Supreme Court has directed the income tax department to refund an amount of Rs.733 Crores to Vodafone within four weeks
A two-judge bench of the Supreme Court has directed the income tax department to refund an amount of Rs.733 Crores to Vodafone within four weeks subjected to any proceedings that the Revenue may deem appropriate to initiate in accordance with the law.
The appellant-Vodafone Idea Ltd. is engaged in providing telecommunication services in different circles. By the scheme of arrangement between VMSL and Idea Cellular Ltd. Vodafone Idea Ltd., the resultant company assumed all the rights and liabilities of the amalgamating/transferor companies. The appellant claimed a refund of Rs.744.94 Crores. A notice under Section 143(2) of the Act was issued to the appellant.
There was complete inaction on part of the respondents in processing the ITRs filed by the appellant and in issuing an appropriate refund to the appellant, Writ Petition was filed by the appellant in the High Court.
Revenue argued that :
on dated 14.03.2019 an intimation was sent to the appellant by the respondent No.1 regarding withholding of refund for AY 2017-18. It stated about the demand status for earlier assessment years as under :-
| AY | Nature of Demand | Amount of Demand raised u/s 143(3)/154 in Crores | Amount already paid and adjusted in Crores | Balance o/s Demand in Crores |
| 2008-09 | Assessment u/s 143(3) | 84.91 | 10.00 | 74.91 |
| 2009-10 | Assessment u/s 143(3) | 242.86 | 97.36 | 145.50 |
| 2010-11 | Assessment u/s 143(3) | 336.22 | 60.00 | 276.22 |
| 2010-11 | Assessment u/s 143(3) | 165.14 | – | 165.14 |
| 2011-12 | Assessment u/s 143(3) | 211.61 | – | 211.61 |
| Total | 1040.74 | 167.36 | 873.38 |
It is also to be noted that earlier refund was withheld vide notesheet dated 23.07.2018 after due approval due to non-availability of proceeding of return facility in ITBA for AY 2017-18 which was intimated to the assessee vide letter dated 23.07.2018. In view of the above discussion there is sufficient reason to believe that issue of refund will negatively impact the interest of the revenue. Therefore, proposal for withhold the refund for AY.2017-18 was forwarded again to Pr. Commissioner of Income Tax-09, Delhi and same has been approved. Approval on note sheet was taken as well as procedure for approval through ITBA was also followed for withholding of refund which also involves approval from PCIT-09. The approval for withholding of refund u/s 241 was taken from PCIT-9 which was sent through proper channel through Addl. CIT Range 26.
In view of the facts above you are hereby intimated that refund of A.Y.2017-18 in the case of M/s Vodafone Mobile Service Limited has been withhold u/s 241A of the Income Tax Act, 1961 till the completion of scrutiny proceedings u/s 143(3) or 144C r.w.s. 143(3) of the Income Tax Act, 1961.”
The copy of the order dated 28.12.2019 placed on record indicates that for Assessment Year 2016-17 a demand in the sum of Rs.2824.99 crores has been raised against the appellant.
The relevant and the factual developments of the case in summary as stated above:
| AY | Status | Refund claim in ITR | Refund certify in assessment order | Balance Demand |
| 2014-15 | Assessment Done | 1,532.00 | 733.00 | – |
| 2015-16 | Assessment Done | 1,355.00 | – | 582.00 |
| 2016-17 | Assessment Pending | 1,128.00 | – | 2824.99 |
| 2017-18 | Assessment Pending | 745.00 | – | – |
| Total | 4,760.00 | 733.00 | 3406.99 |
Insofar as AY 2014-15 is concerned, final assessment order passed under Section 143(3) of the Act indicates that the appellant is entitled to refund of Rs.733 Crores; while for AY 2015-16 there is a demand of Rs.582 Crores. During the course of hearing, it was suggested on behalf of the respondents that demands in respect of earlier assessment years including the liability as a result of order dated 28.12.2019 as referred Rs. 2824.99 Crores hereinabove being outstanding, the respondents would be entitled to invoke the requisite power under Section 245 of the Act to set off the amount of refund payable in respect of AY 2014-15 against tax remaining payable.
Since the requisite action is not even initiated, we say nothing in that respect. In the premises, we direct that the amount of Rs.733 Crores shall be refunded to the appellant within four weeks from today subject to any proceedings that the Revenue may deem appropriate to initiate in accordance with law. We also direct the respondents to conclude the proceedings initiated pursuant to notice under sub-section (2) of Section 143 of the Act in respect of AY 2016-17 and 2017-18 as early as Possible.
The bench consisting of Justice Uday Umesh Lalit and Justice Vineet Saran said, “We direct that the amount of Rs.733 Crores shall be refunded to the appellant within four weeks from today subject to any proceedings that the Revenue may deem appropriate to initiate in accordance with the law.
Source- Vodafone Idea Ltd Vs ACIT (Supreme Court of India); Civil Appeal No.2377 of 2020; 29/04/2020;2014-15
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