Refund cannot be withheld U/S 241A without a reasoned order: Calcutta HC
MCNALLY BHARAT ENGINEERING COMPANY LIMITED AND ANR. ( WPO 80 of 2020)
Facts:
1. Intimation was received u/S 143(1) and the assessee was entitled to a refund of Rs 20.15 crores. A notice for assessment was also issued U/S 143(2)
2. The refund was however not issued and infactc a note was appended to the said intimation showing that the refund determined under Section 143(1) of the said Act has been withheld as per provision of Section 241A.
3. The AO was of the view that there is a total demand of Rs.47.76 Crores against the petitioner for different periods. Scrutiny in respect of such periods are going on. The revenue as such is not liable to make the refund in view of the provision of Section 245 of the said Act.
4. The assessee had maintained that to invoke the provision of Section 241A of the said Act, the Assessing Officer has to form an opinion that the grant of refund is likely to adversely affect the revenue. The demand to which the revenue is now referring to, for invoking the provision of Section 245 of the said Act came into existence only on 27th February, 2020 that is about almost a year after the date when the refund was required to be made.
The Hon Calcutta HC held as below:
1. Once a refund is declared after scrutiny proceedings and such refund is withheld, a reasoned order has to follow because the assessment in such a case is done after production of materials and evidence required by the AO.
2. The scope of the power under Section 241A is narrow, making it clear that a speaking order is required to be passed culling out the reasons as to how the grant of refund is likely to affect the revenue.
3. The action on the part of the AO in withholding of the refund for the assessment year 2018-19 is not sustainable in law and is set aside and quashed.
