TDS refund cannot be withheld merely because assessment notice is issued: Delhi HC

 

 

 

Oyo Hotels and Homes Pvt Ltd [148 taxmann. com 410 (Delhi)[23-03-2023]]

Facts:

1. A notice U/S 142(1) of the Income Tax Act was sent to the Petitioner on 14.12.2021, wherein detailed information and documents were sought by the Revenue. The Petitioner received an intimation under Section 143(1) of the Act which stated that a refund of Rs.33,05,84,840/- has been calculated as due to the Petitioner. The Refund Intimation also stated that the refund shall be credited within a period of 15 days from that date.

2. However no refund was received by the Petitioner. The Petitioner filed online complaints on the Income Tax Portal on 14.05.2022 and 16.06.2022 seeking disbursal of the refund amount as determined under the Refund Intimation. There was a difference of Rs.12,42,97,589/- between the Revised Return as submitted by the Petitioner and the Refund Intimation.

3. It was submitted by the counsel for the Petitioner, that where a refund has been withheld by the Revenue, the provisions of Section 241A of the Act require that reasons be recorded in writing by the concerned Officer to withhold the refund and also that the approval of Principal Commissioner or Commissioner is to be taken.

Hon Delhi HC held as below:

1. While withholding a refund, the AO is required to look into various factors about an Assessee, such as the amount of tax liability which a scrutiny assessment may eventually lead to, the financial standing or credit worthiness of the Assessee, and whether there would be any doubts in the Revenue recovering amounts from the Assessee.

2. Merely because a notice has been issued under Section 143(2) of the Act, it is not sufficient ground to withhold the refund under the provisions of the Act.

3. The order(s) is hereby set aside. Further the Respondents shall conduct a de novo exercise bearing in mind the provisions of Section 241A of the Act and principles articulated within six weeks.