INCOME TAX ACT, 1961

Sction 241A

Refund - Withholding the refund under section 241A - Validity - Reason, return had been selected for scrutiny under section 143(2)

Assessee filed a grievance with CPGRAM requesting to direct to process the return and issue refund at the earliest. The grievance application was disposed stating that since return had been selected for scrutiny under section 143(2) and grant of refund was likely to adversely affect the revenue, therefore, necessary refund would be issued only after completion of assessment proceedings. Assessee challenged this by way of writ petition. Held: The refund of amounts claimed -- where they appear justified, by itself cannot be said to be adverse to the interest of revenue since interest of revenue lies in collecting revenue in a legal and justified manner. It does not lie in retaining the collected taxes in excess of what is justified, since excess collection cannot even be properly termed as “revenue”. The excess collection of tax is liability of State and it lies in the interest of revenue of the State to discharge its interest bearing liability without any delay. The sovereign cannot, but, be seen as fair, honest and credible in its dealings with its subjects. Any lapse in this regard tarnishes the image and credibility of sovereign. It certainly cannot act like any unscrupulous businessman, who is seen to dodge his liabilities by resort to frivolous excuses and devious ways. In absence of any cogent reasons justifying withholding of refund due to assesse, proposal as well as approval granted by Pr.CIT lacked consideration of relevant and germane conditions. Accordingly, impugned order was set aside and respondents were directed to undertake the exercise afresh and pass an order under section 241A.

Supported by:Maple Logistics Private Limited & Anr. v. Pr. Chief CIT & Ors. WP (C) No. 7003/2019 decided on 4-11-2019.

REFERRED :

FAVOUR : In assessee's favour (by way of remand).

A.Y. :

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