Vodafone Idea .......... Petitioner

V.

Assistant Commissioner of Income Tax and ors. .............. Respondents

In a huge relief to the Vodafone Idea Ltd., the Bombay High Court on 26th June 2020, directed the Income Tax department to refund Rs. 833 crores to the telecom company within two weeks, "without fail".

A Division Bench of Justices RD Dhanuka and Madhav Jamdar pronounced a 14-page order through videoconference, granting the above relief to the petitioner Vodafone idea against the respondents Asst. as well as Principal Commissioner of Income Tax, along with Union of India.

The court said that the tax authorities have no power vested in them as to compute self-adjusted refund amount against the tax dues, which were not even adjudicated upon the petitioners, but were only visualised/contemplated by the respondent.

Case Background

The petitioner had filed a petition, seeking a refund of Rs. 1,00,94,38,863 (over 100 cr), from the IT department, quantified by its rectification in an order dated 28th May 2020.

In September 2014, Vodafone Idea filed for its return of income, which was further revised twice, on 31st March 2016 and then on 22nd February 2017. Thereafter, the Assistant Commissioner of Income Tax department, on 31st October 2019, passed an assessment order under Section 143(3) read with 144C of the Income Tax Act, 1961, computing an amount of Rs. 733.80 crores refundable to Vodafone Idea.

Following this, the petitioner company applied section 154 of the Act, seeking rectification of mistakes apparent from the record. Another application was filed for the same before the Asst. Commissioner on 3rd December 2019, because of the case being transferred from Delhi to Mumbai by order under Section 162 of the Act.

The petitioner did not receive any refund from the respondents and hence filed a writ petition in 2018 in the Delhi High Court, which got dismissed. Thereafter, a special leave petition was filed in the Supreme Court, which, in a judgment dated 29th April 2020, granted a refund of Rs. 733 crores, concerning the year 2014-15, payable within 4 weeks.

By this judgment, the Asst. IT Commissioner filed an intimation application under section 245 of the Act, intimating that as per their records, a sum of Rs. 864 crores were pending against Vodafone Idea, for the assessment years 2000-01, 2004-05, 2005-06, 2006-07, 2007-08, 2012-13 and 2018-19. The commissioner thus proposed to adjust this outstanding amount against the assessment year 2014-15.

Therefore, finally, an order dated 28th May 2020, the assistant commissioner held that a refund amount of Rs. 1009.43 crores were payable to Vodafone Idea, however, a sum of Rs. 176.39 crores were deducted, and the net refund amount was computed to Rs. 833.04 crores.

The Division Bench observed, after the conclusion of the submissions, that there is no provision for the determination of further tax liability for any other assessment year, which can be adjusted against a current admitted refundable amount determined by the tax authorities, where Section 241A is applicable or not. If not, even then, the Commissioner has no authority to withhold any refund up to the date on which assessment is made.