M/S. M. J. Engineering Consultants P Ltdthrough:mr.s.krishnan, Advocate v. Income Tax Officer & Ors

$~27 IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 11561/2022 M/S. M. J. ENGINEERING CONSULTANTS P LTDThrough:Mr.S.Krishnan, Advocate. ..... Petitioner versus INCOME TAX OFFICER & ORS. ..... RespondentsThrough:Mr.Abhishek Maratha, Sr.StandingCounsel for the Revenue. % Date of Decision: 16[th]August, 2022 CORAM: HON'BLE MR. JUSTICE MANMOHANHON'BLE MS. JUSTICE MANMEET PRITAM SINGH ARORA MANMOHAN, J (Oral): J U D G M E N T C.M.No.34244/2022 Exemption allowed, subject to all just exceptions. Accordingly, the application stands disposed of. W.P.(C) No.11561/2022 1.Present writ petition has been filed seeking directions to therespondents to issue the refund as claimed in return of income dated11[th]September, 2015 along with applicable interest under Section 244A of W.P.(C) No.11561/2022 the Income Tax Act, 1961 [‘the Act’] for the Assessment Year 2015-16. 2.On the last date of hearing, while accepting notice, Mr.AbhishekMaratha, learned senior standing counsel on behalf of the Respondents-Revenue had stated that Central Processing Centre (CPC), Bangalore had norole to play in the present case within extended time limit specified in ITBAInstruction dated 08[th]October, 2018 and that refund had not been issued, asthe Assessing Officer had to process the return before the due dateprescribed under Section 143(1) of the Act after taking approval of CCIT.However, Mr.Abhishek Maratha on the said date of hearing had soughtfurther time to obtain further instructions from the Assessing Officer. 3.Today, Mr.Abhishek Maratha has handed over the instructionsreceived by him from the Assessing Officer.The same are reproducedhereinbelow:- “The assessee company M/s M.J. Engineering ConsultantsPvt. Ltd. (PAN ) has filed its ITR for AY 2015-16 on11.09.2015 vide ACK No. 793330171110915 at the total Income ofRs. 20,26,638/- and thereby claiming the refund of Rs. 11,27,410/-.The ITR of the assessee couldn't be processed by the CPC and thesame was transferred on 04-Dec-2015 to then Jurisdictional AO i.e.Circle 16(1), Delhi however the same could not be processed undersub-section (1) of section 143 of the Act due to some technicalreasons or otherwise not attributed to the assessee. Consequently,intimation regarding processing of the return could not be sentwithin the period as prescribed in the second proviso to section143(1) of the Act. Later, the PAN as well as jurisdiction of theassessee was transferred to the charge of undersigned i.e. Ward16(1), Delhi on 15/05/2019. The assessee has filed grievance vide CBODT/E/2021/37599dated 07.12.2021, CBODT/P/2022/00006 dated 12.05.2022 andCBODT/P/2022/00007 dated 20.05.1922 because it couldn't get itslegitimate refund in accordance with provisions of the Act. TheCPGRAM grievance was forwarded to the DIT System for technical W.P.(C) No.11561/2022 support. Direction from the system was that since Return has gottime barred, so user cannot process the return and suggested toprocess the same through manual order after administrativeapproval of PCCTT/CCIT as per CBDT instruction No 5/2018 andsend the proposal to enable the processing /uploading of the case inthe system to Pr. DGIT(s)/ADG(s)-3 as per the process described inITBA processing instruction no 4. The Instruction given by the System was perused however, itwas observed that ITBA Processing Instruction No. 4, the thresholddate to take action for processing on time barred ITRs was up to31.03.2019 which was further extended up to 30.11.2021 by theCBDT vide Order F. No. 225/98/2020-ITA-II, dated 30-09-2021however since grievance of assessee was filed on 07.12.2021 i.e.after the expiry of the extended date by the CBDT, the ITR of theassessee could not be processed in the given time frame and statusof the same was updated on Grievance Portal accordingly. The Instruction given by the System was perused however, itwas observed that ITBA Processing Instruction No. 4, the thresholddate to take action for processing on time barred ITRs was up to31.03.2019 which was further extended up to 30.11.2021 by theCBDT vide Order F. No. 225/98/2020-ITA-II, dated 30-09-2021however since grievance of assessee was filed on 07.12.2021 i.e.after the expiry of the extended date by the CBDT, the ITR of theassessee could not be processed in the given time frame and statusof the same was updated on Grievance Portal accordingly. Further, raising the above issue, an e-mail dated 03.06.2022was sent to CPC and ITBA Helpdesk requesting to provide theproper steps/direction/instruction so that the ITR of assessee maybe processed in view of the fact that action as per the instructionquoted by the System