TMI Blog2021 (10) TMI 973X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 241A provides that where there is a refund payable on the returns furnished under Section 143 (1) of the Act, and the Assessing Officer is of the opinion that grant of refund is likely to adversely affect the revenue, he may withhold the refund up to the date on which the assessment is made, subject to reasons to be recorded in writing and with the previous approval of the Principal Commissioner or Commissioner, as the case may be. On a combined reading of Section 143 with Section 241A, it can be discerned that by virtue of the new proviso, it is now mandatory to process the return under sub-section (1) of Section 143, and proceed with grant of the refund determined therein, unless, sufficient reasons exist under Section 241A prima facie demonstrating that the grant of refund is likely to adversely affect the revenue. The scope of the power under Section 241A is narrow, making it clear that a speaking order is required to be passed culling out the reasons as to how the grant of refund is likely to affect the revenue. The recording of reasons to substantiate why such withholding is necessary and how the refund will adversely affect recovery of subsequent revenue is esse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of Section 143(2) of the Income Tax Act, 1961 (hereinafter referred as the said Act). 2) The assessee received another intimation from the respondent no.4 on 15th March, 2019 regarding the assessment under the provisions of Section 143(1) wherein it was declared that the principal refund amount to be ₹ 17,40,23,735/- as assessed by the concerned Assessing Officer. The total income tax refund for the assessee for the assessment year 2017-2018 after addition of interest of ₹ 2,08,82,844/- under the provisions of Section 244A of the said Act was computed as ₹ 19,49,06,579/-. A refund sequence No.8547644783 was also mentioned in the said intimation stating that the process of income tax return was complete. The assessee on checking the refund status at the TIN-NSDL website, however, found the following message displayed thereat, Your Assessing Officer has not sent the refund to the refund banker, please contact your Assessing Officer. The assessed refund was, thus, not refunded to the petitioner (assessee). The note appended to the said intimation shows that the refund determined under Section 143(1) of the said Act has been withheld as per provision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars by adjourning the matter. The only details provided was for a period subsequent to the assessment and declaration of refund which was non-existent at the time when the refund was declared upon completion of assessment. 7) Upon perusal of documents submitted, I find that the instant case is based on interpretation of few provisions of the said Act. Section 143(1) read with Sections 143(2) and 143(3) of the said Act provide for assessment on scrutiny proceedings initiated against an assessee. After the assessment is done the question of payment of further tax with penalty and interest or refund arises depending upon the assessment. Section 241A of the said Act provides for withholding of refunds if the Officer concerned finds that refund will have an adverse affect on the revenue. In the instant case, the petitioner was issued a notice for refund on 15th March, 2019 after the assessment on scrutiny proceeding for the assessment year 2017-18 was completed but the refund was withheld without assigning any reason. The assessment for the assessment year 2017-18 may have taken some time and was completed by 15th March, 2019 when the refund was notified but at that point of time the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the materials on which certain conclusions are based and actual conclusions. They should reveal a rational nexus between the facts considered and conclusions reached. No reasons were assigned by the Officer concerned by referring to any materials that refund declared in case of the petitioner/assessee on being actually made will adversely affect the revenue. No demand as against the petitioner was pending on the date when refund was notified. The petitioner/assess became entitled to the refund immediately on completion of assessment and refund on being notified. The Assessing Officer could not have kept the refund withheld to link such refund with any demand against the petitioner for a subsequent period when such demand was not in existence on the date when the refund was notified. 11) The powers under this revenue friendly provision cannot be used in a mechanical manner without application of mind, wherein the Assessing Officer being of the opinion that the grant of refund may make recovery of pending demands. In that case refund can be withheld only after recording reasons and obtaining approval of Principal Commissioner or Commissioner as held in the judgment reported in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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