R.D. Dhanuka, J.:— Heard Mr. Mistri the learned senior counsel for the petitioner and Mr. Sham Waive the learned counsel for the respondents. Rule. The learned counsel for the respondents waives service.
2. Mr. Mistri the learned senior counsel for the petitioner presses interim relief in terms of prayer clause (c) and refund of Rs. 833,04,88,000. It would be appropriate to highlight some of the relevant facts for the purpose of the consideration of the prayer for interim relief.
3. The petitioner has filed this writ petition, inter alia, praying for a writ of mandamus and seeks refund of Rs. 1009,43,88,637 as quantified by order dated May 28, 2020. In prayer clause (b) of the petition, the petitioner seeks admitted refund of Rs. 833,04,88,000 in accordance with the rectification/section 245 order dated May 28, 2020. The petitioner had filed its return of income on September 30, 2014 in the name of Vodafone Mobile Services Limited. The said income-tax return was revised on March 31, 2016 and further revised on February 22, 2017. On October 31, 2019, respondent No. 1 passed an assessment order under section 143(3) read with section 144C of the Income-tax Act, 1961 (for short the “Act”) determining the refund of Rs. 733,80,83,366 payable to the petitioner on November 7, 2019.
4. The petitioner filed an application for rectification under section 154 of the Income-tax Act, 1961 seeking rectification of certain mistakes apparent from the record according to the petitioner. The petitioner filed another rectification application with respondent No. 1 on December 3, 2019 in view of the case of the petitioner having been transferred from Delhi to Mumbai by an order under section 162 of the Act. Since the respondents did not grant any refund in favour of the petitioner, the petitioner filed Writ Petition (Civil) No. 2730 of 2018 (Vodafone Mobile Services Ltd. v. Asst. CIT, (2020) 421 ITR 193 (Delhi) before the Delhi High Court. By the judgment and order dated December 14, 2018, the Delhi High Court dismissed the said writ petition. Being aggrieved by the said judgment and order, the petitioner preferred a special leave petition which was converted as Civil Appeal No. 2377 of 2020.
5. By the judgment and order dated April 29, 2020 (since reported as Vodafone Idea Ltd. v. Cit, (2020) 424 ITR 664 (SC), the hon'ble Supreme Court in so far as the assessment year 2014-2015 is concerned held that the final assessment order passed under section 143 of the Income-tax Act indicated that the petitioner was entitled for refund of Rs. 733 crores while in the assessment year 2015-2016 there was a demand of Rs. 582 crores. The respondents urged before the hon'ble Supreme Court that the demand in respect of the earlier assessment years including the liability as a result of the order dated December 28, 2019 being outstanding, the respondents would be entitled to invoke the requisite power under section 245 of the Act to set off the amount of refund payable in respect of the assessment year 2014-2015 against tax remaining payable.
6. The hon'ble Supreme Court accordingly held that since the requisite action was not even initiated, the hon'ble Supreme Court said nothing in that respect. The respondents were accordingly directed that the amount of Rs. 733 crores shall be refunded to the petitioner within four weeks from the date of the said order subject to any proceedings that the Revenue may deem appropriate in accordance with law. The respondents were directed to conclude the proceedings initiated pursuant to the notice under sub-section (2) of section 143 of the Act in respect of the assessment years 2016-2017 and 2017-2018 as early as possible. Except those directions issued in paragraph No. 23 of the said judgment, the hon'ble Supreme Court did not interfere with the impugned judgment and order passed by the Delhi High Court and dismissed the said civil appeal without any order as to costs.
7. Pursuant to the said judgment and order dated April 29, 2020 delivered by the hon'ble Supreme Court, respondent No. 1 issued an intimation under section 245 of the Act. In the said intimation, it was the case of respondent No. 1 that as per their records, a sum of Rs. 86,408,27,138 was outstanding against the petitioner in respect of various assessment years, i.e., 2000-2001, 2004-2005, 2005-2006, 2006-2007, 2007-2008, 2012-2013 and 2018-2019. By the said intimation, the respondents proposed to set off the outstanding demand against the refund for the assessment year 2014-2015 arrived at in the case of the petitioner formerly known as Vodafone Mobile Services Limited. The petitioner was directed to inform the respondents in case any of those demands mentioned in the said notice was stayed by any court.