could be taken only up to 30.11.2021 i.e. theextended date for processing of time barred ITRs however no wayout was given by the CPC or ITBA Helpdesk. Assessee has further filed appeal against the resolution ofCPGRAM and it was advised during the said appeal proceedingsthat matter be forwarded to higher authorities.Accordingly, aproposal/request letter dated 23.06.2022 was sent to CBDTrequesting to consider the issue grant the necessary direction/approval for processing of the ITR of the assessee as per section119 of the IT Act, 1961. Since, the approval from the CBDT was still not received inthe case; the impugned ITR of the assessee couldn't be processedyet. The letter sent to CBDT, copy of e-mail sent to CPC andITBA Helpdesk and copy of referred ITBA instruction are alsoattached herewith for ready reference. The facts of the case are hereby submitted for preparing of W.P.(C) No.11561/2022 counter affidavit and any further requirement may please beinformed to the undersigned.” 4.Apart from adopting the aforesaid submissions, Mr. Maratha pointsout that as the petitioner’s return was not processed due to technical reasonnot attributable to assessee, no refund was issued. He emphasises that in thepresent case, the petitioner had not applied for refund within the extendedperiod of time for processing of the return. 5.He also relies upon the judgment of the Supreme Court in AssistantCommissioner of Income Tax vs. Rajesh Jhaveri Stock Brokers Private Limited, (2008) 14 SCC 208, wherein it has been held as under:- “15.In the scheme of things, as noted above, the intimationunder section 143(1)(a) cannot be treated to be an order ofassessment. The distinction is also well brought out by the statutoryprovisions as they stood at different points of time. Under section143(l)(a) as it stood prior to April 1, 1989, the Assessing Officerhad to pass an assessment order if he decided to accept the return,but under the amended provision, the requirement of passing of anassessment order has been dispensed with and instead anintimation is required to be sent. Various circulars sent by theCentral Board of Direct Taxes spell out the intent of theLegislature, i.e., to minimize the departmental work to scrutinizeeach and every return and to concentrate on selective scrutiny ofreturns. These aspects were highlighted by one of us (D. K. Jain J)in Apogee International Limited v. Union of India. 16. It may be noted above that under the first proviso to the newlysubstituted section 143(1), with effect from June 1, 1999, except asprovided in the provision itself, the acknowledgment of the returnshall be deemed to be an intimation under section 143(1) where (a)either no sum is payable by the assessee, or (b) no refund is due tohim. It is significant that the acknowledgment is not done by anyAssessing Officer, but mostly by ministerial staff. Can it be said thatany “assessment” is done by them? The reply is an emphatic “no”.The intimation under section 143(1)(a) was deemed to be a notice W.P.(C) No.11561/2022 16. It may be noted above that under the first proviso to the newlysubstituted section 143(1), with effect from June 1, 1999, except asprovided in the provision itself, the acknowledgment of the returnshall be deemed to be an intimation under section 143(1) where (a)either no sum is payable by the assessee, or (b) no refund is due tohim. It is significant that the acknowledgment is not done by anyAssessing Officer, but mostly by ministerial staff. Can it be said thatany “assessment” is done by them? The reply is an emphatic “no”.The intimation under section 143(1)(a) was deemed to be a notice W.P.(C) No.11561/2022 of demand under section 156, for the apparent purpose of makingmachinery provisions relating to recovery of tax applicable. Bysuch application only recovery indicated to be payable in theintimation became permissible. And nothing more can be inferredfrom the deeming provision. Therefore, there being no assessmentunder section 143(1)(a), the question of change of opinion, ascontended, does not arise.” 6.He contends that till the Court or the CBDT extends the time forprocessing of the return, the refund cannot be granted to the petitioner. COURT’S REASONING SINCE THE ASSESSING OFFICER HAS FAILED TO PROCESS THERETURN OF THE PETITIONER FILED IN ACCORDANCE WITH LAWWITHIN THE PRESCRIBED TIME, THE RETURN AS FILED WILL HAVETO BE TREATED AS ‘DEEMED INTIMATION’ AND AN ORDER UNDERSECTION 143(1) OF THE ACT. 7.This Court is of the view that after filing of the return (under Section139 of the Act) along with due verification (under Section 140 of the Act)and paying taxes as per return (under Section 140A of the Act), a tax-payerhas to simply wait for the refund (as computed in the return) unless the sameis disputed by the Tax Department through notices under Sections 142(1) or143(2) or a defect memo under Section 139(9) of the Act. 8.Since, in the present case, the Assessing Officer has failed to processthe return of the petitioner filed in accordance with law within the prescribedtime, this Court is of the opinion that the return as declared/filed will have tobe treated as ‘deemed intimation’ and an order under Section 143(1) of theAct. (See: Court on its own Motion vs. Union of India 2013 (352) ITR 273(Delhi). W.P.