via Video Conferencing #2 IN HIGH COURT OF DELHI AT NEW DELHI Judgment Delivered On: 04.06.2020 W.P.(C) 2243/2020 & CM APPL.11500/2020 (for directions) M/S. FIS PAYMENT SOLUTIONS & SERVICES INDIA PRIVATE LIMITED .Petitioner versus DEPUTY COMMISSIONER OF INCOME TAX & ANR. Respondents Advocates who appeared in this case: For Petitioner : Mr. Deepak Chopra, Ms. Akansha Aggarwal and Mr. Ankul Goyal, Advocates For Respondents : Mr. Ruchir Bhatia and Mr. Shlok Chandra, Advocates CORAM: HON BLE MR. JUSTICE SIDDHARTH MRIDUL HON BLE MR. JUSTICE TALWANT SINGH JUDGMENT SIDDHARTH MRIDUL, J. (OPEN COURT) 1. present writ petition under Articles 226/227 of Constitution of India, instituted on behalf of petitioner, prays as follows:- (a) Issue writ of mandamus or any other appropriate writ directing Respondent/s to release refund of INR 74,88,99,152/- along with W.P.(C) 2243/2020 Page 1 of 9 applicable interest under section 244A of Act, till date of issuance of refund, for Assessment Year 2018-19; (b) Pass such other orders which this Hon'ble Court may deem fit and proper on facts and in circumstances of case. 2. With consent of learned counsel appearing on behalf of parties, present writ petition is taken up for hearing today. 3. We have heard learned counsel appearing on behalf of parties. 4. Mr. Deepak Chopra, learned counsel appearing on behalf of parties invites our attention to order passed by this Court on 03.03.2020 in present writ petition. same is extracted hereinbelow:- Issue notice. Mr. Bhatia accepts notice. petitioner seeks refund of tax from respondents. In relation to Assessment Year 2017-18, petitioner s assessment has been completed under Section 143(3) of Income Tax Act. So far as Assessment Year 2018-19 is concerned, petitioner s return, as filed, has been processed under Section 143(1) of Income Tax Act. amount due towards refund for both assessment years is substantial. Prima-facie, it appears that there is no justification for respondents not granting refund when same is due. We, therefore, direct respondents to refund amounts for both assessment years along with interest as applicable, to petitioners within four weeks from today. In case respondents have any valid justification W.P.(C) 2243/2020 Page 2 of 9 for withholding refund, or any part thereof, they shall file their counter-affidavit positively within same period clearly stating as to why refund/ partial refund is not due. No further time shall be granted for said purpose. List on 06.05.2020. 5. On same day i.e. 03.03.2020, Deputy Commissioner of Income Tax, Circle-9(1) addressed communication to Principal Commissioner of Income Tax, Delhi -3, which reads as follows:- OFFICE OF DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 9(1), ROOM NO.178, 1ST FLOOR, C.R. BUILDING, I.P. ESTATE, NEW DELHI-02 F.No.DCIT/Cir.-9(1)/2019-20/296 Dated: 03/03/2020 To, Pr. Commissioner of Income Tax, Delhi-03 New Delhi-110 002 (Through Addl. CIT Range-9, New Delhi) Respected Sir, Sub: Withholding of refund in case of M/s FIS Payment Solutions & Services India Pvt. Ltd. for A.Y. 2018-19 Reg. Kindly refer to above mentioned subject. It is seen from records that assessee company M/s FIS Payment Solutions & Services India Pvt. Ltd. (AACCC5587F) had filed its ROI for relevant year on 30.11.2018 vide acknowledgement Number 382938831301118. return has been processed under Section 143(1) (a) of I.T. Act and refund of Rs.748899152/- has been determined by CPC. In this regard, it is important to note that case of assessee Company has been selected for complete scrutiny for W.P.(C) 2243/2020 Page 3 of 9 assessment year 2018-19 on basis of following computer aided scrutiny selection reasons/issues: (i) Large expenditure by way of penalty or fine for violation of any law for time being in force. (ii) Low receipt from house property in ITR as compared to rental receipts in 26AS. (iii) Claim of large value refund. (iv) Large any other amount allowable as deduction claimed in schedule BP of return. (v) Introduction/addition of high value intangible asset during year. (vi) Non compliance to Income Computation & Disclosure Standards. Thus, there are several critical issues to be examined during course of assessment proceedings and revenue is of view that grant of refund may adversely affect recovery of revenue. It is also seen from records that in AY 2017-18 assessment of assessee company was carried out which resulted in addition to tune of Rs.90,31,04,360/-. copy of assessment order is enclosed for kind perusal. Further, Finance Act, 2017 has inserted Section 241A to protect interest of revenue allowing withholding of refund in case where scrutiny assessment is pending and revenue is of view that grant of refund may affect recovery of taxes later. explanatory notes to provisions of Finance Act, 2017 had explained provisions of Section 241A of Act. relevant part of explanatory notes reads as under:- However to address concern of recovery of revenue in doubtful cases, new section 241A has been inserted in Income Tax Act to provide that, for returns furnished for assessment year commencing on or after 1st April, 2017, where refund of any amount becomes due to assessee under Section 143(1) of Income Tax W.P.