Debangana Ray
Published on August 9, 2022 at 17:49 IST
The Delhi High Court held that an order under Section 241A of the Income Tax Act cannot be passed in a mechanical or in a routinely fashion.
Further, refunds cannot be withheld just because the notice under Section 143(2) has been issued and the department wants to verify the claim for deduction under Section 10AA of the Income Tax Act.
The division bench of Justice Manmohan and Justice Manmeet Pritam Singh Arora has observed that the order under Section 241A was generic.
There was no attempt was made by the department to substantiate how granting the refund will adversely affect the revenue.
The court held that the petitioner is liable to be released at the time of order under Section 143(1) unless an order for withholding of refund has been passed under Section 241A of the act which stated that the grant of the refund is going to severely affect the revenue.
The court put forth that even if a higher amount was withheld, the petitioner would still be entitled to a refund along with applicable interest under Section 244A of the Income Tax Act.