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TMI Blog2020 (2) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... 8, the petitioner had filed return of income on 31.10.2017 which was subsequently revised on 28.3.2019. As per the return, the petitioner had declared loss to the tune of Rs. 6600.47 crores (rounded off). Resultantly, the petitioner had claimed refund of the entire amount of tax paid at source which came to Rs. 565.28 crores (rounded off) and tax collected at source of Rs. 22,31,792/-. The return of the petitioner thus gave rise to refund of Rs. 565.51 crores (rounded off). 3. The return of income was processed by respondent No. 1 - Assessing Officer under Section 143(1) of the Income Tax Act, 1961 ("the Act" for short) on 24.3.2019. After certain adjustments, this process of return gave rise to refund of Rs. 562.68 crores (rounded off) with statutory interest, the total refund worked out to Rs. 630.21 crores (rounded off). To complete the facts, we may record that the petitioner's revised return was processed by the Assessing Officer on 14.9.2019. Along with interest, this gave rise to refund of sum of Rs. 634.14 crores (rounded off). This would of course subsume the refund arising out of the original return. 4. The respondents, have, however, not released the refund. Firstly an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 143(1) of the Act. In this case, the petitioner's claim for refund with interest comes to Rs. 154.25 crores (rounded off). In this case also, the Joint Commissioner of Income Tax has, for similar reasons, rejected the refund claim in exercise of powers under Section 241A of the Act. 7. In view of the such facts, appearing for the petitioner, learned counsel Mr. Mistri raised the following contentions:- (1) That auto generated response by the Central Processing Centre of the Income Tax Department cannot be considered an order envisaged under Section 241A of the Act. (2) For over six months, the Assessing Officer did not take any steps for releasing the refund of the petitioner. (3) Even otherwise on merits, the Assessing Officer has committed error in withholding the refund because: (i) Even if the additions were to be made in the hands of the assessee upon completion of the assessment, the assessee would have the right of appeal. Pending such appeal, as per the circular issued by CBDT, ordinarily recovery would be stayed upon depositing 25% of the disputed tax amount. In the present case, indirectly the Department would retain the entire tax even before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in the impugned order, the Assessing Officer in case of this very assessee in earlier assessment years, has made sizable additions, some of them pertain to international transactions. In the present case also, similar issues are likely to arise. The Assessing Officer is, therefore, justified in holding a belief that in order to protect the interest of the revenue, till scrutiny assessment is completed, refund arising out of the process of return under Section 143(1) of the Act should not be released. He also opposed the suggestion of the petitioner that even after accepting all contentions of the Assessing Officer, loss declared by the assessee will still not be converted into one of profit. In support of his contention, learned counsel relied on a decision of the Division Bench of the Delhi High Court in the case of M/s. Vodafone Mobile Services Limited Vs. Asst. Commissioner of Income Tax & Anr. (Order dated 14.12.2018 in W.P.(C) 2730/18 & CM Nos. 46054-55/2018) in which in the context of the provisions contained in Section 143(1D) of the Act, the Court had made following observations:- "39. A reading of the above judgements and the relevant provisions, clearly shows that Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties and having perused the documents on record, before processing the facts, we may refer to Section 241A of the Act. This Section pertains to withholding of refund in certain cases and was inserted by the Finance Act 2017 w.e.f. 1.4.2017. The section reads as under:- "241A. For every assessment year commencing on or after the 1st day of April, 2017, where refund of any amount becomes due to the assessee under the provisions of sub-section (1) of section 143 and the Assessing Officer is of the opinion, having regard to the fact that a notice has been issued under sub-section (2) of section 143 in respect of such return, that the grant of the refund is likely to adversely affect the revenue, he may, for reasons to be recorded in writing and with the previous approval of the Principal Commissioner or Commissioner, as the case may be, withhold the refund up to the date on which the assessment is made." 10. Section 143(1D) of the Act was also simultaneously substituted. Prior to its substitution, this subsection which was inserted by the Finance Act, 2012 w.e.f 1.7.2012 read as under:- "(1D) Notwithstanding anything contained in sub-section (1), the processing of a return shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment year commencing on or after 1st Apri, 2017, where refund of any amount becomes due to the assessee under section 143(1) and the Assessing Officer is of the opinion that grant of refund may adversely affect the recovery of revenue, he may, for the reasons recorded in writing and with the previous approval of the Principal Commissioner or Commissioner, withhold the refund upto the date on which the assessment is made. These amendments will take effect from 1st April, 2017 and will, accordingly, apply to returns furnished for assessment year 2017-18 and subsequent years." 