SPARSH INFRATECH THROU. ITS PARTNER NIKHIL KAPUR vs. DY DIRECTOR OF INCOME TAX I.T. II PUNE AND ORS

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WP/15334/2024HC BombayHCBM01051024202419 November 20244 pages
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What did the High Court hold?

The High Court held that considering the communication dated March 11, 2021, and the undisputed entitlement of the petitioner to the refund, it was in the interest of justice to direct the refund to be processed. The Court noted the significant delay, as the tax pertained to Assessment Year 2009-10, approximately 14 years prior. Therefore, the Court ordered that the refund amount, along with any applicable interest, be credited or paid to the petitioner within four weeks from the date of the order. The Court also directed the concerned Income Tax Officer to report compliance to the Registrar Judicial, High Court, Bombay. If compliance was not received within four weeks, the Registrar was to place the matter before the Court for further appropriate orders regarding non-compliance. No issue was expressly left undecided.

What were the facts?

The petitioner, Sparsh Infratech, filed a writ petition before the Bombay High Court seeking a direction for the release of a tax refund. The petitioner claims entitlement to a refund of Tax Deduction at Source (TDS) paid under Section 195 of the Income Tax Act, 1961, as confirmed by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal. The dispute arises from the respondents' alleged inaction in granting this refund, despite a communication dated March 11, 2021, from the Income Tax Officer, Circular 2, Pune, acknowledging the refund would be issued manually. This communication indicated that the refund for Assessment Year 2009-10 was pending approval for manual issuance after approximately three years had passed since the initial request.

What were the issues?

1. Whether the respondents have unduly delayed the processing and grant of the tax refund due to the petitioner, thereby violating the petitioner's rights? (Question of law and fact, concerning the duty of the revenue to process refunds and the reasonableness of the delay). Assessee's Contention: The petitioner argued that despite being entitled to a refund confirmed by higher authorities, the respondents have failed to act for over three years, causing undue delay. They relied on the communication dated March 11, 2021, which acknowledged the manual refund process was pending approval. Revenue's Contention: The judgment does not record any specific arguments or contentions made by the revenue. It only notes that Mr. Suresh Kumar appeared for the respondents.

Which sections of the Income-tax Act were involved?

Section 195

AI-generated summary — verify with the full judgment below

3-WP-15334-2024.DOC IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO. 15334 OF 2024 Sparsh Infratech … Petitioner Versus Dy. Director of Income Tax (I.T)-II Pune and Ors. …Respondents Mr. Sagar Tilak, a/w. Sachin Hande, & Payal Rathod, i/b. Sachin Hande, for the Petitioner. Mr. Suresh Kumar, for the Respondents. _______________________ CORAM: G. S. KULKARNI & ADVAIT M. SETHNA, JJ. DATED: 19 NOVEMBER 2024 _______________________ P.C. 1. This petition under Article 226 of Constitution of India is filed being aggrieved by the inaction of the respondents that is in delaying grant of refund of the tax deposited by the petitioner, the entitlement of the petitioner to which is not in dispute. 2. It is the petitioner’s case that the petitioner has become entitled to the refund of Tax Deduction at Source (“TDS” for short) paid by the petitioner under Section 195 of Income Tax Act, 1961 under the orders passed by the Commissioner of Income Tax (Appeals) and as confirmed by the Income Tax Appellate Tribunal. Page 1 of 4 19 NOVEMBER 2024 Ganesh Lokhande, PA GANESH SUBHASH LOKHANDE Digitally signed by GANESH SUBHASH LOKHANDE Date: 2024.11.19 18:47:49 +0530

3-WP-15334-2024.DOC 3. Learned counsel for the petitioner has drawn our attention to a communication dated 11th March 2021 issued by the Income Tax Officer Circular 2, Pune inter-alia recording that the refund as entitled to the petitioner would be issued manually. However, despite about more than three years have been passed, from the said order, no action has been taken by the respondents to grant refund and as set out by the manual method. The relevant extract of the said communication dated 11th March 2021 of the Income Tax Officer, reads thus: 02. In your case, you have deposited challans under wrong section instead of mentioning Section 195 of the Act. A request was made by you on 10/03/2017 to ITO(TDS)-3, Pune to change the section code. However, the application could not be processed as the challans were partially consumed and no correction could be carried by either CPC, Ghaziabad or by the Assessing Officer. In view of the above mentioned facts, it is to inform that refund is to be issued manually. This office vide letter No.PN/DCIT(IT)Cir-2/Manual refund Sparsh Infratech/2021- 21/136 dated 29/01/2021 to the CIT(IT/TP), Pune has requested for issue of manual refund. The CIT(IT/TP), Pune has forwarded the same to the CCIT(IT&TP)WZ, Mumbai requesting for approval to issue the manual refund which is under consideration/pending with the office of the CCIT(IT&TP)WZ, Mumbai. Once the approval is received by this office from the office of CCIT (IT&TP)WZ, Mumbai, refund will be issued manually in the case of M/s. Sparsh Infratech PAN: ABNFS1713Q, for A. Y 2009-10. (emphasis supplied) Page 2 of 4 19 NOVEMBER 2024 Ganesh Lokhande, PA

3-WP-15334-2024.DOC 4. As this is only issue as involved in the proceedings and although the petitioner is praying that some technical glitches in the refund being processed, be directed to be removed, in our opinion, it would be in the interest of justice that considering the aforesaid communication as issued to the petitioner, and more particularly as there is no dispute that the petitioner is entitled to the refund of the income tax as deposited, the refund in whatsoever form, be processed further and the refund amount alongwith interest be credited/paid to the petitioner within a period of four weeks from today. This also considering the fact that the tax which is subject matter of consideration pertains to Assessment Year 2009-10 i.e., a period about 14 years back. It is in these circumstances, there ought not to be any further delay and/or extension over and above four weeks to make payment of the refund as ordered us. Ordered accordingly. 5. The concerned Income Tax Officer is directed to report compliance of this order, by intimating the Registrar Judicial, High Court, Bombay (Appellate Side). In the event, such compliance is not received after the period of four weeks as directed by us, the Registrar Judicial shall place the matter before the Court, so that further appropriate orders can be passed including in regard to the non-compliance of this order. 6. Petition is disposed of accordingly. Page 3 of 4 19 NOVEMBER 2024 Ganesh Lokhande, PA

3-WP-15334-2024.DOC 7. All parties to act on an authenticated copy of this order. 8. Mr. Suresh Kumar shall also inform the concerned Income Tax Officer of the present order. (ADVAIT M. SETHNA, J.) (G. S. KULKARNI , J.) Page 4 of 4 19 NOVEMBER 2024 Ganesh Lokhande, PA

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