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2020 (2) TMI 1282 - HC - Income TaxWithholding of the refund in terms of Section 241A - Withholding of refund in certain cases - exercise of powers under Section 241A - HELD THAT:- Auto-generated communication dated 24.3.2019 which contained the note of withholding of the refund in terms of Section 241A of the Act, does not satisfy any of the legal tests for passing said order. Firstly, it is not passed by the Assessing Officer who is competent to do so. Secondly, it is not even an order, it is a mere auto-generated communication. Thirdly, it does not contain any reasons recorded in writing and lastly it is not passed with the prior approval of the Principal Commissioner or Commissioner. When Section 241A confers the Assessing Officer with wide discretionary powers and at the same time, puts conditions for exercise of such powers, such exercise under no circumstances can be taken over by computerized system. The very essence of passing of the order under Section 241A is application of mind by the Assessing Officer to the issues which are germane for withholding the refund on the basis of statutory prescription contained in the said Section. We must, therefore, deprecate the practice of the department in sending such auto-generated response to the assessees for withholding the returns. Merely because in the immediately preceding assessment year 2016-17, the assessee had declared a positive income as against substantial loss declared in the present assessment year, that by itself, cannot be a ground to doubt the contents of the return or the claim of the assessee with respect to the loss suffered. The reference to the several issues which are common in the present assessment year and which are pending before the Tribunal, also in facts of the case would not be a ground to withhold the refund. This is so for the following reasons. We are prepared to proceed on the basis that the Assessing Officer in relation to such issues, in case of the assessee for the earlier assessment years, has already taken a view adverse to the assessee. However, such issues are pending before the Tribunal at the hands of the assessee. We do not find that the exercise of powers by the Assessing Officer fulfills requirement of Section 241A of the Act. We have, no doubt, about the existence of the powers. We find that the exercise of the powers would not be justified in facts of the case. In the result, the orders impugned in both the petitions are set aside. Resultantly, the respondents shall release refund of the petitioner arising out of the return filed for the assessment year 2017-18 and the process thereof under Section 143(1) of the Act by the Assessing Officer. This shall be done along with statutory interest within a period of three weeks from the date of receipt of copy of this order.
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