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TMI Blog2023 (3) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... refund will adversely affect the interest of the Revenue. The reasons as set forth in the communication are bereft of any details and only reproduce the wordings of Section 241A of the Act with some additional sketchy and vague details. There is also a complete absence of reasoning. Petitioner is a well reputed company with a large net-worth running into several billion dollars and not a fly-by-night operator. It is a tax Assessee for the last several years and the credit worthiness of the Assessee is also not in dispute. Merely because a notice has been issued under Section 143(2) of the Act, it is not a sufficient ground to withhold the refund under the provisions of the Act. As has been held in Maple Logistics case [ 2019 (11) TMI 340 - DELHI HIGH COURT] it would be wholly unjust and inequitable for the AO to withhold a refund by citing the reason that a scrutiny notice has been issued and such an interpretation of the provision would be contrary to the intent of the legislature. The ReFAC(AU) has been completely swayed by the fact that the case of the Assessee has been selected by CASS for scrutiny assessment. PCIT (ReFAC)(AU) has also mechanically accorded permi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioner received an intimation under Section 143(1) of the Act which stated that a refund of Rs.33,05,84,840/- (inclusive of interest) has been calculated as due to the Petitioner [hereinafter Refund Intimation ]. The Refund Intimation also stated that the refund shall be credited within a period of 15 days from that date. 2.4 Despite the lapse of several months after the passing of the Refund Intimation, no refund was received by the Petitioner. Aggrieved by the inaction of the Respondents, the Petitioner filed online complaints on the Income Tax Portal on 14.05.2022 and 16.06.2022 seeking disbursal of the refund amount as determined under the Refund Intimation. This was followed by detailed letters dated 06.09.2022 and 21.09.2022 sent to the Respondents seeking disbursal of the refund amounts. 2.5 Since no response was received, the Petitioner requested an inspection of the file and records of AY 2020-2021 and asked for a copy thereof by its letter dated 11.11.2022. In response thereto, the Revenue by an email of even date, informed the Petitioner that its refund has been withheld in view of a letter dated 07.06.2022 received from the Faceless Assessment Unit of the Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue can stall the grant of a refund only in the circumstances as enumerated in Section 241A of the Act. 4.2 It was further submitted that the letter dated 30.05.2022 which has been produced by the Respondents does not provide substantive reasons to defend their decision to withhold the refund under the provisions of Section 241A of the Act. 5. Learned counsel for the Respondents on the other hand submits that the requisite reasons for withholding the refund for AY 2020-2021 in the case of the Petitioner are as set forth in the letter dated 30.05.2022 and approval, therefore, was also granted by letter dated 31.05.2022. Thus, the necessary compliance as is required by the provisions of Section 241A of the Act has been undertaken by the Revenue. 6. We have heard the learned counsel for the parties and perused the record. As stated hereinabove, an intimation under Section 143(1) of the Act was issued to the Petitioner on 27.12.2021 inter-alia setting forth that an amount of Rs.33,05,84,840/- (inclusive of interest) has been calculated by the Respondent No. 1 as refund due to the Petitioner. This amount has not been paid to the Petitioner despite repeated reminders. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of refund is likely to affect the interests of the Revenue and that this step of the A.O. receives the imprimatur [which obviously would mean prior approval] of his superior officer, i.e., Principal Commissioner or Commissioner as the case may be.... [Emphasis is ours] 8.2 Another Coordinate Bench of this Court in Maple Logistics case (supra), has held that the discretion vested with the AO to withhold a refund must be exercised judiciously and with due application of mind. The relevant extract is as follows: 27. In our considered opinion, the AO has completely misunderstood the refund mechanism and the import of Section 241A of the Act. The legislative intent is clear and explicit. The processing of return cannot be kept in abeyance, merely because a notice has been issued under Section 143(2) of the Act. 28. The Legislature has not intended to withhold the refunds just because scrutiny assessment is pending. If such would have been the intent, Section 241A of the Act would have been worded so. On the contrary, Section 241A of the Act enjoins the AO to process the determined refunds, subject to the caveat envisaged under Section 241A of the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislature. The Assessing Officer has been completely swayed by the fact that since the case of the assessee has been selected for scrutiny assessment, he is justified to withhold the refund of tax. 31. The power of the Assessing Officer has been outlined and defined in terms of section 241A and he must proceed giving due regard to the fact that the refund has been determined. The fact that notice under section 143(2) has been issued, would obviously be a relevant factor, but that cannot be used to ritualistically deny refunds. The Assessing Officer is required to apply his mind and evaluate all the relevant factors before deciding the request for refund of tax. Such an exercise cannot be treated to be an empty formality and requires the Assessing Officer to take into consideration all the relevant factors. The relevant factors, to state a few would be the prima facie view on the grounds for the issuance of notice under section 143(2); the amount of tax liability that the scrutiny assessment may eventually result in vis-a-vis the amount of tax refund due to the assessee; the creditworthiness or financial standing of the assessee, and all factors which address the concern o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y assessment is presently in progress in this case which may lead to raising of demand. Grant of refund is likely be adversely affect the revenue. It is therefore advisable that the refund in this case may be withheld u/s 241A of the I T Act. 9.1 The PCIT [ReFAC(AU)] by its letter dated 31.05.2022 granted the approval for withholding of refund of the Petitioner albeit till the date of finalization of assessment as follows: Sub: Withholding of Refund u/s. 241A regarding Kindly refer to the above. 2. In this connection, I am directed to convey that the PCIT (ReFAC)(AU) had accorded permission to withhold the refund in the below-mentioned case till the date of finalization of assessment:- Name PAN A.Y Refund Amount (Rs.) Oyo Hotels and Homes Private Limited AANCA6342H 2020 -21 33,05,84,840/- ( ) ITO (HQ) For Principal Commissioner of Income tax (ReFAC)(AU) 9.2 The intimation for withholding of refund was thereafter forwarded to the Respondents from the Faceless ..... X X X X Extracts X X X X X X X X Extracts X X X X
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