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  • Where for relevant years scrutiny assessments were pending and likelihood of substantial demands upon assessee after completion of scrutiny cannot be ruled out and any demand that would arise from processing of said assessments would have to be adjusted against refund claims, there was no merit in writ petition claiming for direction to Assessing Officer to expeditiously process said returns and issue refund for these years - Decision of High Court of Delhi in Vodafone Mobile Services Ltd.v. Assistant Commissioner of Income-tax

Where for relevant years scrutiny assessments were pending and likelihood of substantial demands upon assessee after completion of scrutiny cannot be ruled out and any demand that would arise from processing of said assessments would have to be adjusted against refund claims, there was no merit in writ petition claiming for direction to Assessing Officer to expeditiously process said returns and issue refund for these years - Decision of High Court of Delhi in Vodafone Mobile Services Ltd.v. Assistant Commissioner of Income-tax

Facts of the case:

  1. The assessee-company (Vodafone) was engaged in providing telecommunication services.
  2. Two amalgamations involving merger of certain Vodafone group companies were undertaken to re-structure business operations and increase operational efficiencies. The revised e-returns of income pertaining to assessment year 2014-15 and assessment year 2015-16, were filed claiming refunds of Rs. 1,532.09 crores and Rs. l,355.51 crores, respectively. The return of income pertaining to assessment year 2016-17, claiming refund of Rs. 1128.47 crores was also filed.
  3. Vodafone requested the revenue for expeditious processing of the pending income-tax returns.
  4. Thereafter, writ petition was filed by the petitioner 'vodafone' on account of inaction on the part of Assessing Officer in processing income tax returns for four assessment years 2014-15 to 2017-18 which would result in issuance of refunds aggregating to Rs. 4759.74 crores along with applicable interest under section 244A seeking a direction upon the Assessing Officer to expeditiously process the refund claim and issue refund under consideration as it was under financial stress.
  5. Section 143(2) empowers the Assessing Officer to issue notice to the assessee to produce documents or other evidence, to prove the genuineness of the income tax return. Under section 143(1D) of the Act as introduced by the Finance Act, 2012 processing of a return under section 143(1)(a) is not necessary where a notice has been issued under section 143(2). This provision has now been amended by the Finance Act, 2016 (with effect from the assessment year 2017-18) to provide that if scrutiny notice is issued under section 143(2), processing of return shall not be necessary before the expiry of one year from the end of the financial year in which return is submitted. 
  6. The Assessing Officer has exercised discretion under section 143(1D) not to process the returns considering the fact that substantial demand would be raised on completion of scrutiny assessment of earlier years.
  7. The revenue also argued that substantial outstanding demand ispending against the petitioner and that the likelihood of substantial demands after the scrutiny for the pending assessments, cannot be ruled out.

Judgement:
The Honorable High Court Of Delhi found no merit in the petitioner's argument and accordingly, the writ petition has been dismissed.

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