Wp/2172/2019 Of Vodafone Idea Limited v. Deputy Commissioner Of Income Tax,Cpc Bangalore And 6 Ors

R.M. AMBERKAR(Private Secretary)IN THE HIGH COURT OF JUDICATURE AT BOMBAYO.O.C.J. WRIT PETITION NO. 2145 OF 2019 New Delhi – 100 001.] .. Respondents WITHWRIT PETITION NO. 2172 OF 2019 ................... Mr. J.D. Mistri, Sr. Advocate a/w Mr. Nitesh Joshi i/by Mr. AtulJasani for the Petitioner Mr. J.D. Mistri, Sr. Advocate a/w Mr. Nitesh Joshi i/by Mr. AtulJasani for the Petitioner Mr. Nirmal Mohanty for Respondent Nos. 2 to 4 Mr. Nirmal Mohanty for Respondent Nos. 2 to 4 ................... CORAM : AKIL KURESHI & S.J. KATHAWALLA, JJ. DATE : OCTOBER 11 & 14, 2019. ORAL JUDGMENT (Per Akil Kureshi, J.) 1.These petitions arise in similar background. Theyhave been heard together and would be disposed of by thiscommon judgment. Primary facts may be noted from WritPetition No. 2145 of 2019. To the extent the facts aredifferent, shall be noted from the companion petition. 2.Petitioner is a public limited company and isengaged in the business of providing telecommunicationservices. For the assessment year 2017-18, the petitionerhad filed return of income on 31.10.2017 which wassubsequently revised on 28.3.2019. As per the return, thepetitioner had declared loss to the tune of Rs. 6600.47 crores(rounded off). Resultantly, the petitioner had claimed refundof the entire amount of tax paid at source which came to Rs.565.28 crores (rounded off) and tax collected at source of Rs.22,31,792/-. The return of the petitioner thus gave rise to refund of Rs. 565.51 crores (rounded off). 3.The return of income was processed byrespondent No. 1 - Assessing OfÏcer under Section 143(1) ofthe Income Tax Act, 1961 (“the Act” for short) on 24.3.2019.After certain adjustments, this process of return gave rise torefund of Rs. 562.68 crores (rounded off) with statutoryinterest, the total refund worked out to Rs. 630.21 crores(rounded off). To complete the facts, we may record thatthe petitioner’s revised return was processed by theAssessing OfÏcer on 14.9.2019. Along with interest, this gaverise to refund of sum of Rs. 634.14 crores (rounded off). Thiswould of course subsume the refund arising out of theoriginal return. 4.The respondents, have, however, not released therefund. Firstly an intimation came to be generated on24.3.2019 from the computer system by the Income TaxDepartment. This intimation contained a followingrecitation :- “The refund determined u/s 143(1) in this intimation has beenwithheld as per the provisions of section 241A of Income Tax Act, 1961. The refund, if any, will be released on completion ofassessment u/s 143(3)/144 as the case may be, along with interestu/s 244A and subject to adjustment of arrear demand, if any, u/s 245.Please contact the Assessing Officer for more detail.” 5.On 21.8.2019, the Assistant Commissioner of Income Tax communicated to the petitioner an order passed by the Joint Commissioner of Income Tax under newlyinserted Section 241A of the Act which is challenged in this petition. This order reads thus:- “Idea Cellular Ltd now known as Vodafone Idea Ltd AY 2017-1829[th] March 2019. Processing the return of income for AY 2017-18 resulted inrefund of Rs. 630.20 Cr. 2.It is seen that the assessee declared income of Rs. 286.89 Cr.In 2016-17 whereas it declared as huge loss in AY 2017-18. 3.It is seen that the assessment proceedings are pendinginvolving various issues including transfer pricing. Further the issueof huge loss in AY 2017-18 whereas there was substantial income inimmediate preceding assessment year i.e AY 2016-17 needsthrough investigation. 4.There had been number of additions every year whereinappeals are pending with ITAT. Some of the issues are as under:- A. Revenue Share License Fees B. Discount to prepaid distributors – Non deduction ofTDS -40(a)(ia)TDS -40(a)(ia) Processing the return of income for AY 2017-18 resulted inrefund of Rs. 630.20 Cr. 2.It is seen that the assessee declared income of Rs. 286.89 Cr.In 2016-17 whereas it declared as huge loss in AY 2017-18. 3.It is seen that the assessment proceedings are pendinginvolving various issues including transfer pricing. Further the issueof huge loss in AY 2017-18 whereas there was substantial income inimmediate preceding assessment year i.e AY 2016-17 needsthrough investigation. 4.There had been number of additions every year whereinappeals are pending with ITAT. Some of the issues are as under:- A. Revenue Share License Fees B. Discount to prepaid distributors – Non deduction ofTDS -40(a)(ia)TDS -40(a)(ia) C. International Roaming charges – Non deduction of TDS– 40(a)(i)– 40(a)(i) D. Lease rent paid to Quippo E. ESOP F. Amortisation u/s. 35ABB in respect of Fixed Licensefees of erstwhile Spice Communications Ltd.amalgamated with the company. 5. If the refunds are issued to the assessee, there would be hugedemand. Therefore to protect the interest of revenue, I propose towithhold the above mentioned refund u/s 241A of the I.T. Act 1961 till31.12.2020 or completion of assessment whichever is earlier. 