Case Note & Summary
The petitioner, M/s. Group M. Media India Pvt. Ltd., filed a writ petition under Article 226 of the Constitution of India challenging the inaction of the Assessing Officer in processing its return of income under Section 143(1) of the Income Tax Act, 1961 and granting the consequent refund under Section 143(1D) for Assessment Year 2015-16. The petitioner had filed its return on 29 November 2015, declaring an income of Rs.144.48 crores and claiming a refund of Rs.27.24 crores. On 12 April 2016, the Assessing Officer issued a notice under Section 143(2) selecting the return for scrutiny. Despite the petitioner's requests on 27 April 2016, 1 June 2016, and personal meetings on 6 June 2016, the Assessing Officer did not process the return or grant the refund, citing CBDT Instruction No.1 of 2015 which directed that refunds be withheld in cases selected for scrutiny. The petitioner brought to the Assessing Officer's attention that the Delhi High Court had quashed Instruction No.1 of 2015 in Tata Teleservices Ltd. v. CBDT on 11 May 2016. The court considered the legal issue of whether the Assessing Officer could refuse to process the return under Section 143(1) and grant refund under Section 143(1D) merely because a scrutiny notice under Section 143(2) had been issued. The petitioner argued that processing under Section 143(1) is mandatory and independent of scrutiny, and that the CBDT instruction, being quashed, could not be relied upon. The respondents contended that the instruction was valid and that the refund could be withheld pending scrutiny. The court held that the processing of a return under Section 143(1) and the grant of refund under Section 143(1D) are statutory obligations that cannot be fettered by executive instructions, especially when such instructions have been quashed by a court. The court directed the Assessing Officer to process the petitioner's return under Section 143(1) and grant the refund of Rs.27.24 crores within four weeks from the date of the order, with interest as per law. The petition was disposed of accordingly.
Headnote
A) Income Tax - Processing of Return - Section 143(1) - Mandatory Processing - The Assessing Officer is bound to process the return under Section 143(1) and grant refund under Section 143(1D) even if a notice under Section 143(2) has been issued, as the two provisions operate independently. The CBDT Instruction No.1 of 2015, which directed withholding of refunds in cases selected for scrutiny, was quashed by the Delhi High Court in Tata Teleservices Ltd. v. CBDT. (Paras 1-10) B) Income Tax - Refund - Section 143(1D) - Refund Due - The petitioner filed its return declaring income of Rs.144.48 crores and claiming refund of Rs.27.24 crores. Despite requests, the Assessing Officer failed to process the return and grant refund, citing CBDT Instruction No.1 of 2015. The court held that the instruction cannot override the statutory mandate and directed the Assessing Officer to process the return and grant refund within four weeks. (Paras 2-10) C) Income Tax - CBDT Instruction - Validity - Instruction No.1 of 2015 - The Delhi High Court quashed CBDT Instruction No.1 of 2015, which fettered the discretion of the Assessing Officer under Section 143(1D). The Bombay High Court followed this decision and held that the instruction cannot be a ground to deny processing of return and refund. (Paras 5-10)
Issue of Consideration
Whether the Assessing Officer is justified in not processing the return of income under Section 143(1) of the Income Tax Act, 1961 and granting refund under Section 143(1D) thereof, on the ground that a notice under Section 143(2) has been issued and scrutiny is pending, particularly in light of CBDT Instruction No.1 of 2015 which has been quashed by the Delhi High Court.
Final Decision
The petition is disposed of by directing the Assessing Officer to process the petitioner's return of income under Section 143(1) of the Income Tax Act, 1961 and grant the refund of Rs.27.24 crores along with interest as per law within four weeks from the date of the order.
Law Points
- Processing of return under Section 143(1) is mandatory and independent of scrutiny under Section 143(2)
- CBDT instruction cannot override statutory provisions
- refund cannot be withheld merely because scrutiny is pending
