Delhi High Court - Orders
Anju Jalaj Batra vs Assistant Commissioner Of Income Tax & ... on 14 September, 2020
Author: Manmohan
Bench: Manmohan, Sanjeev Narula
$~2
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P. (C) 6328/2020
ANJU JALAJ BATRA ...... Petitioner
Through: Mr. Salil Kapoor, Advocate with
Ms. Soumya Singh, Ms. Ananya Kapoor
and Mr. Sanat Kapoor, Advocates
versus
ASSISTANT COMMISSIONER
OF INCOME TAX & ANR. ...... Respondents
Through: Mr. Sunil Agarwal, Advocate
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
HON'BLE MR. JUSTICE SANJEEV NARULA
ORDER
% 14.09.2020
CM APPL. 22457/2020
Allowed, subject to all just exceptions.
W.P. (C) 6328/2020
The petition has been listed before this Bench by the Registry in view of the urgency expressed therein. The same has been heard by way of video conferencing.
Present writ petition has been filed seeking a direction to the respondents to refund the amount of Rs.1,21,87,952/- as per intimation dated 16th November, 2019 for assessment year 2018-2019 issued under Section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as 'Act') along with interest.
Mr. Salil Kapoor, learned counsel for petitioner submits that despite issuance of scrutiny notice dated 23rd September, 2019 under Section 143(2) of the Act, 1961 in terms of the procedure prescribed under Section 143 of the Act, 1961, the refund due to the petitioner was liable to be released at the time of issuance of the intimation order under Section 143(1) of the Act, 1961.
He contends that neither any order has been passed under Section 241A of the Act, 1961 nor any reasons have been communicated for withholding of the refund to the petitioner.
He states that upon the petitioner asking for refund, she was repeatedly informed that the same is pending for approval with petitioner's jurisdictional assessing officer and the same would be released by respondent no.2 upon receipt of the said approval.
Issue notice.
Mr. Sunil Agarwal, learned counsel accepts notice on behalf of respondents.
He prays for six weeks time to file a counter-affidavit as according to him the petitioner in the present case has failed to establish an indefeasible right as well as to show its violation and further to show that this court in writ jurisdiction can interdict such an alleged violation.
He states that as the address of the petitioner kept on changing, the jurisdiction of the Assessing Officer could be determined in March 2020 only.
Learned counsel for the respondents also states that he has no instructions in the present case as to whether any order has been passed under Section 241A of the Act, 1961 or not.
This Court is not able to appreciate the plea of lack of instructions as the counsel for the respondents had sufficient time to obtain instructions. It is pertinent to mention that the Assessing Officer is based in Delhi and the present writ petition had been filed on 08th September, 2020 and was adjourned at the request of learned counsel for the respondents on 11th September, 2020 due to poor connectivity at his end.
It is further settled law that despite issuance of scrutiny notice under Section 143(2) of the Act, 1961, the refund due to the petitioner is liable to be released at the time of issuance of the intimation/order under Section 143(1) of the Act, 1961 unless an order for withholding of refund has been passed under Section 241A of the Act, 1961. In fact, one of us (Mr. Justice Sanjeev Narula) in two recent judgments has held as under:-
A) Maple Logistics (P.) Ltd. Vs. Principal Chief Commissioner of Income Tax, 2019 SCC OnLine Del 10961 :-
"28. With this backdrop, we now consider the situation at hand. Here the return has been filed on 25.10.2017 for AY 2017-2018 and, therefore, the amended provisions would be applicable. In our considered opinion, the AO has completely misunderstood the refund mechanism and the import of Section 241A of the Act. The legislative intent is clear and explicit. The processing of return cannot be kept in abeyance, merely because a notice has been issued under section 143(2) of the Act. Post amendment, sub-section (1D) of section 143 is inapplicable to returns furnished for the AY commencing on or after 1st Day of April 2017. The only provision that empowers the AO to withhold the refund in a given case presently, is section 241A. Now the refunds can be withheld only in accordance with the said provision. The aforesaid provision is applicable to such cases where refund is found to be due to the Assessee under the provisions of Sub-Section (1) of Section 143, and also a notice has been issued under Sub-Section (2) of Section 143 in respect of such returns. However, this does not mean that in every case where a notice has been issued under Sub-Section (2) of Section 143 and the case of the Assessee is selected for scrutiny assessment, the determined refund has to be withheld.
