Vodafone-Idea to get tax refund of Rs 733 cr on SC order, not Rs 4,759 cr
Vodafone had argued that the IT Department had to process the ITR within one year and since the tax department missed this deadline, it could claim the refund.Updated: Apr 29, 2020 23:44 IST
The Supreme Court on Wednesday told the government to pay Rs 733 crore as Income Tax refunds to Vodafone Idea Ltd for the assessment year 2014-15 within four weeks. The Income Tax department had withheld total refunds to the tune of Rs 4,759 crore claimed by the company for assessment years 2014-15 to 2017-18 for further scrutiny.
Later the IT Department had passed an assessment order for the assessment year 2014-15 and 2015-16. While it had held Vodafone as eligible for Rs 733 crore (against a claim of Rs 1532 crore) for the year 2014-15, the department had raised a demand of Rs 582 crore for the year 2015-16. The Supreme Court upheld these conclusions by the department.
“..we direct that the amount of Rs 733 crore shall be refunded to the appellant within four weeks from today subject to any proceedings that the Revenue may deem appropriate to initiate in accordance with law”, a bench of justices UU Lalit and Vineet Saran held.
The top court agreed with the IT Department’s argument that once the department has issued notice under section 143(2) of the Income Tax Act (IT Act) to the assessee for further scrutiny of Income Tax Returns (ITR), the department could not be forced to make refunds claimed till such further scrutiny is completed.
Section 143 (2) empowers the assessing officer to serve a notice on the assessee asking the entity to produce evidence to further scrutinise the tax return to ensure that the income has not been understated.
“Once such scrutiny is undertaken and proceedings are initiated by issuance of a notice under sub-section (2) of Section 143, it would be anomalous and incongruent that while such proceedings so initiated are pending, the return be processed under sub-section (1) of Section 143”, the court said upholding a December 2018 judgment of Delhi high court in this regard.
“The revenue department’s stand in withholding refunds to the tune of Rs 4,500 crore in the case of Vodafone for various assessment years pending scrutiny assessments has been upheld by the Supreme Court… The stand taken by Vodafone was also rejected by the High Court of Delhi and that has been upheld by the Supreme Court,” advocate Zoheb Hossain who appeared for the income tax department told HT.
Vodafone had argued that the IT Department had to process the ITR within one year and since the tax department missed this deadline, it could claim the refund.
The IT Department, however, argued that this deadline didn’t apply since it had issued notice to scrutinise the evidence. This notice, the department had argued, was as good as an intimation to a taxpayer that the return had been taken up for a closer look.
The court agreed with the department on all these counts.
“If the return itself is under probe and scrutiny, such return cannot be the foundation to sustain a claim for refund till such scrutiny is not complete”, the judges ruled.
Further, it was also pointed out by the IT Department that the claims with respect to assessment years 2014-15 and 2015-16 had become infructuous since the IT Department had already passed final assessment orders for both those years.
For the year 2014-15, the department had concluded that Vodafone was eligible for refund of Rs 733 crore, while for the year 2015-15 the department had raised a demand of Rs 582 crore after further scrutiny.