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IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, Tara Vitasta Ganju, JJ.
Oyo Hotels And Homes Private Limited – Appellant
Versus
Deputy Assistant Commissioner of Income Tax & Anr. – Respondents
W.P.(C) 16698 of 2022
Decided On : 23-03-2023
Refund Withholding - Income Tax - Section 139, Section 143, Section 241A - The court addressed the withholding of a refund under Section 241A of the Income Tax Act, 1961. It emphasized the necessity of recording reasons in writing and obtaining prior approval before withholding a refund. The court highlighted that a mere notice under Section 143(2) is not sufficient to withhold a refund and emphasized the need for judicious exercise of discretion by the Assessing Officer. The court set aside the order to withhold the refund, directing a de novo exercise by the Respondents.
Fact of the Case:
The Petitioner sought directions for the disbursal of a refund amount for the Assessment Year 2020-2021. Despite receiving a refund intimation, the Petitioner did not receive the refund. The Respondents cited reasons for withholding the refund under Section 241A of the Income Tax Act, 1961.
Finding of the Court:
The court found that the reasons for withholding the refund were not adequately substantiated and did not comply with the provisions of Section 241A. It emphasized the need for detailed and compelling reasons for withholding a refund and set aside the order to withhold the refund, directing a de novo exercise by the Respondents.
Issues: The main issue was the withholding of the refund under Section 241A of the Income Tax Act, 1961, and the adequacy of the reasons provided by the Respondents.
Ratio Decidendi: The court held that a mere notice under Section 143(2) is not sufficient to withhold a refund and emphasized the need for judicious exercise of discretion by the Assessing Officer. It emphasized the necessity of recording reasons in writing and obtaining prior approval before withholding a refund.
Final Decision: The court set aside the order(s) to withhold the refund and directed the Respondents to conduct a de novo exercise within six weeks, considering the provisions of Section 241A and the principles articulated in the judgment.
JUDGMENT
Tara Vitasta Ganju, J. The present Petition has been filed seeking directions for disbursal of a refund amount of Rs.31,48,42,701/- along with applicable interest for the Assessment Year (AY) 2020-2021. The Petitioner's only grievance is that despite its refund being determined and an intimation thereof being given to the Petitioner, the same has not been remitted as yet.
2. The following broad facts are required to be noticed for adjudication of this Writ Petition:
2.1. The Petitioner filed a return of Income Tax for AY 2020-2021 declaring a loss of Rs.16,13,83,22,476/- and claimed a refund of Rs.31,46,26,494/- on account of tax deducted at source under Section 139 of the Income Tax Act, 1961 [hereinafter "the Act"]. Pursuant to a de-merger and to give effect to the Scheme of Arrangement, the Petitioner filed a revised return of Income Tax for AY 2020-2021 on 27.03.2021 [hereinafter "Revised Return"] declaring a loss of Rs.16,70,16,05,998/- and claiming a refund of Rs.43,91,40,294/-.
2.2. The Petitioner was subjected to a scrutiny assessment under Section 143(2) of the Act by notice dated 29.06.2021 which was responded to by the Petitioner with all the necessary clarifications as sought for, on 29.07.2021.
2.3. Subsequently, a notice under Section 142(1) of the Act was sent to the Petitioner on 14.12.2021, wherein detailed information and documents were sought by the Revenue. The Petitioner submitted a response to the same on 27.12.2021. On the same day, the Petitioner 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 Respondent. The letter dated 07.06.2022, however, did not contain any enclosures or reasons for the withholding of the refund of the Petitioner.
2.6. Additionally, since there was a difference of Rs.12,42,97,589/- between the Revised Return as submitted by the Petitioner and the Refund Intimation, the Petitioner filed an appeal before the Commissioner of Income Tax (Appeals). The said appeal is, however, not a subject matter of the present Writ Petition.
3. This Court, by its order dated 07.12.2022, while issuing notice in the matter, had noticed that although an intimation concerning the refund had been received by the Petitioner on 27.12.2021, no refund had been credited to its account till date. Thus, counsel for the Respondent was directed to return with instructions on the refund.
3.1. Learned counsel appearing for the Respondents, Mr Puneet Rai, had during the hearing on 03.02.2023 handed over a letter dated 30.05.2022 addressed by the Faceless Assessment Unit and letter dated 31.05.2022 addressed by PCIT, submitting that the said documents contained the reasons for withholding of the refund due to the Petitioner. Subsequently, the Revenue filed an affidavit along with the documents dated 30.05.2022 and 31.05.2022, stating that these documents comply with the provisions of Section 241A
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