Authorities must provide cogent reasons for withholding tax refunds, with mere pending assessments not sufficient justification under the Income Tax Act.

ORDER :

1. The petitioner has filed this petition for directions to the Respondents to issue refund of Rs.9,30,46,736/- as computed under Refund Intimation dated 22.09.2022 bearing DIN: CPC/2122/A6/243697378 (Annexure A) along with applicable interest under section 244A of the INCOME TAX ACT , 1961 (for short, 'the IT Act') in an expeditious and timely manner. Sri. Tarun Gulati, the learned Senior counsel for the petitioner, and Sri. Y.V.Raviraj, the learned Senior standing counsel for the respondents, are heard.

2. The petitioner, for the Assessment Year 2021-22 is informed about the computed refund in a sum of Rs.31,94,20,940/- (including the principal amount in a sum of Rs.29,35,11,360/-), and this computation is as of 22.09.2022. On 16.05.2023, the third respondent (the jurisdictional Additional Commissioner of Income Tax), referring to the withholding of refund to the petitioner for the Assessment Year 2021-2022, has informed the first respondent (the Assessing Officer with the National Faceless Assessment Centre - NaFAC) that:

(i) the petitioner is reporting a loss to the tune of Rs.3,325.85/- Crores and this loss can cover any addition proposed.

(ii) in the past there have been no addition and as such, withholding of refund may be re-list-examined considering whether it would be so warranted despite carry forward loss as aforesaid.

3. Sri. Tarun Gulati, the learned Senior counsel for the petitioner, on one of the previous hearing dates, had canvassed that the refund was being withheld without affording an opportunity and without recording an opinion as would be required under Section 241A of the IT Act, and as such, the respondents were permitted to place on record the opinion recorded by the Assessing Officer and the permission granted by the concerned Principal Commissioner of Income Tax, if any.

4. In response, Sri. Y.V.Raviraj, the learned Senior standing counsel for the respondents, has placed on record a copy of the Communication dated 20.12.2022 addressed by the Assistant Commissioner of income Tax, ReAc (AU)-1(2)(1), Surat to the Principal Commissioner of Income Tax (AR)-1 and the approval granted by the aforesaid Principal Commissioner of Income Tax (AR)-1. Sri. Tarun Gulati, with the assistance of these documents, canvasses:

4.1 that the Assistant Commissioner of Income Tax, ReAc (AU)-1(2)(1), without recording an opinion on whether grant of refund would likely affect the revenue adversely as is required under the provisions of Section 241A of the IT Act, has stated that because scrutiny assessment is pending with the Transfer Pricing Officer (TPO), the refund may be withheld,

4.2 that the Assistant Commissioner of Income Tax, ReAc (AU)-1(2)(1), in the Communication dated 20.12.2022, has referred to eleven different instances, including the petitioner's instance citing the same reason and this indicates lack of application of mind.

4.3 that the Principal Commissioner of Income Tax (AU)-1, without even observing that the Assistant Commissioner of Income Tax, ReAc (AU)- 1(2)(1), Surat has not recorded that the revenue's interest would be adversely impacted if refund is granted, has once again granted permission for withholding the refund recording the details.

4.4 that the first respondent has filed affidavit for the first time before this Court mentioning a reference for transfer pricing parameter and an investigation by the foreign jurisdiction to justify withholding the refund, but the reason must be as available as of the date the computation under Section 143(1) of the IT Act,

4.5 that if the petition is disposed of without directions to refund because of the reasons now filed this Court would be permitting supplementing reasons to justify an illegal decision.

5. Sri. Ta