2020 Supreme(SC) 354

SUPREME COURT OF INDIA
UDAY UMESH LALIT, VINEET SARAN, JJ.
Vodafone Idea Ltd. (Earlier Known As Vodafone Mobile Services Limited) – Appellant
Versus
Assistant Commissioner of Income Tax Circle 26 (2) & Anr. – Respondent
Civil Appeal No.2377 of 2020 Arising out of SLP(Civil) No.1169 of 2019
Decided On : 29-04-2020

IMPORTANT POINT
Income Tax Return filed by assessee itself calls for or requires a further probe and deeper consideration. Guiding principle is to ensure that income is not under-stated or the loss is not over-stated or tax is not under paid in any manner.

Headnote:

Income Tax Act, 1961 – Sections 143(2) and 241-A – Refund of income tax – Denial of – Section 143(2) empowers, Assessing Officer to issue notice to assessee to produce documents or other evidence, to prove genuineness of income tax return – Assessing Officer has to apply his mind to consider whether facts and circumstances of case, warrant some or all of refund of assessee’s amounts, or if all of it needs to be withheld, whenever assessee presses for refund – Due credit to amount of tax paid and any relief that is allowable is to be given and net amount payable or to be refunded, is to be computed – Return filed by assessee itself calls for or requires a further probe and deeper consideration – Guiding principle is to ensure that income is not under-stated or the loss is not over-stated or tax is not under paid in any manner – Upon issuance of notice, assessee is entitled to produce evidence in support of his case – After hearing assessee and considering evidence so produced, by an order in writing, assessment of total income or loss is to be made – Exercise of power under Sub-sections (2) and (3) of Section 143 of Act is premised on non-acceptance of what is evident from return itself and to ensure that there is no avoidance of tax in any manner – Dimension of such power is far greater and deeper than mere adjustments to be made in respect of what is available from return – Once such scrutiny is undertaken and proceedings are initiated by issuance of a notice under sub-section (2) of Section 143, it would be anomalous and incongruent that while such proceedings so initiated are pending, return be processed under sub-section (1) of Section 143, which may in a given case, entail payment of refund – Processing of return under sub-section (1) of Section 143 must await further exercise of power of scrutiny assessment under sub-sections (2) and (3) of Section 143 – If power under sub-section (2) of Section 143 of Act is initiated in a manner known to law, there cannot be any insistence that processing under sub-section (1) of Section 143 be completed and refund be made before scrutiny pursuant to notice under sub-section (2) of Section 143 is over – Issuance of notice under sub-section (2) of Section 143 is enough to trigger required consequence – In present case, exercise of power was not only after issuance of notice under sub-section (2) of Section 143 and after recording due satisfaction in terms of Section 241-A of Act, but was also well within period contemplated by sub-section (1) of Section 143 of Act for causing due intimation – Appeal dismissed. (Paras 12, 14, 19, 22 and 24)

Facts of the Case:

For AY3 2014-15, the appellant filed Income Tax Return on 30.09.2014 claiming refund of Rs.1532.09 Crores. On 31.08.2015, a notice under Section 143(2) of the Act4 was issued to the appellant in respect of AY 2014-15. On 01.11.2015, the appellant filed ITR for AY 2015-16 claiming refund of Rs.1355.51 Crores. A notice under Section 143(2) of the Act was issued by the Department on 16.03.2016 in respect of AY 2015-16. A revised return was filed by appellant on 31.03.2016 in respect of AY 2014-15. The appellant entered into an Advanced Pricing Agreement with the CBDT5 under Section 92 CC of the Act. Thereafter, further revised return was filed on 25.11.2016 for AY 2015-16 and a modified return in terms of Section 92 CD of the Act was filed by the appellant on 22.02.2017 for AY 2014-15. By its judgment and order dated 14.12.2018, the High Court dismissed said Writ Petition.

Findings of the Court:

Whether the satisfaction recorded in terms of said Section 241-A of the Act was otherwise correct or not and whether case for withholding of refund was made out or not, are not the issues that arise for our consideration. For the present purposes, whether exercise of power is facially in conformity with the statutory provisions is the issue and we are satisfied that there is nothing in the exercise of power that led to the passing of the order dated 14.03.2019 which could be said to have violated any statutory requirements.

Result : Appeal dismissed.