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TMI Blog2017 (10) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... citing the availability of time upto the last date of framing the assessment under sub-section (3) of section 143. We simply cannot accept the interpretation of the counsel for the Revenue that once a notice under sub-section (2) of section 143 is issued, the suspension of the refund arising out of the return filed by the assessee would be automatic and till the passing of the order of assessment under sub-section (3) of section 143. The reasonable interpretation of the statute and the situation in such a case would be, to expect the Assessing Officer to take up an expeditious disposal of the processing of return under sub-section (1) of section 143 of the Act at least once the assessee requests for release of the refund, and send as an intimation to the assessee if he wishes to withhold the same. AO is directed to complete the process of the assessee's return under sub-section (1) of section 143 of the Act latest by 31.10.2017. If any refund arises out of said exercise, grant the same to the petitioner as per the statutory provisions. Insofar as the assessment of the year 2016-17 is concerned, the time for processing the return under sub-section (1) of section 143 read with provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions and deposit the same with the Government. On account of the peculiar situation of the petitioner, the petitioner finds itself in liquidity crunch particularly for depositing such TDS with the Government. The petitioner, therefore, wrote a letter dated 04.01.2017 to the respondent and requested for refund of an amount of ₹ 2,50,96,487/- pointing out to the said authority the tax and refund liabilities of the petitioner for the last few assessment years as under: "We give below the details of refund due and demand payable for various assessment years as per the records of the assessee. Assessment year Refund Demand A.Y. 2007-08 NIL 8950 A.Y. 2010-11 51,03,929 1,57,47,190 A.Y. 2013-14 1,51,88,181 86,82,860 A.Y. 2014-15 1,53,28,492 NIL A.Y. 2015-16 1,39,14,885 NIL Total 4,95,35,487 2,44,39,000 As can be seen in the above table, the assessee company is eligible for refund even after adjusting the current demand. The net refund works out to be ₹ 2,50,96,487/-." 5. The petitioner did not receive any response from the respondent, upon which, the petitioner made several further representations along the same line. Since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143 of the Act read as under: "Assessment 143. [(1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:- (a) the total income or loss shall be computed after making the following adjustments, namely:- (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80-IE, if the return is furnished beyond the due date specified under sub section (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A pr Form, 16 which has not been included in computing the total income in the return: Provided that no such adjustments shall b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a). (1A) xxx xxx xxxx (1B) xxx xxx xxxx (1C) xxx xxx xxxx [(1D) Notwithstanding anything contained in sub-section (1), the processing of a return shall not be necessary before the expiry of the period specified in the second proviso to sub-section (1), where a notice has been issued to the assessee under sub-section (2). Provided that such return shall be processed before the issuance of an order under sub-section (3)." [(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of sub-section (1) of section 143 after a return has been made under section 139 or in response to a notice under sub-section (1) of section 142 and the Assessing Officer is of the opinion, having regard to the fact that- (i) a notice has been issued, or is likely to be issued, under sub-section (2) of section 143 in respect of the said return; or (ii) the order is the subject-matter of an appeal or further proceeding; or (iii) any other proceeding under this Act is pending, that the grant of the refund is likely to adversely affect the revenue, the Assessing Officer may, with the previous approval of the Chief Commissioner or Commissioner, withhold the refund till such time as the Chief Commissioner or Commissioner may determine." 13. If we analyze section 143 of the Act as it existed prior to the amendment of the Finance Act 2017, the return filed by the assessee would be processed by the Assessing Officer as provided under sub-section (1) of Section 143 permitting him to make adjustments and compute the tax or refund intimating to the assessee the culmination of such exercise and granting the refund if due to him in terms of clause (e) of sub-section (1) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owever the time frame envisaged in the further proviso to sub-section (1) expires and is not extended by virtue of the operation of sub-section (1D) of section 143, there would be no scope thereafter for the Assessing Officer to withhold the refund arising out of the return filed by the assessee. 17. This position would become clear if we compare the provisions of section 143(1D) as amended by the Finance Act, 2017 read with newly inserted Section 241A. Under the new sub-section (1D) the legislature provides that notwithstanding anything contained in sub-section (1) the processing of return would not be necessary where a notice has been issued to an assessee under sub section (2). This would make it clear that once notice under section 143(2) has been issued, the Assessing Officer shall not process the return under section 143(1). The original proviso to sub-section (1D) has been substituted by a new proviso under which it is clarified that the proviso under said sub-section shall not apply to any return furnished for the assessment year commencing on or after 01.04.2017. Section 241A which was inserted simultaneously, now enables the Assessing Officer to withhold the refund in fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pleted expeditiously. The Delhi High Court was of the opinion that sub-section (1D) of section 143 gave a discretion to the Assessing Officer to process a return under section 143(1) even after issuing notice under section 143(2) of the Act and the CBDT could not have taken away such discretion which would be a direction against the interest of the assessee and not binding to the assessee. The Delhi High Court referred to and relied upon the decisions of Supreme Court in case of UCO Bank vs. CIT reported in 237 ITR 889 and in case of CCE vs. Ratan Melting and Wire Industries reported in [2008] 13 SCC 1. 20. Bombay High Court in case of Group M Media Pvt Ltd, Mumbai (supra) considered a situation where the Assessing Officer, after issuing a notice under sub-section (2) of section 143 of the Act, did not entertain the assessee's application for refund of the tax arising out of the return filed. The case of the Revenue was that, the Assessing Officer had time till the last date of framing of the assessment to process the return under section 143(1) of the Act. The Bombay High Court referring to the decision of Delhi High Court in case of Tata Teleservices Ltd.(supra) deprecated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in they have specifically directed the officers of the Revenue to process all returns in which refunds are payable expeditiously. Similarly, as late as in 2014 in the Citizen's Charter issued by the Income Tax Department in its vision statement states that the Department aspires to issue refunds along with interest under Section 143(1) of the Act within 6 months from date of electronically, filing the returns. 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 (lncome Tax Act) but the assessee must also please the priest (lncome 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." 21. Coming back to the facts on hand, sofar as the assessment of the year 2015-16 is concerned, the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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