6.Submitted for approval. Jt. CIT(OSD) holding charge of Dy CIT 5(2)(2), Mumbai.” 6.In Writ Petition No. 2172 of 2019, basic issues involved are identical. Only difference is in dates of filing andprocessing of the returns as well as the claim of the refundarising out of the process of return under Section 143(1) ofthe Act. In this case, the petitioner's claim for refund withinterest comes to Rs. 154.25 crores (rounded off). In thiscase also, the Joint Commissioner of Income Tax has, forsimilar reasons, rejected the refund claim in exercise ofpowers under Section 241A of the Act. 7.In view of the such facts, appearing for thepetitioner, learned counsel Mr. Mistri raised the followingcontentions:- (1) That auto generated response by the Central Processing Centre of the Income Tax Department cannot be considered an order envisaged under Section 241A of the Act. (2) For over six months, the Assessing Officer did not takeany steps for releasing the refund of the petitioner.any steps for releasing the refund of the petitioner. (3) Even otherwise on merits, the Assessing Officer has committed error in withholding the refund because: (i) Even if the additions were to be made in the handsof the assessee upon completion of theassessment, the assessee would have the right ofappeal. Pending such appeal, as per the circularissued by CBDT, ordinarily recovery would bestayed upon depositing 25% of the disputed taxamount. In the present case, indirectly theDepartment would retain the entire tax even beforethe assessment is completed;of the assessee upon completion of theassessment, the assessee would have the right ofappeal. Pending such appeal, as per the circularissued by CBDT, ordinarily recovery would bestayed upon depositing 25% of the disputed taxamount. In the present case, indirectly theDepartment would retain the entire tax even beforethe assessment is completed; (ii) The assessee has suffered huge losses during theyear under consideration. Even if all additionswhich the Assessing Officer has indicated in hisimpugned order, which according to him requirefurther scrutiny were to be made, the petitionerwould still have a loss return. In other words, evenif all grounds raised by the Assessing Officer in theimpugned order are accepted, there would still beyear under consideration. Even if all additionswhich the Assessing Officer has indicated in hisimpugned order, which according to him requirefurther scrutiny were to be made, the petitionerwould still have a loss return. In other words, evenif all grounds raised by the Assessing Officer in theimpugned order are accepted, there would still be (ii) The assessee has suffered huge losses during theyear under consideration. Even if all additionswhich the Assessing Officer has indicated in hisimpugned order, which according to him requirefurther scrutiny were to be made, the petitionerwould still have a loss return. In other words, evenif all grounds raised by the Assessing Officer in theimpugned order are accepted, there would still beyear under consideration. Even if all additionswhich the Assessing Officer has indicated in hisimpugned order, which according to him requirefurther scrutiny were to be made, the petitionerwould still have a loss return. In other words, evenif all grounds raised by the Assessing Officer in theimpugned order are accepted, there would still be no tax liability in the hands of the assessee in thecurrent assessment year; (iii) Learned counsel drew our attention to an orderdated 30.3.2017 under Section 197 of the Act. Thisorder was passed pursuant to an application dated17.5.2016 filed by the assessee requesting theAssessing Officer to issue a certificate for nondeduction of tax at source in terms of Section 197of the Act. Learned counsel pointed out that forvirtually entire assessment year, no order waspassed on such application. Instead, only two daysbefore the end of the financial year, the order cameto be passed. As per this order, the authoritypermitted payees of the assessee not to deductany tax at source. In other words, he was alsoprima facie of the opinion that considering theassessee’s finances, the assessee during thepresent assessment year, is unlikely to have anytax demand. He submitted that had this order beenpassed expeditiously, the entire question of payeesdeducting tax at source of which the assesseewould claim refund, could to have been avoided; (iv) He submitted that even otherwise requirements of Section 241A of the Act have not been followed inthe present case. 8.On the other hand, learned counsel Mr. Mohantyopposed the petition submitting that Section 241A of the Actgives discretionary powers to the Assessing OfÏcer not torelease the refund arising out of the process of return underSection 143(1) of the Act under certain circumstances. TheAssessing