The Delhi High Court has dismissed telecom major Vodafone’s plea seeking directions to the Income Tax Department to expeditiously process its claim for refund of over Rs 4,759 crore in respect of returns filed for the assessment years (AYs) 2014-15 to 2017-18.
A bench of Justices S Ravindra Bhat and Prateek Jalan declined to grant any relief to the company, saying there was merit in the tax department’s argument that substantial outstanding demand was pending against the company and there was likelihood of more demands being made after the assessment for the AYs in question were scrutinised.
The court said the department should have the right to adjust the demands against the refunds that may arise but have not yet been determined due to the ongoing scrutiny proceedings.
“There is some merit in the revenue’s (tax department) argument that substantial outstanding demand are pending against the petitioner. Further, the likelihood of substantial demands upon the assessee after the scrutiny for the AYs is completed cannot be ruled out.
“The Revenue should have the right to adjust the demands against the refunds that may arise but have not yet been determined due to ongoing scrutiny proceedings,” it said in the judgement rejecting Vodafone’s plea.
The court noted that assessments for the years in question were either facing special audit or pending before the Assessment Officer (AO) for scrutiny and since scrutiny assessment of earlier years had led to raising of substantial demand, the tax department had decided not to process the company’s returns.
The company had claimed that it had received an acknowledgement after it had filed a return and therefore, within a year of the same, the refund ought to have been processed and failing which, interest would be applicable.
Rejecting the contention, the court said, “Intimation or acknowledgement cannot confer any greater right than for the assessee to ask the AO to process the refund and make over the money.”