13. As noted, previously sub-section (1D) of Section 143 permitted non-processing of return under Section 143(1) of the Act before expiry of the period specified in second provision to sub-section (1) where a notice has been issued to the assessee under sub-section (2) of Section 143. A Division Bench of this Court, in case of M/s. Group M. Media India Pvt Ltd Vs. The Union of India & Ors. 15 OS WP 2145-2172-19.doc, had occasion to examine the said provision in the light of the action of Assessing Officer in withholding the refund of the assessee arising out of return of income. In this background, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 14. Thus, even under the provisions of sub-section (1D) of Section 143 before its substitution by Finance Act of 2017, the Court did not approve unjustifiable delay in processing of return and thereby delay the refund of the assessee arising therefrom. Section 241A has since been inserted in the Act and as the notes on clauses explaining the provisions of Finance Bill, 2017 provides, in order to address the grievance of delay in issuance of refund in genuine cases which are routinely selected for scrutiny assessment, it was proposed that provisions of Section 143(1D) shall ceases to apply in respect of returns furnished for assessment year 2017-18 and onwards. However, to address the concern of recovery of revenue in doubtful cases, it was directed to insert a new section 241A to provide that, for the returns furnished for assessment year commencing on or after 1st Apfril, 2017, where refund of any amount becomes due to the assessee under Section 143(1) and the Assessing Officer is of the opinion that grant of refund may adversely affect the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of statutory prescription contained in the said Section. We must, therefore, deprecate the practice of the department in sending such auto-generated response to the assessees for withholding the returns. 17. The issue does not rest here since the Assessing Officer has thereafter passed order dated 21.8.2019 with the previous approval of the competent authority and citing reasons for withholding the refund of the petitioner. We may examine such reasons. Broadly, the Assessing Officer has referred to the preceding return of the assessee for the assessment year 2016-17 in which the assesee had declared an income of Rs. 286.86 crores as against which in the present year, the assessee has declared huge loss. He, therefore, formed an opinion that the return for the assessment year 2017-18 needs thorough investigation. He also referred to several issues such as revenue share license fees, discount to prepaid distributors and non-deduction of tax at source on the same, international roaming charges and non-deduction of tax at source on such charges etc which are pending with the Income Tax Appellate Tribunal. He, therefore, concluded that there is likelihood of huge demand. In order to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on profit and loss account filed by the petitioner along with return. 21. At this interim stage, it is not necessary for us to examine these minute details, the nature of additions which would be sustained and if sustained, what exactly would be the impact of the petitioner's liability in the current year. We had called for the affidavit for gathering broader picture that in any view of the matter, accepting the stand of the Assessing Officer, there would still not be any tax demand from the assessee in the current assessment year. We have perused such material and are prima facie satisfied with the petitioner's contention in this respect. We may note that the assessee has declared loss of over Rs. 6000/- crores. 22. One another significant aspect of the matter is the application filed by the petitioner under Section 197 of the Act before the Deputy Commissioner of Income Tax (TDS) on 17.5.2016. As is well known, under sub-section (1) of Section 197 of the Act, it is open for the competent authority upon justification being made by the assessee to permit deduction of tax at source by the payees at a lower rate or provide that no deduction at all shall be made. For the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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