OfÏcer has prima facie examined the return ofincome filed by the petitioner and come to the conclusionthat there is every possibility of substantial additions beingmade in such return. In order to protect the interest of therevenue, therefore,he has exercised the power under Section241A of the Act. The Court should, therefore, not interferewith such discretionary exercise of powers. Learned counselsubmitted that in relation to the issues mentioned by theAssessing OfÏcer in the impugned order, the AssessingOfÏcer in case of this very assessee in earlier assessmentyears, has made sizable additions, some of them pertain tointernational transactions. In the present case also, similarissues are likely to arise. The Assessing OfÏcer is, therefore,justified in holding a belief that in order to protect the interest of the revenue, till scrutiny assessment iscompleted, refund arising out of the process of return underSection 143(1) of the Act should not be released. He alsoopposed the suggestion of the petitioner that even afteraccepting all contentions of the Assessing OfÏcer, lossdeclared by the assessee will still not be converted into oneof profit. In support of his contention, learned counsel reliedon a decision of the Division Bench of the Delhi High Court inthe case of M/s. Vodafone Mobile Services Limited Vs.Asst. Commissioner of Income Tax & Anr.[1] in which inthe context of the provisions contained in Section 143(1D) ofthe Act, the Court had made following observations:- interest of the revenue, till scrutiny assessment iscompleted, refund arising out of the process of return underSection 143(1) of the Act should not be released. He alsoopposed the suggestion of the petitioner that even afteraccepting all contentions of the Assessing OfÏcer, lossdeclared by the assessee will still not be converted into oneof profit. In support of his contention, learned counsel reliedon a decision of the Division Bench of the Delhi High Court inthe case of M/s. Vodafone Mobile Services Limited Vs.Asst. Commissioner of Income Tax & Anr.[1] in which inthe context of the provisions contained in Section 143(1D) ofthe Act, the Court had made following observations:- “39.A reading of the above judgements and the relevantprovisions, clearly shows that Section 143(2) empowers, the AO toissue notice to the assessee to produce documents or otherevidence, to prove the genuineness of the income tax return. Undersection 143(1D) of the Act as introduced by the Finance Act, 2012processing of a return under Section 143(1)(a) is not necessarywhere a notice has been issued under Section 143(2) of the Act. Thisprovision has now been amended by the Finance Act, 2016 (witheffect from the AY 2017-18) to provide that if scrutiny notice is issuedunder Section 143(2), processing of return shall not be necessarybefore the expiry of one year from the end of the financial year inwhich return is submitted. 1Order dated 14.12.2018 in W.P.(C) 2730/18 & CM Nos. 46054-55/2018 48.There is some merit in the revenue's argument that substantialoutstanding demand are pending against the petitioner. Further, thelikelihood of substantial demands upon the assessee after thescrutiny for the AYs is completed, cannot be ruled out. The Revenueshould have the right to adjust the demands against the refunds thatmay arise but have not yet been determined due to ongoing scrutinyproceedings. 49. As far as the argument that the expiry of the one year period,per second proviso to Section 143(1) resulting in finality of theintimation of acceptance, this court is of opinion that the deemingprovision in question, i.e. Section 143(1)(d) only talks of twoeventualities: "shall be deemed to be the intimation in a case whereno sum is payable by, or refundable to, the assessee under clause(c), and where no adjustment has been made under clause (a).”Secondly, that intimation or acknowledgment cannot confer anygreater right than for the assessee to ask the AO to process therefund and make over the money; it is up to the AO- wherever thepossibility of issuing a notice under Section 143(2) exists, or wheresuch notice has been issued, to apply his mind, and decide whethergiven the nature of the returns and the potential or likely liability, the-refund can be given. It does not mean that when an assessment pursuant to notice under Section 143(2) is pending, such right toclaim refund can accrue. This court also recollects the decision of theSupreme Court in Deputy Commissioner of Income Tax v ZuariEstate Development & Investment Co Ltd 2015 (15) SCC 248 whichheld that an intimation under Section 143(1) is not to be consideredas an assessment.” 