2017 (1) TMI 1149 - HC - Income Tax

Grant of refund - only contention on behalf of the Revenue to oppose the petition is that as the Assessing Officer has time available to process the refund till 31st March, 2017, no mandamus can be issued till 31st March, 2015 - Held that - No reasons are forthcoming from the Revenue as to why the Assessing Officer will not able to dispose of the application for refund or process the return under Section 143(1) of the Act before 31st March, 2017. This conduct / stand of the Assessing Officer, to say the least, is most disturbing in the context of the fact that the petitioners have been seeking refund since April, 2016. First, he does not deem it proper to inform the petitioner in writing why he cannot deal with the application and after the petitioner moves the Court, the stand taken is that no direction can be given to him till 31st March, 2017 which is the last date to process the return under Section 143(1) of the Act. This attitude on the part of the Assessing Officer is preposterous. The action of the officer on the ground urged seems to be in complete variance with the higher echelons of administration of the tax administration being an assessee friendly regime. In this case, the return was filed on 29th November, 2015, yet there is no reason why the Assessing Officer has not processed the refund and taken a decision to grant or not grant a refund under Section 143(1D) of the Act. This attitude on the part of the Assessing Officer leaves us with a feeling (not based on any evidence) that the Officers of the Revenue seem to believe that it is not enough for the assessee to please the deity (Income Tax Act) but the assessee must also please the priest (Income Tax Officer) before getting what is due to him under the Act. The officers of the State must ensure that their conduct does not give rise to the above feeling even remotely. Article 226(1) of the Constitution empowers the Court to issue directions, orders or writs, including writs in the nature of habeas corpus, mandamus, certiorari or any of them. Therefore, in view of the conduct of the Assessing Officer, we are compelled to direct the Assessing Officer to consider and process the petitioner s representation dated 12th August, 2016 and dispose of the same as expeditiously as possible within a period of 8 weeks from today.

Summary

Issues:
Challenge to inaction of Assessing Officer in processing income tax return and granting refund under Section 143(1) and 143(1D) of the Income Tax Act, 1961 for Assessment Year 2015-16.

Analysis:
1. The petitioner filed its income tax return for AY 2015-16, declaring income and claiming a refund. Despite requests and representations, the Assessing Officer failed to process the return and grant the refund, leading to the petition challenging this inaction.
2. The respondent Revenue cited CBDT Instruction No.1 of 2015 as the reason for not processing the return post-issuance of notice under Section 143(2) of the Act. The petitioner argued that this instruction was quashed by the Delhi High Court in a specific case, Tata Teleservices Ltd., and should not be relied upon.
3. The petitioner emphasized that decisions declaring a provision ultra vires are binding on all authorities administering the Act, as held in previous cases like Commissioner of Income Tax Vs. Smt. Godavaridevi Saraf and Commissioner of Income Tax Vs. Valson Dyeing Bleaching and Printing Works.
4. The Delhi High Court's decision in Tata Teleservices Ltd. highlighted that CBDT instructions must be beneficial to the assessee and cannot be prejudicial. Consequently, the Assessing Officer was obligated to disregard Instruction No.1 of 2015 and independently decide on processing the return and granting the refund.
5. The Revenue acknowledged the Delhi High Court's decision and agreed that the Instruction No.1 of 2015 no longer fettered the Assessing Officer's discretion. However, they argued against issuing a mandamus before 31st March, 2017, as the officer had time till then to process the return.
6. The Court criticized the Assessing Officer's delay and highlighted the importance of an assessee-friendly tax administration. Referring to previous instructions emphasizing timely refund processing, the Court directed the Officer to consider and process the petitioner's representation promptly within 8 weeks.

In conclusion, the High Court allowed the petition, directing the Assessing Officer to expedite the processing of the petitioner's return and refund application, emphasizing the importance of timely and fair tax administration.