Formulate rational policy for processing IT Returns sent to AO: HC

Tata Projects Limited Vs. DCIT (Bombay High Court)

We made a query to the learned ASG whether there is any policy of the department as regards priority to be given to the returns which are to be processed AOs. The returns are required to be processed by AO under the said scheme of 2011 either by reason of a notice having been issued under subsection (2) of Section 143 or because the returns are pushed to AOs for processing for other reasons. It cannot be that the Assessing Officer gives priority for processing of the returns of those assessees who file petitions in this Court and make a grievance. There has to be a rational policy for processing the returns which are sent to the AO and which are required to be dealt with either under sub­section(1) or sub­section(3) of Section 143. There cannot be a pick and choose policy and the AOs will have to be guided by a rational policy which will stand the test of Article 14 of the Constitution of India. As a Writ Court, we cannot appreciate the practice of giving priority to the processing of the returns of those assessees who approach to this Court with a grievance. We have already quoted paragraph 10 of judgment of this Court in the case of M/s. Group M. Media India Pvt. Ltd. (supra) and very pertinent observations made by the Division Bench in the last part of paragraph 10. As indicated by the said observations, the AOs cannot give priority to the processing of the returns to those assessees who approach them. We are surprised to note that there is no order of priority laid down by any authority which will bind the AOs when it comes to processing of the returns. For example, the returns of Assessment Year 2016- 17 which were transferred to AO were not processed till 31^st October, 2017 as proper ITBA software was not available. Now the income tax department must ensure that the returns which are kept pending due to its own default, are processed as per a rational policy which determines the order of priority. We are on this aspect, it will be necessary to advert to the notification No. S.O.17(E) dated 4^th January, 2012, sub- ­clause (iib) of clause 8 is relevant which confers power on the Commissioner to decide the order of priority for processing of returns of income based on administrative requirements. The phrase “administrative requirements” is very vague. In fact this clause indicates that there can be arbitrariness while deciding which returns should be given priority for the processing. Therefore, we propose to issue a direction to the respondents to formulate a rational policy on this aspect and place it before the Court within the time specified by this Court.

FULL TEXT OF THE HIGH COURT JUDGMENT / ORDER IS AS FOLLOWS:-

1 We have heard these petitions at some length as certain important procedural and legal issues are involved in these petitions which arise out of the provisions of the Income Tax Act, 1961 (for short `the said Act’). The issues relate to implementation of the Centralized Processing of Return Scheme, 2011 published under the notification SO­16E dated 4th January 2012 and especially the processing of the returns which are transmitted by the Centralized Processing Center (for short “the Center”) to Assessing Officers having jurisdiction in accordance with sub clause (iii) of clause (8) of the Centralized Processing of Return Scheme, 2011 (for short “the said Scheme of 2011”). The petitions also concern issue of interpretation of subsection 1(D) of section 143 of the said Act as existing on the relevant date.

2 Writ Petition No. 2051 of 2017 and WP(L) 2498 of 2017 have been filed by the same Company. Writ Petition No. 2051 of 2017 concerns the assessment year 2015- 16 and Writ Petition (L) No. 2498 of 2017 concerns the assessment year 2016- 17. In the case of assessment year 2015- 16, return was filed by the petitioner ­company on 30^th November 2015 claiming refund. A revised return was filed on 9^th January 2016 claiming higher refund. Both the returns were filed electronically. In relation to the said returns filed for the assessment year 2015- 16, a notice under subsection 2 of section 143 of the said Act was issued by the respondents on 19^th September 2016. It is stated in the petition that as scrutiny proceedings of the cases of the assessment year 2014- 15 are not yet concluded, the scrutiny proceedings of the returns of the assessment year 201516 have been kept pending. According to the case of the petitioner, on 6^th June 2016, Income Tax e­filing website showed that the returns were transferred by the Center to the jurisdictional Assessing Officer for processing. Reliance is placed on screen shot of the concerned page of the website. The petition refers to communications of the Officer of the petitioner to the offices of the first and second respondents for the purposes of pursuing return and the claim for refund. Reliance is placed on several letters addressed by the petitioner from time to time. According to the case of the petitioner, on 19^th May 2017, the first respondent (Assessing Officer) signed intimation under clause (a) of subsection 1 of section 143 of processing the refund of Rs. 28,75,27,080/­ along with interest payable under section 244A of the said Act. The case made out by the petitioner in the Writ Petition is that the refund was not issued by the first respondent but it was orally informed that the refund will not be issued due to expiry of limitation contained in the second proviso to clause (a) of subsection 1 of section 143 of the said Act. Writ Petition No. 2051 of 2017 is filed seeking a writ of mandamus directing respondents to process of return for the assessment year 2015- 16 and to issue the refund.

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