9.Having thus heard learned counsel for the parties and having perused the documents on record, before processing the facts, we may refer to Section 241A of theAct. This Section pertains to withholding of refund in certaincases and was inserted by the Finance Act 2017 w.e.f. 1.4.2017. The section reads as under:- 9.Having thus heard learned counsel for the parties and having perused the documents on record, before processing the facts, we may refer to Section 241A of theAct. This Section pertains to withholding of refund in certaincases and was inserted by the Finance Act 2017 w.e.f. 1.4.2017. The section reads as under:- “241A.For every assessment year commencing on or after the1st day of April, 2017, where refund of any amount becomes due tothe assessee under the provisions of sub-section (1) of section 143and the Assessing Officer is of the opinion, having regard to the factthat a notice has been issued under sub-section (2) of section 143 inrespect of such return, that the grant of the refund is likely toadversely affect the revenue, he may, for reasons to be recorded inwriting and with the previous approval of the Principal Commissioneror Commissioner, as the case may be, withhold the refund up to thedate on which the assessment is made.” 10.Section 143(1D) of the Act was also simultaneously substituted. Prior to its substitution, this sub- section which was inserted by the Finance Act, 2012 w.e.f 1.7.2012 read as under:- “(1D) Notwithstanding anything contained in sub-section (1), theprocessing of a return shall not be necessary before the expiry of theperiod specified in the second proviso to sub-section (1), where anotice has been issued to the assessee under sub-section (2): Provided that such return shall be processed before the issuance ofan order under sub-section (3).” 11.By virtue of Finance Act, 2017 w.e.f 1.4.2017, the substituted sub-section (1D) of Section 143 reads as under :- “(1D) Notwithstanding anything contained in sub-section (1), theprocessing of a return shall not be necessary, where a notice hasbeen issued to the assessee under sub-section (2): 12.Section 241A of the Act, thus provides that forevery assessment year commencing on or after 1.4.2017,where refund of any amount becomes due to the assesseeunder Section 143(1) of the Act and the Assessing OfÏcer isof the opinion, having regard to the fact that the notice hasbeen issued under sub-section (2) of Section 143 in respectof such return, that the grant of the refund is likely toadversely affect the revenue, he may, for reasons to berecorded in writing and with the previous approval of thePrincipal Commissioner or the Commissioner, as the casemay be, withhold the refund upto the date on which theassessment is made. Clauses 57 and 76 of the notes clausesexplaining the relevant provisions of the Finance Act, in thecontext of substitution of sub-section (1D) of Section 143 andinsertion of Section 241A of the Act provided as under:- “Processing of return within the prescribed time and enablewithholding of refund in certain cases The provisions of sub-section (1D) of section 143 provide that the processing of a return shall not be necessary, where a notice hasbeen issued to the assessee under sub-section (2) of the saidsection. Amendment to the said sub-section brought by Finance Act,2016 provides that with effect from assessment year 2017-18,processing under section 143(1) is to be done before passing ofassessment order. In order to address the grievance of delay in issuance ofrefund in genuine cases which are routinely selected for scrutinyassessment, it is proposed that provisions of section 143(1D) shallceases to apply in respect of returns furnished for assessment year2017-18 and onwards. “Processing of return within the prescribed time and enablewithholding of refund in certain cases The provisions of sub-section (1D) of section 143 provide that the processing of a return shall not be necessary, where a notice hasbeen issued to the assessee under sub-section (2) of the saidsection. Amendment to the said sub-section brought by Finance Act,2016 provides that with effect from assessment year 2017-18,processing under section 143(1) is to be done before passing ofassessment order. In order to address the grievance of delay in issuance ofrefund in genuine cases which are routinely selected for scrutinyassessment, it is proposed that provisions of section 143(1D) shallceases to apply in respect of returns furnished for assessment year2017-18 and onwards. However, to address the concern of recovery of revenue indoubtful cases, it is provided to insert a new section 241A to providethat, for the returns furnished for assessment year commencing on orafter 1[st] Apri, 2017, where refund of any amount becomes due to theassessee under section 143(1) and the Assessing Officer is of theopinion that grant of refund may adversely affect the recovery ofrevenue, he may, for the reasons recorded in writing and with theprevious approval of the Principal Commissioner or Commissioner,withhold the refund upto the date on which the assessment is made. These amendments will take effect from 1[st] April, 2017 andwill, accordingly, apply to returns furnished for assessment year2017-18 and subsequent years.” 