Assessee, a public company, filed its return of income for Assessment Year 2017-18, declaring loss.
It claimed refund of the entire tax deducted at source (TDS).
The assessee received intimation under section 143(1) by the Assessing Officer (AO).
A note appended to the said intimation shows that the AO had withheld the refund determined under section 143(1) as per provision of section 241A.
Aggrieved-assesses filed a writ petition before the Calcutta High Order.
The Calcutta High Court held on a combined reading of section 143 with section 241A; it can be discerned that it is mandatory to process the return under section 143(1).
It is also mandatory for AO to proceed with the grant of the refund determined therein unless sufficient reasons exist under section 241A prima facie demonstrating that the grant of refund is likely to affect the revenue adversely.
However, the scope of the power under section 241A is narrow and clarifies that a speaking order is required to be passed, culling out the reasons for how the grant of refund is likely to affect the revenue.
The recording of reasons to substantiate why such withholding is necessary and how the refund will adversely affect the recovery of subsequent revenue.
However, in the instant case, no reasons were assigned by the AO concerned by referring to any materials that refund declared in case of the assessee on being made will adversely affect the revenue.
Further, no demand as against the assessee was pending on the date when the refund was notified.
Thus, the assessee became entitled to the refund immediately on completion of assessment and refund on being notified. AO could not have kept the refund withheld to link such refund with any demand against the petitioner for a subsequent period when such demand was not in existence on the date when the refund was notified.