8. The said intimation under section 245 of the Act was strongly objected to by the petitioner by an e-mail dated May 13, 2020 on various grounds. The petitioner also brought on record the order passed by the Income-tax Appellate Tribunal for the assessment year 2006-2007 and pendency of the various stay applications filed by the petitioner. The petitioner contended in the said reply that the refund due for the assessment year 2014-2015 could not be adjusted against the outstanding demand for the assessment year 2012-2013 and for the various other assessment years on various grounds. On May 19, 2020, the petitioner filed an additional response to the intimation under section 245 of the Act and strongly raised the objection to the said action on the part of respondent No. 1.
9. On May 28, 2020, respondent No. 1 passed an order under section 154 of the Act read with section 143(3) of the Income-tax Act, 1961. In so far as the assessment year 2014-2015 is concerned, respondent No. 1 held that the petitioner was entitled to a refund of Rs. 1009,43,88,637. Respondent No. 1 in the said order however also held that the demand for several years was pending against the petitioners for the sum of Rs. 176,39,00,637. Respondent No. 1 deducted the said amount of Rs. 176,39,00,637 out of the refund amount of Rs. 1009,43,88,637 and determined the net refundable amount at Rs. 833,04,88,000.
10. The petitioner vide its e-mail dated June 11, 2020 to the Principal Commissioner of Income-tax demanded refund by seeking compliance of the order dated April 29, 2020 passed by the hon'ble Supreme Court. The petitioner thereafter sent various reminders to the respondents for seeking refund and compliance of the order passed by the hon'ble Supreme Court. The respondents however, did not refund any amount to the petitioner including Rs. 833,04,88,000 which according to the respondents was due and payable to the petitioner. The petitioner thus, filed this petition, inter alia, praying for various reliefs. Pursuant to the order dated June 23, 2020 passed by this court, the respondents filed affidavit-in-reply dated June 24, 2020. The petitioner filed affidavit-in-rejoinder dated June 25, 2020.
11. Mr. Mistri the learned senior counsel for the petitioner invited our attention to the order passed by the hon'ble Supreme Court in Civil Appeal No. 2377 of 2020 and various annexures to the petition including the order passed by respondent No. 1 on May 28, 2020 holding that the net refundable amount of Rs. 833,04,88,000 was due and payable to the petitioner. He submits that the hon'ble Supreme Court though had directed the respondents to refund an amount of Rs. 733 crores to the petitioner within four weeks from the date of the said order subject to any proceedings that the Revenue may deem appropriate to initiate in accordance with law, the respondent did not refund the said amount in compliance with the order passed by the hon'ble Supreme Court. He submits that the respondents themselves had invoked section 245 of the Act seeking adjustment of the alleged demand against the refund payable to the petitioner.
12. It is submitted that the order passed by respondent No. 1 on May 28, 2020 was a common order disposing of all the applications for rectification filed by the petitioner under section 154 of the Act and also the notices issued by the respondents under section 245 of the Act seeking adjustment of the alleged outstanding dues of the petitioner against the amount of refund due to the petitioner. He submits that even according to the respondents, after adjusting the demand of the respondents against the petitioner, the net refundable amount payable to the petitioner was Rs. 833,04,88,000.
13. The learned senior counsel submits that at the first instance the respondents could not have adjusted even the sum of Rs. 176,39,00,637 against the amount of Rs. 1009,43,88,637 found refundable to the petitioner under the said order. In his alternate submission, he submits that in any event the respondents could not have withheld the said net refundable amount of Rs. 833,04,88,000. The learned senior counsel accordingly presses an interim relief for admitted refundable amount of Rs. 833,04,88,000.