13.As noted, previously sub-section (1D) of Section143 permitted non-processing of return under Section 143(1)of the Act before expiry of the period specified in secondprovision to sub-section (1) where a notice has been issuedto the assessee under sub-section (2) of Section 143. ADivision Bench of this Court, in case of M/s. Group M. Media India Pvt Ltd Vs. The Union of India & Ors.[2] , hadoccasion to examine the said provision in the light of theaction of Assessing OfÏcer in withholding the refund of theassessee arising out of return of income. In this background,it is observed as under:- "9.The only contention on behalf of the Revenue tooppose the petition is that as the Assessing Officer has timeavailable to process the refund till 31[st] March, 2017, nomandamus can be issued till 31[st ]March, 2015. We repeatedlyasked of Mr. Mohanty, the learned Counsel for the Revenue, ifthere was any reason why the return could not be processedbefore 31[st] March, 2017. No reasons are forthcoming from theRevenue as to why the Assessing Officer will not able todispose of the application for refund or process the returnunder Section 143(1) of the Act before 31[st] March, 2017. Thisconduct / stand of the Assessing Officer, to say the least, ismost disturbing in the context of the fact that the petitionershave been seeking refund since April, 2016. First, he does notdeem it proper to inform the petitioner in writing why he cannotdeal with the application and after the petitioner moves theCourt, the stand taken is that no direction can be given to himtill 31[st] March, 2017 which is the last date to process the returnunder Section 143(1) of the Act. This attitude on the part of theAssessing Officer is preposterous. 10.The action of the officer on the ground urged seems tobe in complete variance with the higher echelons ofadministration of the tax administration being an assessee 2Judgment dated 15.10.2016 in OS WP No. 2067 of 2016 10.The action of the officer on the ground urged seems tobe in complete variance with the higher echelons ofadministration of the tax administration being an assessee 2Judgment dated 15.10.2016 in OS WP No. 2067 of 2016 friendly regime. In fact, the CBDT has itself issued InstructionNo.7/2012, dated 1[st] August, 2002 wherein they havespecifically directed the officers of the Revenue to process allreturns in which refunds are payable expeditiously. Similarly,as late as in 2014 in the Citizen's Charter issued by theIncome Tax Department in its vision statement states that theDepartment aspires to issue refunds along with interest underSection 143(1) of the Act within 6 months from date ofelectronically filing the returns. In this case, the return wasfiled on 29[th] November, 2015, yet there is no reason why theAssessing Officer has not processed the refund and taken adecision to grant or not grant a refund under Section 143(1D)of the Act. This attitude on the part of the Assessing Officerleaves us with a feeling (not based on any evidence) that theOfficers of the Revenue seem to believe that it is not enoughfor the assessee to please the deity (Income Tax Act) but theassessee must also please the priest (Income Tax Officer)before getting what is due to him under the Act. The officers ofthe State must ensure that their conduct does not give rise tothe above feeling even remotely. 14.Thus, even under the provisions of sub-section(1D) of Section 143 before its substitution by Finance Act of2017, the Court did not approve unjustifiable delay inprocessing of return and thereby delay the refund of theassessee arising therefrom. Section 241A has since beeninserted in the Act and as the notes on clauses explainingthe provisions of Finance Bill, 2017 provides, in order toaddress the grievance of delay in issuance of refund in genuine cases which are routinely selected for scrutinyassessment, it was proposed that provisions of Section143(1D) shall ceases to apply in respect of returns furnishedfor assessment year 2017-18 and onwards. However, toaddress the concern of recovery of revenue in doubtfulcases, it was directed to insert a new section 241A to providethat, for the returns furnished for assessment yearcommencing on or after 1st Apfril, 2017, where refund of anyamount becomes due to the assessee under Section 143(1)and the Assessing OfÏcer is of the opinion that grant ofrefund may adversely affect the recovery of revenue, he mayfor the reasons recorded in writing and with the previousapproval of the Principal Commissioner or Commissioner,withhold the refund upto the date on which the assessmentis made. 15.This Section, therefore, had two objects toachieve; firstly, to avoid the difÏculties of delay in issuanceof refund in genuine cases which are routinely selected forscrutiny assessment. Sub-section (1D) of Section 143 was,therefore, made inapplicable to the returns furnished for the assessment year 2017-18 and