Bombay HC orders Income Tax dept to refund Rs 833 crore to Vodafone Idea within two weeks

The Bombay high court (HC) last Friday directed the income tax (I-T) department to refund Rs. 833 crore to Vodafone Idea Limited within two weeks while upholding the telco’s plea.

Earlier, Vodafone Idea had filed a petition seeking a direction to the I-T department to refund Rs 1009.43 crore, including Rs 833 crore on an immediate basis as the undisputed amount, while citing the tax authorities’ rectification order issued on May 28.

The plea stated that the telco had filed its I-T returns in September 2014 and subsequently revised it twice in March 2016 and February 2017.

On October 31, 2019, an assistant commissioner of I-T had passed an assessment order, determining the refund of Rs 733.80 crore to the company.

Vodafone Idea, however, sought rectification of the assessment, which led to litigation that was decided by the Supreme Court on April 29.

The I-T department issued its rectification order on May 28 following the SC order. The I-T authorities accepted that the telco was entitled to a refund of Rs 1009.43 crore for the assessment year 2014-15.

The assessing officer, however, deducted Rs 176.39 crore as pending dues and settled for the net refund of Rs 833 crore.

On June 11, the company wrote to the principal commissioner of I-T and sought the refund of Rs 1009.43 crore, citing its May 28 order, followed it up with several reminders, and then moved the HC after it didn’t get any response from the authorities concerned.

The plea contended that the department was bound to release the refund amount, as there is no provision under the I-T Act, 1961, permitting withholding the said amount after orders were passed determining the refund.

I-T department responded to the plea, arguing that withholding the refund was justified as massive outstanding dues are yet to be settled by the petitioner.

It cited Section 241A of the I-T Act, 1961, which empowers the authorities concerned to withhold the refund.

However, a two-member division bench, comprising Justice RD Dhanuka and Madhav Jamdar, refused to accept the I-T authorities’ argument.

It stated that the department’s May 28 order is binding and the only matter that remained to be adjudicated was whether the assessing officer is empowered to adjust Rs 176.39 crore from the agreed refund sum.

The bench observed that I-T authorities have no power to withhold refunds against undetermined future demands.