Last Friday, Bombay high court ordered the income tax department to refund Rs 833 crore to Vodafone Idea within a period of 2 weeks. The order came after filing of a petition by the telecom company in which it sought a refund of Rs 1009.43 crore, including Rs 833 crore on an immediate basis as the undisputed amount, citing the tax authorities’ rectification order issued on May 28. Vodafone Idea argued that it has filed for IT returns in September 2014 and then revised it twice in March 2016 and February 2017.
Last year, an assistant IT commissioner passed an assessment order which estimated 733.80 crores as the refund amount to the telecom company. The company approached the court for litigation on rectification of the assessment. After being directed by the court, the IT department issued its rectification order on May 28, stating that it accepts that the company is entitled to a refund of Rs 1009.43 crore for the assessment year 2014-15. But the department decided to deduct Rs 176.39 crore as pending dues from the refund amount.
The IT did not refund Rs 1009.43 crore, even after several reminders by the company. The IT department withheld the refund as the company had massive outstanding dues which were not settled. The company then filed for litigation in HC, claiming the refund amount. IT department cited Section 241A of the IT Act, 1961, and said that the authorities concerned are empowered to withhold the refund. But the company argued that there is no provision under the IT Act, 1961, to allow withholding of the said amount following court orders determining the refund.
A two-member division bench, headed by Justice RD Dhanuka and Justice Madhav Jamdar, passed the judgement of the case in favour of the telecom company stating the court’s May 28 order is binding. The court observed that IT authorities do not have the right to withhold refunds against undetermined future demands.