14. It is submitted by the learned senior counsel that once respondent No. 1 having exercised power under section 245 of the Act and holding that the amount of Rs. 176,39,00,637 was adjustable against the gross refund of Rs. 1009,43,88,637 and determining the net amount of Rs. 833,04,88,000 as refundable to the petitioner, there is no question of withholding the sum of Rs. 833,04,88,000 admittedly due and refundable to the petitioner on the grounds set out for the first time in the affidavit-in-reply. He submits that there is no provision under the Act permitting withholding of the said admitted amount once having passed an order by respondent No. 1 himself under section 154 read with section 245 of the Act.
15. The learned senior counsel also invited our attention to some of the contentions raised by the respondents in affidavit-in-reply. He submits that the provisions of section 241A of the Act sought to be pressed in service by the respondents in paragraph No. 5 of the affidavit-in-reply is not applicable to the petitioner in so far as refund for the assessment year 2014-2015 is concerned. The said provision would apply only for the assessment year 2017-2018 onwards. He submits that respondent No. 1 has issued refund of approximately Rs. 706 crores pertaining to the assessment year 2017-2018 to the petitioner pursuant to the decisions of this court. Respondent No. 1 did not challenge the said order passed by this court before the hon'ble Supreme Court. The learned senior counsel submits that the proceedings initiated by the respondents under section 245 of the Act have been already ended in view of the common order dated May 28, 2020 passed under section 154 read with section 245 of the Act. He submits that as on today, there is no demand for the assessment year 2016-2017.
16. The learned senior counsel submits that there is no provision in the Act, which allows the respondents to withhold refunds in anticipation of tax determination which may arise in future.
17. Mr. Waive the learned counsel for the respondents on the other hand, strongly pressed into service section 241A of the Income-tax Act, 1961 and would submit that since huge outstanding demand has been pending against the petitioner, the Assessing Officer has initiated proceedings under section 241A of the Act against the petitioner to withhold the refund after following the prescribed procedure laid down in the Act. He submits that the petitioner has claimed refund in several years and the total value is more than the outstanding demand excluding the stay against the demands raised by the respondents. The learned counsel for the respondents submits that action of the respondents to withhold the refund under section 241A is justified in view of the liberty granted by the hon'ble Supreme Court in the order dated April 29, 2020.
18. The learned counsel placed reliance on the judgment of the Delhi High Court in the case of Maruti Suzuki India Ltd. v. Deputy CIT, (2012) 347 ITR 43 (Delhi) and more particularly, paragraph Nos. 17 and 25 in support of his submission that the respondents were justified in withholding the refund due to the petitioner for the assessment year 2014-2015 by invoking section 241A of the Act.
19. Mr. Mistri learned senior counsel for the petitioner in the rejoinder distinguished the judgment of the Delhi High Court in the case of Maruti Suzuki India Ltd. v. Deputy CIT (supra). He submits that in the facts of that case, the Delhi High Court has held that the conduct and action of the respondent-Revenue in recovering the disputed tax in respect of additions to the extent of Rs. 96 crores on the issues which were already covered against them by the earlier orders of the Income-tax Appellate Tribunal or the Commissioner of Income-tax (Appeals) was unjustified and contrary to law. The learned senior counsel submits that the respondents cannot withhold the amount of refund admittedly due by seeking adjustment of the tax liability which may arise according to the respondents in future. He submits that the entire action on the part of the respondents is in gross violation of the judgment and order of the hon'ble Supreme Court dated April 29, 2020 directing the respondents to refund the amount of Rs. 733 crores and also contrary to the order passed by respondent No. 1 himself holding that the petitioner was entitled to a net refundable amount of Rs. 833,04,88,000.
20. A perusal of the record clearly indicates mat in so far as the assessment year 2014-2015 is concerned, the hon'ble Supreme Court by judgment and order dated April 29, 2020 had already directed the respondents to refund a sum of Rs. 733 crores to the petitioner however subject to any proceedings that the Revenue may deem appropriate to initiate in accordance with law. Respondent No. 1 had already issued two notices dated May 8, 2020 and May 13, 2020 respectively, inter alia, seeking adjustment of the refund in sum of Rs. 953,75,27,138 against the refund payable to the petitioner for the assessment year 2014-2015.
