On Friday 26 June 2020, the Bombay High Court directed the Income Tax department to refund a sum of Rs 833 crore to the petitioner Vodafone Idea Ltd. within two weeks, without fail.
The matter was taken up by a division bench of R D Dhanuka and Madhav J Jamdar, JJ. The hearing took place via video conference and thereafter an oral order was pronounced by Justice R D Dhanuka, after hearing all the parties to the case- Vodafone Idea Ltd., Assistant Commissioner of Income Tax, Principal Commissioner of Income Tax, and Union of India.
The petitioner had filed a writ petition (Mandamus) and thereby sought a refund of more than Rs 1000 crore, as quantified by an order dated 28 May 2020. Also, the petitioner sought a refund of Rs 833,04,88,000/- in accordance with Section 245 of the IT Act, 1961.
Case Summary:
The petitioner had filed its return on income on 30 September 2014 in the name of Vodafone Mobile Services Ltd. It was further revised on 31 March 2016 and 22 February 2017.
On 31 October 2019, the Assistant Commissioner of Income Tax passed an assessment order under Section 143(3) r/w. Section 144C of the Income Tax Act, 1961 (hereinafter, the Act) that determined the payable refund of Rs 733 crore to the petitioner on 7 November 2019.
Thereafter, the petitioner sought rectification of certain mistakes in the records by filing an application for the same, under Section 154 of the Act. On 3 December 2019, the petitioner filed another rectification application before the Assistant Commissioner, on the case being transferred from Delhi to Mumbai, by order under Section 162 of the Act.
Since no refund was granted by the IT dept., the petitioner filed a writ petition before the Delhi High Court in 2018, however, it was subsequently dismissed by the Court. Being aggrieved by the said judgment and order, the petitioner filed a Special Leave Petition in the Supreme Court.
By the judgment dated 29 April 2020, the SC held that the final assessment order passed under Section 143 of the Act indicated that the petitioner was entitled to a refund of Rs 733 crore, while in 2015-16, there was a demand of Rs 582 crore.
The respondents mentioned that in respect of earlier assessment years including the liability as a result of Order dated 28 December 2019 being outstanding, they would be entitled to set off the amount of refund payable under Section 245 of the Act. However, the Supreme Court said nothing in that respect as the said action was not even initiated.
The respondents were directed to refund Rs 733 crore to the petitioner within four weeks from the date of the said order. In addition to this, 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 year 2016-17 and 2017-18 as early as possible.
Pursuant to the SC judgment, the Assistant Commissioner issued an intimation under Section 245 of the Act, wherein, the respondents proposed to set off a sum of Rs 864 crores (approx.) that was outstanding against the petitioner in respect of various years 2000-01, 2004-05, 2005-06, 2006-07, 2007-08, 2012-13 and 2018-19, against the refund for the year 2014-15.
The said intimation was strongly objected by the petitioner. The petitioner contended that the refund due for the assessment year 2014-15 could not be adjusted on various grounds.
On 28 May 2020, the Assistant Commissioner passed an order under Section 154 r/w. Section 143(3) of the Act, wherein, he held that the petitioner was entitled to a refund of Rs 1009,43,88,637/-, out of which Rs 176 crore was pending for several years and must be deducted from it. Hence, the net refundable amount is determined at Rs 833 crores.
Present Case
The bench said, "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 the respondent No.1 (assistant commissioner) 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 the refund of the amount in view of the judgment delivered by Hon’ble Supreme Court on 29th April 2020 and the order dated 28th May 2020 passed by the respondent no.1."
"We accordingly pass the following order: 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," the order read.
