Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2023 (3) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (3) TMI 1165 - HC - Income TaxWithholding of refund - As submitted by Petitioner, that where refund has been withheld by the Revenue, the provisions of Section 241A require that reasons be recorded in writing by the concerned Officer to withhold the refund and also that the approval of Principal Commissioner or Commissioner is to be taken - HELD THAT:- The issue of withholding of refund under the provisions of Section 241A of the Act is no longer res integra. This Court in various decisions has inter-alia held that a refund may be withheld subject, however, to reasons being recorded in writing on how the grant of refund in the opinion is “likely to adversely affect revenue”. It is well settled that a refund cannot simply be withheld if an Assessee is selected for scrutiny assessment or where a notice has been issued under sub-section (2) of Section 143 of the Act. AO is also required to give detailed and compelling reasons as to how the release of the refund will adversely affect the interest of the Revenue. The reasons as set forth in the communication are bereft of any details and only reproduce the wordings of Section 241A of the Act with some additional sketchy and vague details. There is also a complete absence of reasoning. Petitioner is a well reputed company with a large net-worth running into several billion dollars and not a “fly-by-night” operator. It is a tax Assessee for the last several years and the credit worthiness of the Assessee is also not in dispute. Merely because a notice has been issued under Section 143(2) of the Act, it is not a sufficient ground to withhold the refund under the provisions of the Act. As has been held in Maple Logistics case [2019 (11) TMI 340 - DELHI HIGH COURT] it would be wholly unjust and inequitable for the AO to withhold a refund by citing the reason that a scrutiny notice has been issued and such an interpretation of the provision would be contrary to the intent of the legislature. The ReFAC(AU) has been completely swayed by the fact that the case of the Assessee has been selected by CASS for scrutiny assessment. PCIT (ReFAC)(AU) has also mechanically accorded permission to withhold the refund till the date of finalization of assessment without any application of mind in the matter. The orders are bereft of cogent reasons and are not in consonance with the principles enunciated in Maple Logistics case [2019 (11) TMI 340 - DELHI HIGH COURT] and Ingenico International case [2021 (3) TMI 848 - DELHI HIGH COURT] and hence, cannot be sustained. We set aside the order(s) - Respondents shall conduct a de novo exercise bearing in mind the provisions of Section 241A of the Act and principles articulated hereinabove, within six weeks of receipt of a copy of the Judgment.
|