petition be listed for further hearing on 7th January,2025 on top of the Board.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the petitioner is entitled to the refund due after the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] has been given effect by the Assessing Officer.
Whether the respondent authorities are justified in adjusting the refund due for subsequent assessment years against the outstanding demand without proper basis.
Whether there is a failure on the part of the respondent authorities in processing and issuing the refund due to technical or administrative issues.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Entitlement to Refund

Relevant Legal Framework and Precedents: The entitlement to a refund is governed by the provisions of the Income Tax Act, particularly sections related to assessment, appeals, and refunds. The CIT(A)'s order, which reduces the taxable income, forms the basis for recalculating the tax liability and determining the refund due.
Court's Interpretation and Reasoning: The court noted that the petitioner filed a return for the Assessment Year (A.Y.) 2017-18, claiming a refund. The CIT(A) partially allowed the appeal, reducing the taxable income significantly. The court emphasized that the refund should have been processed post the CIT(A)'s order.
Key Evidence and Findings: The court examined the revised income calculations and acknowledged the discrepancies in the refund processing, highlighting the administrative lapses.
Application of Law to Facts: The court applied the provisions of the Income Tax Act to the facts, concluding that the petitioner was entitled to a refund based on the revised assessment order.
Treatment of Competing Arguments: The respondent argued that the refund was adjusted against outstanding demands. However, the court found no valid basis for such adjustments, given the revised order.
Conclusions: The court concluded that the petitioner was entitled to a refund of approximately Rs. 80,00,000/- after recalculating the tax liability based on the CIT(A)'s order.

Issue 2: Adjustment of Refund for Subsequent Years

Relevant Legal Framework and Precedents: Adjustments against future demands should be substantiated by outstanding liabilities, as per the Income Tax Act.
Court's Interpretation and Reasoning: The court scrutinized the respondent's actions of adjusting refunds for subsequent years without clear justification or outstanding demands.
Key Evidence and Findings: The court found that the adjustments were made without a proper basis, as the demands for those years did not exist following the revised order.
Application of Law to Facts: The court applied the law to determine that the adjustments were improper and the petitioner was entitled to the refund without such deductions.
Treatment of Competing Arguments: The respondent's justification for adjustments was not supported by evidence, leading the court to favor the petitioner.
Conclusions: The court concluded that the petitioner was entitled to the full refund amount, including the improperly adjusted amounts for subsequent years.

Issue 3: Administrative and Technical Failures in Processing Refund

Relevant Legal Framework and Precedents: The procedural aspects of refund processing are governed by the administrative rules and guidelines of the Income Tax Department.
Court's Interpretation and Reasoning: The court noted the administrative delays and technical issues highlighted by the respondent, which hindered the refund process.
Key Evidence and Findings: The court reviewed the correspondence and actions taken by the respondent to resolve the technical issues, noting the lack of effective resolution.
Application of Law to Facts: The court applied administrative law principles to emphasize the need for efficient processing and accountability.
Treatment of Competing Arguments: The court found the respondent's reliance on technical issues insufficient to justify the delay in refund issuance.
Conclusions: The court directed the respondent to expedite the refund process and ensure the crediting of the refund amount to the petitioner's account.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: "The respondent is liable to refund at least Rs. 6.30 Crore subject to final calculation of refund."
Core principles established: The court reaffirmed the principle that refunds due post-assessment and appeal orders should be processed promptly and without unjustified adjustments.
Final determinations on each issue: The court determined that the petitioner was entitled to a refund of Rs. 6.30 Crore, subject to verification and accurate computation, and directed the respondent to ensure the refund is credited promptly.

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