(C) 2243/2020 Page 4 of 9 Act and Assessing Officer is of opinion that grant of refund may adversely affect recovery of revenue, he may, for reasons recorded in writing and with previous approval of Principal Commissioner or Commissioner withhold refund up to date on which assessment is made. Thus, in view of provisions of Section 241A of IT Act, 1961, and on facts of case, AO is of opinion that granting of refund may adversely affect recovery of taxes as case of company has been selected for complete scrutiny on basis of 06 critical reasons and has history of huge additions in earlier years. Thus assessment may result into creation of demand and taxes would require to be recovered from company. It is further to be noted that each year is treated as separate year under provision of Income Tax law and it is not mandatory that demand shall not be raised in this year, if it has not been raised in earlier years. In view of above it is requested that refund in assessee company case for AY 2018-19 may be withhold upto date of assessment so that refund cannot be granted before completion of scrutiny assessment proceedings for AY 2018-19 under Section 143(3) of Act. Yours faithfully, Sd/- (Priyanka Durbey) Deputy Commissioner of Income Tax Circle 9(1), New Delhi 6. We are informed at Bar that, communication of order dated 03.03.2020 passed by Deputy Commissioner of Income Tax, Circle-9(1) has culminated into order dated 09.03.2020, rendered by Principal Commissioner of Income Tax-3, New Delhi. same is reproduced hereunder:- W.P.(C) 2243/2020 Page 5 of 9 OFFICE OF PRINCIPAL COMMISSIONER OF INCOME TAX-3 ROOM NO.394A, C.R. BUILDING, I.P. ESTATE, NEW DELHI F.No.Pr.CIT-3/Refund/2019-20/2726 Dated : 09.03.2020 To Dy. Commissioner of Income Tax Circle-9(1) New Delhi Sir/Madam, Sub: Approval for withholding of refund u/s 241A determined under 143(1) in respect of A.Y.2018-19 in cases where notice u/s 143(2) issued reg. Kindly refer to your office letter dated 03.03.2020 on above subject. 2. In this regard, I am directed to convey approval of Ld. Pr. Commissioner of Income Tax-3, New Delhi for withholding of refund u/s 241A determined under 143(1) in following case where notice u/s 143(2) issued:- S.No. Name A.Y. of Case 1. M/s FIS Payment 2018-19 Solutions & Services India Pvt. Ltd. 3. I have been further directed to convey that approval for withholding of refund has been granted after examining your proposal, looking to issues identified for scrutiny and additions made in preceding assessment year and consequential W.P.(C) 2243/2020 Page 6 of 9 huge tax demand which is likely to be created on completion of scrutiny assessment u/s 143(3). Yours faithfully, Sd/- (M.L. Gupta) Income Tax Officer (Hqrs.) O/o Pr.CIT-3, New Delhi Copy to: Addl. CIT, Range-9, New Delhi for information. Income Tax Officer (Hqrs.) O/o.Pr.CIT-3, New Delhi 7. Mr. Deepak Chopra, learned counsel appearing on behalf of petitioner states that, in view of subsequent developments and in particular order dated 09.03.2020, rendered by Principal Commissioner of Income Tax-3, New Delhi, they have instituted separate petition being W.P.(C) 3273/2020 titled as M/S FIS Payment Solutions & Services India Private Limited vs. Deputy Commissioner of Income Tax-9(1) and Anr. Assailing said order dated 09.03.2020. said writ petition prays as follow:- (a) Issue writ of mandamus or any other appropriate writ quashing proceedings undertaken by First Respondent vide letter dated 03.03.2020 seeking to withhold refunds for Assessment Year 2018-19 and approval granted by Second Respondent on 09.03.2020 to invoke section 241A W.P.(C) 2243/2020 Page 7 of 9 of Act on request made by First respondent on 03.03.2020; (b) Issue writ of mandamus, or any other appropriate writ directing Respondent/s to release refund of INR 74,88,99,152/- along with applicable interest under section 244A of Act, till date of issuance of refund, for Assessment Year 2018- 19; (c) Pass such other orders which this Hon'ble Court may deem fit and proper on facts and in circumstances of case. 8. It is admitted position that both these petitions relate to refund pertaining to assessment year 2018-19. We have already issued notice in said writ petition being W.P.(C) 3273/2020 for 17.07.2020. 9. Mr. Chopra, learned counsel appearing on behalf of petitioner, therefore, seeks leave to withdraw present petition with liberty to prosecute W.P.(C) 3273/2020, which also pertains to assessment year 2018-19 and is subject matter of present writ petition, as well. 10. Leave and liberty granted. 11. present petition is disposed of as having become infructuous. pending application also stands disposed of. W.P.(C) 2243/2020 Page 8 of 9 12. date already fixed i.e. 17.07.2020 stands cancelled. 13. copy of this judgment be uploaded on website of this Court. SIDDHARTH MRIDUL JUDGE TALWANT SINGH JUDGE JUNE 04, 2020 dn/as W.P.(C) 2243/2020 Page 9 of 9 FIS Payment Solutions & Services India Private Limited v. Deputy Commissioner of Income-tax & Anr