Discretion of Assessing Officer in Processing of Income Tax Return:
The litigation for Vodafone Mobile in India is not coming to an end. By each passing day the company is facing new challenges imposed by the revenue department.
In a very recent judgement Hon’ble High court of Delhi has allowed the discretion of Assessing Officer of not processing the income tax return and refund of the company.
- The company filed its return of income for AY 2014-15 and AY 2015-16, claiming refunds of Rs. 1,532.09 crores and Rs. 1,355.51 crores, respectively. The return of income pertaining to assessment year 2016-17, claiming refund of Rs. 1128.47 crores was filed. However, this too had not been processed till date.
- Vodafone requested the revenue for expeditious processing of the pending income-tax returns.
- Thereafter, writ petition was filed by the petitioner ‘vodafone’ on account of inaction on the part of Assessing Officer in processing income tax returns for four assessment years 2014-15 to 2017-18 which would result in issuance of refunds aggregating to Rs. 4759.74 crores along with applicable interest under section 244A.
- The writ petition claimed a direction upon the Assessing Officer to expeditiously process the refund claim made by Vodafone, and issue refund in respect of Vodafone’s income tax returns for the relevant period under consideration.
- The assessee’s argument in these proceedings is that once the one year period in proviso to section 143 (1) ends, the return – and whatever calculations are contained in it, with respect to tax liability as well as the consequential refunds, become final, subject to only one event: issuance of notice under section 143(2).
- Revenue contended that substantial outstanding demand are pending against the petitioner. Further, the likelihood of substantial demands upon the assessee after the scrutiny for the assessment years is completed, cannot be ruled out. The revenue should have the right to adjust the demands against the refunds that may arise but have not yet been determined due to ongoing scrutiny proceedings.
High Court’s ruling:
- As far as the argument that the expiry of the one year period, per second proviso to Section 143 (1) resulting in finality of the intimation of acceptance, this court is of opinion that the deeming provision in question, i.e. Section 143(1)(d) only talks of two eventualities: “shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a).” Secondly, that intimation or acknowledgement cannot confer any greater right than for the assessee to ask the AO to process the refund and make over the money; it is up to the AO- wherever the possibility of issuing a notice under Section 143(2) exists, or where such notice has been issued, to apply his mind, and decide whether given the nature of the returns and the potential or likely liability, the refund can be given. It does not mean that when an assessment – pursuant to notice under Section 143(2) is pending, such right to claim refund can accrue. This court also recollects the decision of the Supreme Court in Dy. CIT v. Zuari Estate Development & Investment Co. Ltd.  63 taxmann.com 177/ 236 Taxman 1/ 373 ITR 661 which held that an intimation under Section 143(1) is not to be considered as an assessment.
The judgement of High Court of Delhi has clearly stated that issue of refund is discretion of the Assessing Officer in cases where there is possibility of scrutiny assessment. This will surely lead to delay in issue of refund of various assessee’s having adverse past assessment history and will act as a hurdle in governments claim’s of faster refund processing in India.