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2019 (9) TMI 447

..... certain circumstances HELD THAT:- Previously, the petitioner had filed a Writ Petition before this Court complaining about the department not showing sufficient urgency in processing the petitioner’s return for AY 2016-2017 which the petitioner expected would give rise to sizeable refund. High Court directed the respondents to complete the process expeditiously. Consequently, the intimation under section 143(1) of the Act gave rise to refund of a sum of ₹ 180 crores. With interest, this refund came to approximately ₹ 207 crores. Immediately, the department raised the possibility of invoking section 245 of the Act in order not to release the refund. The petitioner pointed out that the tax demands referred to in the communications proposing to invoke section 245 of the Act have all been stayed by the Tribunal under different interim orders. Under sub-section (1) of section 281B thus, where during the pendency of any proceedings for assessment or reassessment, the assessing officer is of the opinion that for the purposes of protecting the interest of revenue, it is necessary so to do, he may with the previous approval of the higher authority pass an order in writing .....

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..... o the petitioner s return for AY 2016-2017. 3. Brief facts are as under: The petitioner is a company registered under the Companies Act and is engaged in the business of providing communication services. For the AY 2016-2017, the petitioner had filed return of income declaring a loss of ₹ 2,561 crores (rounded off). Since the assessing officer was not processing the return of the petitioner, the petitioner had previously approached this Court by filing Writ Petition No.2146 of 2018 which was disposed of by an order dated 1.10.2018. In the context of the grievance of the petitioner that the return was not being processed promptly, the Court made the following observations in the said order: 7. The communication, copy of which is at Annexure-A makes interesting reading with regard to assessment year 2016-2017. It is solemnly stated that the return for this assessment year has been processed but it is pushed to what is stated as and styled as the Centralized Processing Center. That is stated to be forwarded for computation. 8. We fail to understand as to why somebody who is incharge of making and framing assessment, namely, the Assessing Officer can process the return and ordina .....

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..... pressed any view in favour of a refund or against it. 4. It was pursuant to this order that the return was processed which gave rise to refund of ₹ 180 crores (rounded off) and with interest, it came to ₹ 207 crores (rounded off). In ordinary course, the petitioner should have received the refund from the department. However, under section 245 of the Act, the competent authority has right to claim the set-off of such refund against any tax remaining payable even if it arises out of any other assessment year. Under section 281B of the Act, the competent authority subject to following proper procedure also has a power to provisionally attach any property of an assessee to protect the interest of the revenue under certain circumstances. The refund would undoubtedly be covered within the said expression - any property belonging to the assessee. We would take a closer look at those sections later. 5. For the time being, we may record that the respondents while intimating the processing of the return under section 143(1) of the Act, appended a following note to the said communication: NOTE:- As per the records of CPC, the following demands are outstanding. An intimation under .....

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..... with statutory interest. 10. The learned Counsel Shri Mistri, appearing for the petitioner, submitted that the action of the department is wholly illegal and unlawful. Originally, the department refused to process the return for the AY 2016-2017. When the High Court directed the department to do so, the refund was not released arising out of intimation on the ground that previous tax demands were outstanding. When it was pointed out that these demands were stayed by the Tribunal, the authorities invoked the power of provisional attachment under section 281B of the Act, without there being any justifiable reason. 11. On the other hand, the learned Counsel Shri Mohanty submitted that when the High Court previously ordered expeditious processing of the petitioner s return under the order dated 19.10.2018, it was clarified that the High Court has not examined the merits of the petitioner s claim of refund. He submitted that the demands are stayed by the Tribunal for various assessment years without entering into the merits of the assessments which were confirmed by the appellate Commissioner. He submitted that a scrutiny assessment of the petitioner s return for AY 2016-2017 would be o .....

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..... rovisions of the Act, a refund is found to be due to any person, it would be open for the competent authority mentioned in the said provision to, in lieu of payment of refund, set off the amount to be so refunded or any part thereof against the sum remaining payable under the Act by the person to whom the refund is due and payable. This provision thus, could have been applied if the tax demand was due and recoverable from the petitioner. In the present case, admittedly, all such tax demands were suspended by the Tribunal. Enabling the department to adjust such tax demands against the petitioner s refund would amount to overreaching the interim orders passed by the Income Tax Appellate Tribunal. As long as the stay against the recoveries was in operation issued by the competent appellate authority, Tribunal or Court, it would not be open for the department to enforce the recoveries through the aid of section 245 of the Act. Perhaps, it was not necessary for us to elaborate on this since advisedly, the department has given up this line of action for refusing refund to the petitioner. 15. These brief comments were however, necessary since the department seeks to press in service the p .....

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..... ment year i.e., AY 2016-2017, the issues where the assessing officer believes that there will be sizeable tax demands are common as in the earlier assessment years and which are subject matter of appeals before the Tribunal and in which the Tribunal has passed interim orders preventing the department from carrying out a recovery. He emphasized that what the Tribunal has stayed is recoveries and not the orders. 18. Even if it were to be believed that by going by his previous assessments, the assessing officer is most likely to confirm the demands while carrying out the final assessment of the petitioner s return for the AY 2016-2017, we cannot lose sight of the fact that the demands for the previous assessments have been stayed by the Tribunal. The Tribunal has given reasons why it was persuaded to pass such interim orders. It is not possible for us to dissect the reasons of the Tribunal and come to the conclusion that in the final analysis, such demands would be confirmed. Permitting the department to provisionally attaching the petitioner s refund for the current year on the ground that in the final assessment, the demands are likely to be confirmed, would amount to ignoring the h .....

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