A division bench of Justices K R Shriram and Neela Gokhale also takes a strong view against the assessing officer for showing laxity and lethargy in not passing the final order within the mandated 30-day time and thus causing a huge loss to the exchequer and public
The Bombay High Court has directed the Income Tax department to refund Rs 1,128 crore to Vodafone Idea Limited paid by the telecom operator in taxes for the assessment year 2016-2017. The assessment order passed by the department in August this year was time-barred and hence cannot be sustained, the HC noted in its judgement on Wednesday.
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A division bench of Justices K R Shriram and Neela Gokhale also took a strong view against the assessing officer for showing laxity and lethargy in not passing the final order within the mandated 30-day time and thus causing a huge loss to the exchequer and public. The court passed its judgment on a petition filed by the Vodafone Idea Limited claiming the I-T department failed to refund the amount paid by it for the assessment year 2016-2017 which, it said, was in excess of the legitimate tax due on its income.
The bench in its order noted the case of Vodafone was quite elementary and that it was constrained to observe the complete apathy and negligent approach of the assessing officer concerned in discharging his duties in accordance with provisions of the Income Tax Act. Any dereliction and remissness on the part of the officers entrusted with a duty to act within the strict contours of law affects the exchequer and has far reaching consequences on the prosperity and economic stability of the nation, the order said.
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Laxity in this regard has a propensity to destroy and bring to naught any effective system put in place by the government for efficient and transparent administration of taxation laws and its regulations, it added. The court recommended a detailed enquiry to be initiated on the failure on part of the assessing officer concerned to act in accordance with provisions of the Income Tax Act.
Strict action should be taken against persons responsible for the laxity and lethargy displayed which has caused a huge loss to the exchequer and in turn to the citizens of this country, the HC said, directing for its order copy to be circulated to the Union Ministry of Finance. As per the petition, the assessing officer passed a draft order pertaining to the assessment year in December 2019 against which the company filed objections before the Dispute Resolution Panel (DRP) in January 2020.
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In March 2021, the DRP issued certain directions. The Vodafone Idea Limited in its plea said the assessing officer ought to have passed the final order in the case within 30 days as mandated in the Act. Since the officer failed to pass the final order, it was entitled to a refund with interest, the company said. The company also said after it filed the petition in HC in June 2023 seeking refund of the amount, the assessing officer passed the final assessment order in August.
The tax department claimed due to the “Faceless Assessment Regime” it had not received the DRP’s directions. The high court, however, refused to accept this and said the DRP directions were always visible and accessible on the Income Tax Business Application (ITBA) portal. There was also no whisper of any explanation as to why the assessing officer remained inactive and silent for two long years in the case and swung into action only when he received information of the petition filed, it said.
We have no hesitation in holding that the assessment order dated August 31, 2023 passed by the assessing officer two years after the DRP directions, is time barred and cannot be sustained, the bench said. Hence, the Vodafone Idea Limited was entitled to receive the refund together with interest, the HC said.
