Higher income in earlier year cannot be the ground for withholding of refund

DCIT, CPC, Bangalore v. Vodafone Idea Ltd. (2021) 131 taxmann.com 128 (SC)

Short Overview of the case: 

Apex court has recently held that Assessing Officer cannot withhold refund merely because assessee declared huge income in immediately preceding year.

The SLP dismissed on ground of delay.

Assessee filed its return declaring loss and, consequently, claimed refund of entire amount of tax paid at source. 

Assessing Officer determined amount of refund while completing assessment under section 143(1). 

However, he withheld said refund as per provisions of section 241A on grounds that in return for immediately preceding assessment year assessee had declared an income of huge amount, however, in relevant year, assessee had declared huge loss, therefore, return for relevant assessment year needed thorough investigation.

High Court by impugned order held that merely because in immediately preceding assessment year, assessee had declared a positive income as against substantial loss declared in relevant assessment year, it could not be a ground to doubt contents of return or claim of assessee with respect to loss suffered and withhold refund claimed by assessee. 

Special Leave Petition filed against impugned order of High Court was to be dismissed on ground of delay.

With this, the issue was decided in favour of assessee.