onwards. Second object wasto safeguard the interest of the revenue where refund of anyamount is due to the assessee under Section 143(1) of theAct, and the Assessing OfÏcer forms an opinion that grant ofrefund may adversely affect the recovery of revenue, hemay, subject to fulfilling the conditions contained in the saidprovision, withhold the refund till the date of scrutinyassessment. The powers vested with the Assessing OfÏcerare not unguided or unlimited. The exercise of powers underSection 241A are subject to the Assessing OfÏcer forming abonafide opinion that grant of refund may adversely affectrecovery of revenue. Further, he has to record his reasons inwriting and can withhold the refund only with previousapproval of the Principal Commissioner or Commissioner asthe case may be. These are, thus, safeguards againstarbitrary or unguided exercise of powers. 16.In this background, firstly we must observe thatthe auto-generated communication dated 24.3.2019 whichcontained the note of withholding of the refund in terms ofSection 241A of the Act, does not satisfy any of the legal tests for passing said order. Firstly, it is not passed by theAssessing OfÏcer who is competent to do so. Secondly, it isnot even an order, it is a mere auto-generatedcommunication. Thirdly, it does not contain any reasonsrecorded in writing and lastly it is not passed with the priorapproval of the Principal Commissioner or Commissioner.When Section 241A confers the Assessing OfÏcer with widediscretionary powers and at the same time, puts conditionsfor exercise of such powers, such exercise under nocircumstances can be taken over by computerized system.The very essence of passing of the order under Section 241Ais application of mind by the Assessing OfÏcer to the issueswhich are germane for withholding the refund on the basis ofstatutory prescription contained in the said Section. Wemust, therefore, deprecate the practice of the department insending such auto-generated response to the assessees forwithholding the returns. 17.The issue does not rest here since the AssessingOfÏcer has thereafter passed order dated 21.8.2019 with theprevious approval of the competent authority and citing reasons for withholding the refund of the petitioner. We mayexamine such reasons. Broadly, the Assessing OfÏcer hasreferred to the preceding return of the assessee for theassessment year 2016-17 in which the assesee had declaredan income of Rs. 286.86 crores as against which in thepresent year, the assessee has declared huge loss. He,therefore, formed an opinion that the return for theassessment year 2017-18 needs thorough investigation. Healso referred to several issues such as revenue share licensefees, discount to prepaid distributors and non-deduction oftax at source on the same, international roaming chargesand non-deduction of tax at source on such charges etcwhich are pending with the Income Tax Appellate Tribunal.He, therefore, concluded that there is likelihood of hugedemand. In order to protect the interest of the revenue, heordered withholding of the entire refund of the assesseearising from the processing of the return under Section143(1) of the Act. 18.Merely because in the immediately precedingassessment year 2016-17, the assessee had declared a positive income as against substantial loss declared in thepresent assessment year, that by itself, cannot be a groundto doubt the contents of the return or the claim of theassessee with respect to the loss suffered. The reference tothe several issues which are common in the presentassessment year and which are pending before the Tribunal,also in facts of the case would not be a ground to withholdthe refund. This is so for the following reasons. 19.We are prepared to proceed on the basis that theAssessing OfÏcer in relation to such issues, in case of theassessee for the earlier assessment years, has already takena view adverse to the assessee. However, such issues arepending before the Tribunal at the hands of the assessee.Learned counsel for the petitioner had argued that even if allthese additions are sustained in the present assessmentyear, the total loss declared by the assessee will under nocircumstances be wiped out so as to result in assessment ofpositive income. He had, at our instance, filed a shortafÏdavit dated 7.10.2019 of one Mr. Vaibhav Mangal onbehalf of the petitioner in which it is stated as under :- “3.I say that the estimated amount of adjustment to income 19.We are prepared to proceed on the basis that theAssessing OfÏcer in relation to such issues, in case of theassessee for the earlier assessment years, has already takena view adverse to the assessee. However, such issues arepending before the Tribunal at the hands of the assessee.Learned counsel for the petitioner had argued that even if allthese additions are sustained in the present assessmentyear, the total loss declared by the assessee will under nocircumstances