2025 (5) TMI 719 - HC - Income Tax

Refund claim - respondents produced communications by which approvals have been granted of the Deputy Commissioner of Income Tax and the Principal CIT for withholding such refund inter alia on the ground that petitioner s case was selected for scrutiny under CASS criteria for AY 2023-24 and there is likelihood of huge demand - HELD THAT - Given the above communications supra at this stage we cannot issue any writ of mandamus to the respondents to process the petitioner s refund application for AY 2020-21. Similarly such communications cannot be challenged by filing a rejoinder. If the petitioner is serious about such a challenge the petitioner will have to take appropriate steps by raising all permissible grounds to challenge the said communications. Petitioner states that the petitioner will file necessary proceedings to challenge the impugned communications. He however complains that there was no justification for the respondents not to have served the above communications to the petitioner earlier. We agree with Petitioner that the above communications should have been served upon the petitioner no sooner than they were made. Based on the above communications the petitioner s application for a refund is not yet being processed. Therefore the petitioner should have been informed about these communications so that the petitioner could have taken immediate steps to challenge them if advised. Be that as it may nothing further survives in this petition.

Summary

The Bombay High Court, through M.S. Sonak and Jitendra Jain, JJ., addressed a petition seeking (i) stay of a demand notice for AY 2016-17, (ii) directions for rectification for AY 2022-23, and (iii) refund for AY 2020-21. The Court noted that the stay relief was not pressed as the ITAT had heard the appeal and was to deliver orders. The rectification relief was rendered moot as the order dated 14 November 2024 had been passed.Regarding the refund for AY 2020-21, the respondents produced communications dated 23 and 31 July 2024, showing approvals by the Deputy Commissioner and Principal CIT to withhold the refund due to scrutiny of the petitioner's AY 2023-24 case under CASS criteria and potential large demand. The petitioner contended these communications were not furnished earlier and challenged them in a rejoinder.The Court held that these communications cannot be challenged via rejoinder and declined to issue a writ of mandamus directing refund processing. It granted the petitioner liberty to initiate appropriate proceedings to challenge these communications on all permissible grounds. The Court agreed the communications should have been served promptly to enable timely challenge.Ultimately, the petition was disposed of with liberty to challenge the communications, leaving all contentions open, and no costs were imposed.