21. A perusal of the order dated May 28, 2020 passed by respondent No. 1 clearly indicates that the said order was the common order passed in the application filed by the petitioner under section 154 of the Act and also under section 245 of the Act. The adjustment of the alleged tax dues which was required to be made according to the respondents against the refund amount due to the petitioner in the assessment year 2014-2015 was already made by respondent No. 1 in the said order. The said order, in so far as the respondents are concerned, has attained finality. The question as to whether respondent No. 1 could have adjusted the 6um of Rs. 176,39,00,637 or not is an issue raised in this writ petition. The said issue would be decided by this court at the stage of final hearing of the writ petition.
22. However, in so far as the net refundable amount of Rs. 833,04,88,000 is concerned, in our view, the respondents already having invoked their powers under section 245 of the Act which action has ended with the passing of the order dated May 28, 2020, the respondents cannot withhold the admitted refundable amount of Rs. 833,04,88,000 on the ground that the respondents may have a future demand against the petitioner arising out of the pending assessment orders. In our view, there is no such power vested in the respondents to adjust the admitted refund amount against the tax dues which are not even adjudicated upon by the respondents and may arise in the future as contemplated/visualized by the respondents.
23. In so far as the provisions of section 241A of the Act pressed into service by the respondents and that also only in the affidavit-in-reply for the first time is concerned, it would be appropriate to quote the said section to appreciate the submission made by the respondents. Section 241A of the Income-tax Act, 1961 reads thus:
“241A. For every assessment year commencing on or after the 1st day of April, 2017, where refund of any amount becomes due to the assessee under the provisions of sub-section (1) of section 143 and the Assessing Officer is of the opinion, having regard to the fact that a notice has been issued under sub-section (2) of section 143 in respect of such return, that the grant of the refund is likely to adversely affect the Revenue, he may, for reasons to be recorded in writing and with the previous approval of the Principal Commissioner or Commissioner, as the case may be, withhold the refund up to the date on which the assessment is made.”
24. The respondents cannot be allowed to invoke section 241A for the first time in the affidavit-in-reply to the writ petition filed by the petitioner. Be that as it may, a plain reading of the said provision makes it clear that the power to withhold the refund granted to the Assessing Officer is subject to the previous approval of the Principal Commissioner or Commissioner, as the case may be and that also would be for every assessment year after April 1, 2017 where refund of any amount becomes due to the assessee under the provisions of sub-section (1) of section 143 and not for the earlier assessment year. The assessment year in question in this case is 2014-2015. In our view, section 241A pressed into service even in the affidavit-in-reply or otherwise is not attracted to the refund of the assessment year 2014-2015 or any assessment year prior to 2017-2018.
25. It is not in dispute that as on today, there is no determination of any further tax liability for any other assessment year which liability can be adjusted against the admitted refundable amount determined by respondent No. 1 assuming section 241A is applicable or otherwise. Even otherwise no approval is granted by the Principal Commissioner or Commissioner as the case may be to withhold the refund up to the date on which the assessment is made. In this case, the assessment order under section 143(1) for the assessment year 2014-2015 has already attained finality resulting in refund of amount in view of the judgment delivered by the hon'ble Supreme Court on April 29, 2020 and the order dated May 28, 2020 passed by respondent No. 1. In so far as the reliance placed by the learned counsel for the respondents on the judgment of the Delhi High Court in the case of Maruti Suzuki India Ltd. v. Deputy CIT (supra) is concerned, in our view, the said judgment is not even remotely applicable to the facts of this case. Reliance placed by the learned counsel on the said judgment is totally misplaced.
26. We accordingly pass the following order:
(a) The respondents are directed to refund a sum of Rs. 833,04,88,000 to the petitioner within two weeks from the date of uploading of this order without fail.
(b) This order will be digitally signed by the personal secretary/personal assistant of this court. Associate of this court is permitted to forward the petitioner and the respondents copy of this order by e-mail. All concerned to act on digitally signed copy of this order.