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2017 (12) TMI 1525 - HC - Income TaxClaim of refund - Centralised Processing of Return Scheme, 2011 - Claim of higher refund vide revised return alongwith interest u/s 244A - returns containing claims for refund for the assessment years 201213, 201314, 201415 were not processed within the time frame prescribed under subsection 1 of section 143 of the said Act. Held that:- the net result of the processing done under subsection (1) of Section 143 and the order passed under subsection (3) of Section 143 is the same. The time within which the exercise of passing an order under subsection(3) of Section 143 should be done is provided in subsection(1) of Section 153 of the said Act. The stand of the department that once a notice under subsection (2) of Section 143 of the said Act is issued, there is no discretion left with the AO whether to process the return or not. Thus, the said stand taken by the department is completely contrary to subsection (1D) and the interpretation put to the said Section by the Delhi High Court as well as this Court, and therefore, the said stand deserves to be rejected. AOs cannot give priority to the processing of the returns to those assessees who approach them. We are surprised to note that there is no order of priority laid down by any authority which will bind the AOs when it comes to processing of the returns. For example, the returns of Assessment Year 201617 which were transferred to AO were not processed till 31st October, 2017 as proper ITBA software was not available. Now the income tax department must ensure that the returns which are kept pending due to its own default, are processed as per a rational policy which determines the order of priority. The phrase “administrative requirements” is very vague. In fact this clause indicates that there can be arbitrariness while deciding which returns should be given priority for the processing. Therefore, we propose to issue a direction to the respondents to formulate a rational policy on this aspect and place it before the Court within the time specified by this Court. Direction for manual processing of return - Held that:- There is no provision in both the notifications which lays down that after the returns are sent to the Assessing Officer, if he finds that the returns cannot be processed on ITBA or any other software, the same cannot be processed manually. The only object served by the refusal of the Commissioner to grant permission to process return manually was that the processing of the return was unduly delayed. In fact, the Principal Commissioner ought to have taken steps to remedy the situation and with a view to ensure that the returns transmitted to AO are not kept pending, ought to have authorised manual processing of returns. The said scheme of 2011 was brought into force with the object of expediting the processing of returns. Due to the approach adopted by the Principal Commissioner, in fact there was a delay caused in processing of the returns. Whenever returns are transferred by the Centre to AOs for processing, if the returns cannot be processed immediately because of lack of availability of proper software, or because of technical difficulties in functioning of the software, the returns must be permitted to be processed manually. There will not be any illegality attached to it. If at all software is not provided to deal with the returns of a particular year, there is no embargo imposed by law which prevents AOs from processing the returns manually. If returns cannot be processed due to system failure and if the errors cannot be rectified and system cannot be made functional within a reasonable time, the Commissioner ought to permit the AOs to process the returns manually. Petition disposed with direction to the department / government.
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