Gujarat HC holds that mere
issuance of notice u/s. 143(2) & claiming extended period for processing of
refund u/s. 143(1) would not be sufficient to withhold tax refund for AYs
2015-16 and 2016-17; Assessee (a turnkey projects contractor) had filed tax
returns for both the years declaring high amount of tax losses and claimed tax
refunds arising on account of TDS and for one of years i.e. AY 2015-16, notice
u/s Sec 143(2) was issued but the assessment was not complete; Considering the
financial crunch and liquidity problems, the assessee followed up several times
with the IT Department for the release of the tax refunds, but did not receive
any response after which the assessee decided to approach HC; Noting the
amendments by Finance Act, 2017 and provisions as applicable to the assessee
i.e. post deletion of section 241 of the Act and prior to insertion of section
241A, HC observes that "the Revenue cannot contend that even though no
intimation under sub-section (1) of section 143 was issued within the time
envisaged and no notice under sub-section (2) of section 143 was issued, the
Assessing Officer can sit tight over the refund claimed by the assessee arising
out of the return filed"; HC further adds that "We simply
cannot accept the interpretation of the counsel
for the Revenue that once a notice under sub-section (2) of section 143 is
issued, the suspension of the refund arising out of the return filed by the
assessee would be automatic and till the passing of the order of assessment
under sub-section (3) of section 143"; HC states that it would be 'wholly
inequitable' for the AO to merely sit over the petitioner's request for refund
citing the availability of time upto the last date of framing the assessment
u/s 143(3); Applying the reasonable interpretation of the provisions, HC
observes that AO is expected to take up an expeditious disposal of the
processing of return u/s 143(1) once the assessee requests for release of the
refund and send as an intimation to the assessee if he wishes to withhold the
refund; For AY 2015-16, HC directs AO to complete the process of the assessee's
return u/s 143(1) latest by October 31, 2017 and notes that for AY 2016-17 the
time for processing the return under sub-section (1) of section 143 read with
proviso is not yet over:HC
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