Point of Law: Income Tax – Refund – Attachment before judgment – Power of Court -When Court not been empowered to assess tax liability in first instance, it would ordinarily not form a prima facie view even, of what it is not finally empowered to do.

JUDGMENT :

Rajiv Sahai Endlaw, J.

1. This petition was originally filed, seeking a mandamus, directing the respondents to issue / grant refund due of Rs.249.39 crores, for the assessment year 2018-19 along with interest under Section 244A of the Income Tax Act, 1961, to the petitioner. It was the case of the petitioner, that (i) the petitioner, on 31st October, 2018 filed its Income Tax Return (ITR) for the assessment year 2018-19, claiming refund of Rs.226.72 crores, being the amount of Tax Deducted at Source (TDS) by the payer, from the payments made to the petitioner on account of sale by the petitioner of shares of an Indian company and which payment was not chargeable to tax in India in terms of Article 13(4) of the Double Taxation Avoidance Agreement (DTAA) between India and Mauritius; (ii) the ITR of the petitioner was selected for scrutiny assessment and a notice dated 22nd September, 2019, under Section 143(2) of the Act, was received by the petitioner; (iii) on 25th November, 2019, an intimation under Section 143(1) of the Act was issued to the petitioner, determining a refund of approximately Rs.249.39 crores to be due to the petitioner along with applicable interest; and, (iv) however inspite of intimation dated 25th November, 2019 and several reminders of the petitioner, till the date of filing of the petition, refund had not been received by the petitioner.

2. The petition came up before this Court first on 19th June, 2020 and thereafter before this Bench on 23rd June, 2020, when it was the contention of the senior counsel for the petitioner that no order under Section 241A of the Act, for retention of the aforesaid amount, had been passed. Per contra, the counsel for the respondents, appearing on advance notice, stated that it was mentioned in the intimation dated 25th November, 2019 itself that

“The refund determined u/s 143(1) in this intimation, if any, along with interest u/s 244A and subject to adjustment of arrear demand, if any, u/s 245 will be released as per the provisions of Section 241A of the Income Tax Act, 1961 as determined by the Assessing Officer”

and time was sought for filing counter affidavit.

3. On the next date of hearing i.e. 27th July, 2020, the senior counsel for the petitioner stated that the petitioner, on 15th July, 2020 had been served with an order under Section 241A of the Income Tax Act and he had advised for amendment of the writ petition. Per contra, the counsel for the respondents stated that though counter affidavit had already been filed but an additional counter affidavit would be required to be filed to the amended petition.

4. The pleadings were accordingly completed. The petitioner, in the amended petition, besides the relief of mandamus directing refund with interest, has also impugned the order dated 15th July, 2020 under Section 241A of the Act.

5. Considering the nature of the controversy, it is not deemed expedient to detail the pleadings at this stage. We may however reproduce hereinbelow the relevant part of the order dated 15th July, 2020 as under:

“1. I have gone through the proposal of the DCIT Circle 1 (3)(1) regarding withholding of refund of M/s GE Capital Mauritius Overseas Investments (PAN- AADCG3823H) for AY 2018-19 vide her application dated 26.6.2020.

2. The assesse is a company registered in Mauritius since 2007. However it never filed its return of income in India before the present return which has resulted in refund of Rs.226,72,06,7201- u/s 143(1) of the I.T. Act 1961 subject to withholding of refund under section 241 A.

3. The assesse company has sold its share holding in SBI Cards and Payment Services Private Limited, a company incorporated in India. This resulted in Long Term Capital gains of Rs. 2036.50 crore/-. The assesse has claimed benefit of Indo Mauritian DTAA and has asserted that the Capital gains arising out of sale of shares in Indian Companies were not taxable in India. The case of the assesse for the said assessment year was selected for scruti