29. The legislature has not intended to withhold the refunds just because scrutiny assessment is pending. If such would have been the intent, Section 241A would have been worded so. On the contrary, section 241A enjoins the AO to process the determined refunds, subject to the caveat envisaged under Section 241A. The language of section 241A envisages that the aforesaid provision is not resorted to merely for the reason that the case of the assessee is selected for scrutiny assessment. Sufficient checks and balances have been built in under the said provision and same have to be given due consideration and meaning. An order under section 241A should be transparent and reflect due application of mind.
30. The AO is duty bound to process the refund where the same are determined. He cannot deny the refund in every case where a notice has been issued under Sub-Section (2) of Section 143. The discretion vested with the AO has to be exercised judiciously and is conditioned and channelized. Merely because a scrutiny notice has been issued should not weigh with the AO to withhold the refund. The AO has to apply his mind judiciously and such application of mind has to be found in the reasons which are to be recorded in writing. He must make an objective assessment of all the relevant circumstances that would fall within the realm of "adversely affecting the revenue".
31. In the present case, the AO has completely lost sight of the words in the provision to the effect that, "the grant of the refund is likely to adversely affect the revenue". The reasons that are relied upon by the Revenue to justify the witholding of the refund in the present case, are abysmally lacking in reasoning. Except for reproducing the wordings of Section 241A of the Act, they do not state anything more. The entire purpose of Section 241A would be negated, in case the AO was to construe the said provision in the manner he has sought to do. It would be wholly unjust and inequitable for the AO to withhold the refund, by citing the reason that the scrutiny notice has been issued. Such an interpretation of the provision would be completely contrary to the intent of the legislature. The AO has been completely swayed by the fact that since the case of the assessee has been selected for scrutiny assessment, he is justified to withhold the refund of tax.
32. The power of the AO has been outlined and defined in terms of the Section 241A and he must proceed giving due regard to the fact that the refund has been determined. The fact that notice under section 143(2) has been issued, would obviously be a relevant factor, but that cannot be used to ritualistically deny refunds. The AO is required to apply its mind and evaluate all the relevant factors before deciding the request for refund of tax. Such an exercise cannot be treated to be an empty formality and requires the AO to take into consideration all the relevant factors. The relevant factors, to state a few would be the prima facie view on the grounds for the issuance of notice under section 143(2); the amount of tax liability that the scrutiny assessment may eventually result in vis-a-vis the amount of tax refund due to the assessee; the creditworthiness or financial standing of the assessee, and all factors which address the concern of recovery of revenue in doubtful cases.
33. Therefore, merely because a notice has been issued under section 143(2), it is not a sufficient ground to withhold refund under section 241A and the order denying refund on this ground alone would be laconic. Additionally, the reasons which are to be recorded in writing have to also be approved by the Principal Commissioner, or Commissioner, as the case may be and this should be done objectively."
(emphasis supplied) B) Ericsson India Private Limited Vs. Additional Commissioner of Income Tax, Special Range-3, New Delhi & Anr., W.P.(C) 10373/2019 dated 18th February, 2020 :-
"18. The refund of amounts claimed - where they appear justified, by itself cannot be said to be adverse to the interest of the revenue. The interest of revenue lies in collecting revenue in a legal and justified manner. It does not lie in retaining the collected taxes in excess of what is justified, since the excess collection cannot even be properly termed as "revenue". The excess collection of tax is a liability of the State and it lies in the interest of the revenue of the State to discharge its interest bearing liability without any delay. The sovereign cannot, but, be seen as fair, honest and credible in its dealings with its subjects. Any lapse in this regard tarnishes the image and credibility of the sovereign. It certainly cannot act like any unscrupulous businessman, who is seen to dodge his liabilities by resort to frivolous excuses and devious ways."
In view of the arguments advanced by the respondents, this Court is of the prima facie opinion that the significance and import of the aforesaid judgments have not been appreciated by the Assessing Officer and the same are being treated as „water off a duck‟s back‟.
If any order had been passed under Section 241A of the Act, 1961, this Court is of the view that the respondents had sufficient time to produce the same. This view is fortified by the fact that in response to the petitioner's Grievance Application dated 11th May, 2020 seeking release of refund, the Assessing Officer, Circle 52(1), Delhi had vide letter dated 01st June, 2020 stated that "The needful action has been taken by this office as per the communication received from the CPC."
To obviate any mischief and as the petitioner's refund has been withheld for nearly ten months, this Court directs the concerned Assessing Officer to be personally present before us via video link tomorrow with all the relevant papers of the assessee.
List on 15th September, 2020.
The order be uploaded on the website forthwith. Copy of the order be also forwarded to the learned counsel through e-mail.
MANMOHAN, J SANJEEV NARULA, J SEPTEMBER 14, 2020 sb/rn