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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Talwant Singh, JJ.
Ingenico International India Pvt Ltd - Appellant
Versus
Deputy Commissioner Of Income-tax, Circle 10(1) & Ors - Respondent
W.P.(C) No. 10764 of 2020
Decided On : 18-03-2021
Refund - Income Tax - Section 143(1) of the Income Tax Act, 1961 - The court discussed the provisions of Section 143(1) and Section 241A of the Income Tax Act, 1961, and highlighted the conditions under which the Revenue can withhold the refund. The court emphasized that the mere issuance of a scrutiny notice under Section 143(2) cannot stall the remittance of the refund to the assessee, and the refund can only be withheld if specific conditions under Section 241A are fulfilled. The court also suggested a constructive approach for the Revenue to balance the interests of both the assessee and the Revenue in cases where the release of refund is likely to adversely affect the Revenue's interests.
Fact of the Case:
The petitioner sought a refund determined by the Revenue in October 2019, but the amount had not been remitted. Despite multiple correspondences and court orders, the Revenue failed to provide clarity on the refund, leading the petitioner to approach the Court.
Finding of the Court:
The Court found that the Revenue had not provided any evidence of issuing an order under Section 241A of the Income Tax Act, 1961, and therefore directed the Revenue to remit the determined amount along with interest to the petitioner within 10 days.
Issues: The main issue was the delay in remitting the determined refund amount by the Revenue, and the lack of clarity on the issuance of an order under Section 241A of the Income Tax Act, 1961.
Ratio Decidendi: The court emphasized that the mere issuance of a scrutiny notice under Section 143(2) cannot stall the remittance of the refund to the assessee, and the refund can only be withheld if specific conditions under Section 241A are fulfilled.
Final Decision: The writ petition was allowed, and the Revenue was directed to remit the determined amount along with requisite interest within 10 days.
JUDGMENT
Rajiv Shakdher, J. - The singular grievance of the petitioner in the instant case is that despite the fact that the amount to be refunded was determined by the Revenue in October 2019, the amount, so determined, has not been remitted, as yet.
1.1. Interestingly, the order determining the refund is dated 02.10.2019. We have asked Mr. Kunal Sharma, who appears for the Revenue, as to how that date was endorsed on the order. His candid reply was that although he was not aware as to why the said order bore 02.10.2019 as the date, there was no dispute about the genuineness of the order.
2. What is not in dispute is that the said order has quantified the refund amount at Rs.5,89,14,434/-. This amount concerns the assessment year [in short "AY"] 2018-2019. The intimation received vide order dated 02.10.2019 by the petitioner was sent by the Revenue pursuant to return being filed qua the aforementioned AY and the same being processed under Section 143(1) of the Income Tax Act, 1961 [in short "the Act"].
3. Interestingly, in the month preceding the intimation of refund, via order dated 02.10.2019, the petitioner was served with notice dated 22.09.2019 under Section 143(2) of the Act [hereafter referred to as "scrutiny notice"].
4. It appears, since the refund amount was not being released to the petitioner; it entered into a correspondence on the issue with the Revenue. The letters sent to the Revenue in this behalf are dated 16.07.2020, 06.10.2020, 17.08.2020, 22.09.2020, 06.10.2020 and 19.10.2020.
5. These efforts bore no fruit. Exasperated with the approach of the Revenue, the petitioner uploaded a complaint on the E-Nirvan Grievance Portal of the Revenue. This complaint was addressed to the assessing officer [in short "A.O."]. The complaint was lodged on 22.10.2020. The complaint was also copied to the Central Processing Centre [in short "CPC"].
6. The A.O. in response to the complaint wrote back to the petitioner on 02.12.2020 wherein, he indicated that, since the Income tax return for AY 2019-2020 disclosed that the petitioner's total income amounted to Rs.18,01,18,140/-, he no longer had jurisdiction in the matter.
6.1 We may indicate, at this juncture, that the petitioner's communication dated 22.09.2020 and 17.08.2020 was addressed to the Assistant Commissioner of Income Tax, Circle 10(1) [in short "ACIT"], i.e., the officer who evidently had jurisdiction in the matter.
6.2. Resultantly, in effect, there was no resolution to the grievance articulated by the petitioner. The petitioner in the fond hope that issue could still be resolved wrote another letter dated 26.10.2020 to the Revenue; only to be disappointed.
7. It is in this backdrop that the petitioner finally took the decision to approach this Court. Notice in the instant writ petition was issued on 21.12.2020 when service on behalf of the Revenue was accepted by Mr. Kunal Sharma. The order, briefly, recorded the controversy in issue. The returnable date in the matter was fixed as 15.01.2021.
7.1 On 15.01.2021, Mr. Sharma was not present in the case. The Court in the interest of justice deferred adverse orders and directed that the matter be placed before it on 19.02.2021.
7.2. On 19.02.2021, the Bench recorded the following:
"1. Further time to obtain instructions qua refund is sought.
2. The counsel for the petitioner states that the refund has already been delayed for one and a half years.
3. This state of affairs cannot be tolerated.
4. If within two weeks it is not informed that any notice under Section 241A of the Income Tax Act, 1961 has been issued and the notice not placed before this Court, this Court will direct refund without granting any further time.
5. List on 8th March, 2021."
8. Thereafter, the matter was listed before this Bench on 08.03.2021 when the following was noted:
"1. Despite three orders being passed by this Court, there is no clarity as to whether notice has been issued by the Assessing Officer (in short "AO") under Section 241A of Income Tax Act, 19
Once a refund is quantified under Section 143(1), the Revenue must release it unless a valid order under Section 241A is issued; mere issuance of a scrutiny notice does not suffice.
The main legal point established is that the withholding of a refund under Section 241A of the Income Tax Act, 1961 requires detailed and compelling reasons to be recorded in writing, and the exercis....
The estimation of tax liability should be rational and founded on cogent grounds, taking into account the financial wherewithal of the assessee and consistent application of accounting policy.
Procedural violations in tax adjudication require rectification to uphold the rights to refunds and interests, emphasizing the need for jurisdiction and fair hearing in administrative processes.
The main legal point established in the judgment is that the petitioner is entitled to the refund as per the statutory provisions of the Income Tax Act, and delays and technical glitches in the syste....
The court has the authority to direct the revenue to remit disputed refund amounts and grant liberty to file a rectification application for differences in refund amounts under the Income Tax Act, 19....
Point of Law : Once statute provides for payment of interest and stipulated conditions are fulfilled, respondent/revenue would be obliged, in law, to pay interest.
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 wh....
The main legal point established is that the refund under the DVAT Act should be processed within the stipulated period, and interest is payable from the date the refund was due to be paid.
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