Case Law Details
Ericsson India Pvt. Ltd. Vs ACIT (Delhi High Court)
Conclusion: Withholding of refund claims should be examined by the Principal Commissioner of Income Tax with due application of mind and the entire exercise should be completed within the period of six weeks and the case of failure of Officers should transmit the amount including the interest to assessee without awaiting any further orders.
Held: Assessee-company was engaged in the business of trading, manufacturing or assembly of telecommunication carrier equipment for sale to independent customers. It was regularly assessed for tax. Assessee-company filed a petition to seek directions to the revenue for a refund of a certain amount which was said to be lying with the Department in respect of Assessment Year (AY) 2017-18; 2016-17 and 2018-19. The refund was primarily on account of issuance of tax deduction certificates at considerably higher rate of 5%, in comparison to assessee’s request of 3.12%. Besides, the delay in issuance of the certificates was also cited as a factor that had resulted in refund claim. The issue arose for consideration was whether the Commissioner of Income Tax was empowered to keep the refunds for a long period of time or not? It was held that in absence of any cogent reasons justifying withholding of the refund due to assessee under Section 143(1) for AY 2016-17, 2017-18, 2018-19, it was found that the proposal as well as the approval granted by Principal Commissioner of Income Tax lacked consideration of the relevant and germane conditions. Therefore, six weeks’ time to Principal Commissioner of Income Tax was granted to consider the aspect whether the amount found due to be refunded, or any part thereof, was liable to be withheld under Section 241A. While doing so, the AO should firstly, with reasons, make a prima facie estimation of the probability that additions would be made in the Scrutiny Assessment Proceedings; secondly, he should make an estimation of the quantum of additions/disallowances, if any, that might be made to the income returned, and the likely tax effect that such additions/disallowances might have, thirdly; he should consider the financials, and financial standing of assessee with regard to its ability to meet and service any demand for tax that might be raised as a result of the scrutiny proceedings; and, also took into consideration such other factors eg. past demands, any outstanding litigation and the past conduct of the assessee etc. All the aforesaid aspects should be examined to ascertain if the payment of the refund, or any part thereof, were likely to have adverse affect on the Revenue. Such a proposal should be examined by the Principal Commissioner of Income Tax with due application of mind on all the aforesaid aspects. The entire consideration, with the approval of the Principal Commissioner of Income Tax to the withholding of the refund amount, or any part thereof, should be completed within six weeks from today, failing which, AO should transmit the amount of Rs. 48,361,57,240/- (for AY 2017- 18), Rs. 421,18,02,760/- (for AY 2016-17) and Rs. 349,41,45,020/- (for AY 2018-19) with interest to assessee.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
1. All the three writ petitions seek directions to the revenue for refund of Rs. 48,361,57,240/-, Rs. 421,18,02,760/- and Rs. 349,41,45,020/- stated to be lying with the Department in respect of Assessment Year (AY) 2017-18; 2016-17 and 2018-19. Since the petitions raise similar grievance and the issues are interlinked, the same are being disposed of by this common order.
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