2018 (10) TMI 506 - HC - Income Tax

Claim of refund - Delay in processing of centralized returns - AO expressed difficulty in computation of Income - Prima facie adjustments u/s 143 - time barring - Held that - Prima facie, we see some substance in this complaint of Mr. Pardiwala. We do not think that the draft assessment can be delayed and in the manner stated before us. We direct that even the draft assessment for the assessment year 2015-2016 shall be completed by 30th November, 2018. Let the further steps thereafter be taken in accordance with law. The communication, copy of which is at Annexure-A makes interesting reading with regard to assessment year 2016- 2017. It is solemnly stated that the return for this assessment year has been processed but it is pushed to what is stated as and styled as the Centralized Processing Center. That is stated to be forwarded for computation. If computation such a difficult, if not an important task, why it cannot be performed by this Assessing Officer, is not clarified to us at all. It is evident that, after it is pushed to this center, from the center s communication, copy of which is handed over by Mr. Mohanty dated 7th August, 2018, it is apparent that this center has done nothing in relation to this computation. The said letter dated 7th August, 2018 is taken on record and marked X for identification. It may be lying with it and who knows for how long. It would continue with it until such time as the law permits holding up of the further proceedings or till the last date.

Summary

Issues:
1. Processing of income tax returns for assessment years 2014-15 to 2017-18.
2. Pending scrutiny assessments and refund claims.
3. Delay in draft assessment for assessment year 2015-16.
4. Processing of returns at the Centralized Processing Center.
5. Concerns regarding delays and complications in the assessment process.

Analysis:
1. Processing of Income Tax Returns: The petitioner sought processing and refund issuance for assessment years 2014-15 to 2017-18. The respondent stated that scrutiny assessments were pending for the mentioned years and Section 143(1D) precluded processing for some years due to being time-barred. The High Court accepted the respondent's undertaking to finalize the 2014-15 assessment and directed completion of the 2015-16 draft assessment by a specified date.

2. Pending Scrutiny Assessments and Refund Claims: The respondent highlighted pending assessments and substantial demands raised for earlier years, justifying the non-processing of returns. The petitioner's claims regarding refund crystallization and historical covered issues were disputed. The High Court emphasized the need for timely assessment completion and proper handling of refund claims to avoid unnecessary delays and ensure fair treatment.

3. Delay in Draft Assessment: Concerns were raised about potential delays in the draft assessment for the 2015-16 assessment year. The High Court directed the completion of the draft assessment by a specified date to prevent unwarranted delays and ensure timely progress in the assessment process.

4. Processing at Centralized Center: The Court questioned the necessity of forwarding returns to a Centralized Processing Center for computation, highlighting potential inefficiencies and delays in the assessment process. The Court urged the Center to promptly decide on computations and communicate the outcomes to the Assessing Officer within a specified timeframe to streamline the process and avoid unnecessary delays.

5. Concerns Regarding Delays and Complications: The Court expressed concerns about delays, complications, and potential prejudice to both the revenue and the assessee due to inefficient processing and unnecessary bureaucratic hurdles. Emphasis was placed on the need for efficient decision-making, timely actions, and avoidance of unnecessary delays to ensure a fair and expedited assessment process without prejudicing either party.

In conclusion, the High Court emphasized the importance of timely assessment completion, efficient processing, and fair treatment of refund claims to avoid unnecessary delays, complications, and potential prejudice to either party involved in the income tax assessment process.