(C) No.11561/2022 9.This Court is also of the view that an assessee cannot be penalised forinaction on the part of the respondent-department. CONCEPT OF ‘INTIMATION’ UNDER SECTION 143(1) OF THE ACT‘’AND REFUND ARE ENTIRELY DIFFERENT. 10.Further, the concept of ‘intimation’ under Section 143(1) of the Actand ‘refund’ are entirely different. Second proviso to Section 143(1) of theAct deals with the issue of intimation and not refund as contemplated underClause (e) of Section 143(1) of the Act. In fact, the concept of ‘refund’ hasbeen separately dealt with under Chapter XIX of the Act. Section 237 of theAct reads as under:- “Refunds. 237. If any person satisfies the [Assessing] Officer that the amount oftax paid by him or on his behalf or treated as paid by him or on hisbehalf for any assessment year exceeds the amount with which he isproperly chargeable under this Act for that year, he shall be entitledto a refund of the excess.” ASSESSEE NEED NOT FILE ANY SEPARATE CLAIM FOR REFUND ASTHE SAME IS DEEMED TO HAVE BEEN INCORPORATED IN THERETURN FILED BY THE ASSESSEE ITSELF. 11.This Court is of the view that the assessee need not file any separateclaim for refund as the same is deemed to have been incorporated in thereturn filed by the assessee itself. 12.Further, prior to expiry of time for processing of return or failure ofthe respondent to process the return within the stipulated and or extendedtime, the petitioner has no right to expect refund. In fact, upon respondent’sfailure to process an assessee’s return within time, the right to refund arisesby operation of law. W.P.(C) No.11561/2022 ASSESSEE NEED NOT FILE ANY SEPARATE CLAIM FOR REFUND ASTHE SAME IS DEEMED TO HAVE BEEN INCORPORATED IN THERETURN FILED BY THE ASSESSEE ITSELF. 11.This Court is of the view that the assessee need not file any separateclaim for refund as the same is deemed to have been incorporated in thereturn filed by the assessee itself. 12.Further, prior to expiry of time for processing of return or failure ofthe respondent to process the return within the stipulated and or extendedtime, the petitioner has no right to expect refund. In fact, upon respondent’sfailure to process an assessee’s return within time, the right to refund arisesby operation of law. W.P.(C) No.11561/2022 JUDGMENT IN RAJESH JHAVERI STOCK BROKERS PRIVATE LIMITED-(SUPRA) HAS NO APPLICATION AS IT DEALS WITH THE CASE OF REASSESSMENT AND MAKES A DISTINCTION BETWEEN ‘INTIMATION’AND ‘ASSESSMENT’ UNDER SECTION 143(1) AND 143(3) OF THEACT. 13.Moreover, the judgment of the Supreme Court in Rajesh JhaveriStock Brokers Private Limited (supra) has no application to the facts of thepresent case inasmuch as it deals with the case of re-assessment and makes adistinction between ‘intimation’ and ‘assessment’ under Section 143(1) and143(3) of the Act. IF THE SUBMISSION OF TAX DEPARTMENT IS ACCEPTED, THEN ITWOULD AMOUNT TO UNJUST ENRICHMENT ON THE PART OF THESTATE. 14.If the submission of learned counsel for Income Tax Department, asarticulated in the instructions received by him from the Assessing Officer isaccepted, then it would amount to unjust enrichment on the part of the State,which is legally impermissible. It is pertinent to mention that the principle ofunjust enrichment proceeds on the basis that it would be unjust to allow aperson to retain a benefit at the expense of another person. Supreme Court ina nine Judges Bench judgment in Mafatlal Industries Ltd. vs. Union ofIndia, (1997) 5 SCC 536 has held that once unjust enrichment is proved,restitution is the answer i.e. the person must be given back that benefit.15.Further, if the respondents do not refund the amount immediately dueand payable to the assessee, then interest on the said amount would accrue atthe expense of the tax payer. W.P.(C) No.11561/2022 RELIEF 16.Consequently, the respondents are directed to refund the excessamount paid as tax by the petitioner along with the interest within fourweeks of receipt of this order.17.With the aforesaid observations and directions, present writ petitionstands disposed of. MANMOHAN, J AUGUST 16, 2022KA MANMEET PRITAM SINGH ARORA, J W.P.(C) No.11561/2022 Page 8 of 8