Facts of the Case

The Petitioner, Mother Dairy Fruit and Vegetable Private Limited, filed writ petitions challenging intimations issued under Section 143(1) of the Income Tax Act for Assessment Years 2017–18 and 2018–19.

The grievance of the Petitioner was limited to non-release of refund amounts after completion of assessment under Section 143(3), allegedly on account of invocation of Section 241A.

The Petitioner claimed refund amounts aggregating to:

  • ₹7,09,36,128 (AY 2017–18)
  • ₹8,20,57,079 (AY 2018–19)
    including interest calculated up to February 2022, along with further interest under Section 244A.

Issues Involved

  1. Whether the Revenue can withhold refund without passing an order under Section 241A of the Income Tax Act?
  2. Whether the Petitioner is entitled to immediate release of refund along with statutory interest under Section 244A?

Petitioner’s Arguments

  • The withholding of refund was illegal and arbitrary as no valid order under Section 241A had been passed.
  • Refund became due after completion of assessment under Section 143(3).
  • The Petitioner is entitled to refund along with interest under Section 244A.
  • Mere pendency or assumption cannot justify withholding of refunds without statutory compliance.

Respondent’s Arguments

  • The Revenue initially contended that action under Section 241A had been invoked.
  • However, upon direction of the Court, it was admitted that no order under Section 241A had been passed till date.

Court’s Findings / Order

  • The Court recorded the statement of the Revenue that no order under Section 241A exists.
  • In absence of such an order, withholding of refund is unsustainable in law.
  • The Court directed the Respondents to release the refund amounts due to the Petitioner within four weeks, in accordance with law.
  • The writ petitions were disposed of with the above direction.

Important Clarification by Court

  • Refund cannot be withheld unless a valid and reasoned order under Section 241A is passed.
  • Mere assertion of invocation of Section 241A is insufficient without an actual order.
  • Tax authorities must strictly comply with statutory requirements before withholding refunds.

 Link to download the order -

https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:1114-DB/MMH28032022CW45012022_170356.pdf

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