be wiped out so as to result in assessment ofpositive income. He had, at our instance, filed a shortafÏdavit dated 7.10.2019 of one Mr. Vaibhav Mangal onbehalf of the petitioner in which it is stated as under :- “3.I say that the estimated amount of adjustment to income required in respect of the issues referred to in paragraph 3 of thereasons recorded by respondent No. 1A under Section 241A of theAct would be Rs. 15,26,37,83,152. Assuming without admitting thatthe entire amount is added to the petitioner’s income, its assessedincome would continue to be a loss. This is apart from the fact thatthe said issues also stand substantially covered in the Assessee’s-‘’favour. Hereto annexed and marked as Exhibit Ois a copy of theChart quantifying the estimated amount of adjustment and alsogiving details of orders by which the issue stands covered.” 20.Learned counsel for the revenue, of course,controverted some of these details provided by the petitionerand submitted that the assessment is yet to be completedand therefore, the declarations made by the petitioner in thisrespect cannot be accepted without further scrutiny. In thiscontext, he had relied on profit and loss account filed by thepetitioner along with return. 21.At this interim stage, it is not necessary for us toexamine these minute details, the nature of additions whichwould be sustained and if sustained, what exactly would bethe impact of the petitioner’s liability in the current year. Wehad called for the afÏdavit for gathering broader picture thatin any view of the matter, accepting the stand of theAssessing OfÏcer, there would still not be any tax demand from the assessee in the current assessment year. We haveperused such material and are prima facie satisfied with thepetitioner's contention in this respect. We may note that theassessee has declared loss of over Rs. 6000/- crores. 22.One another significant aspect of the matter is theapplication filed by the petitioner under Section 197 of theAct before the Deputy Commissioner of Income Tax (TDS) on17.5.2016. As is well known, under sub-section (1) of Section197 of the Act, it is open for the competent authority uponjustification being made by the assessee to permit deductionof tax at source by the payees at a lower rate or provide thatno deduction at all shall be made. For the presentassessment year 2017-18, the assessee had in the saidapplication dated 17.5.2016 cited grounds and statedreasons why such deduction of tax be waived. According tothe assessee, the financial condition of the assessee did notjustify deduction of such tax at source. Interestingly, theDeputy Commissioner (TDS) decided this application by anorder dated 30.3.2017 permitting deduction of tax at sourceat ‘NIL’ rate. We are conscious that consideration under Section 197 of the Act is of prima facie nature and any orderthat may be passed either allowing the application partly orfully or rejecting it, is always subject to the final order ofassessment that may be passed. However, the said orderdated 30.3.2017 also manifests a prima facie belief of theDeputy Commissioner (TDS) that looking to the financialcondition of the assessee for the present assessment year,no deduction of tax at source would be justified. Had theapplication of the petitioner made in the month of 2017 beendecided in time, the assessee would have suffered nodeduction of tax at source at the time of receiving paymentsfrom the payees and resultantly, there would have been norequirement for seeking refund from the department uponfiling of the return. It was only because the considerationand disposal of the application was delayed and finally madeonly a couple of days before the end of the financial year,that the payees of the assessee had to continue deductionof tax at source at prescribed rates and correspondingly, theassessee had to suffer such tax deduction for virtually theentire year. 23.The decision of the Delhi High Court was renderedin the background of unamended Section 143(1D) of the Actand can have no direct application in the present case whicharises out of order passed under Section 241A of the Act. 24.Considering these aspects of the matter, we donot find that the exercise of powers by the Assessing OfÏcerfulfills requirement of Section 241A of the Act. We have, nodoubt, about the existence of the powers. We find that theexercise of the powers would not be justified in facts of thecase. In the result, the orders impugned in both the petitionsare set aside. Resultantly, the respondents shall releaserefund of the petitioner arising out of the return filed for theassessment year 2017-18 and the process thereof underSection 143(1) of the Act by the Assessing OfÏcer. This shallbe done along with statutory interest within a period of threeweeks from the date of receipt of copy of this order. 25.Both the petitions are allowed and disposed ofaccordingly. [ S.J. KATHAWALLA, J. ] [ AKIL KURESHI, J , ]