The Supreme Court on Friday sought response from the Income Tax Department as to why it should not refund around Rs 4,761 crore to Vodafone Idea with respect to returns for assessment years (AYs) 2014-15 to 2017-18.
Stating that such inaction in granting refunds has caused grave financial hardships, Vodafone said that its financial condition is precarious as it has accumulated losses of Rs 5,557 crore and debts amounting to Rs 53,000 crore as on March 31, 2017.
A bench led by Justice U U Lalit gave four weeks to the Department to respond to the appeal filed by Vodafone Idea, challenging the Delhi High Court’s December 14, 2018 order that rejected its request for a direction to the I-T Department to process the returns of income and issue refunds aggregating to Rs 4,761 crore.
The company said that the high court had relied on a July 23, 2018 letter by the Department that denied refund to the company and the reason for denial “are superfluous and without any basis”.
According to the telecom major, “this letter/order is admittedly beyond limitation, bereft of any cogent reasoning and hence without jurisdiction,” as the time limit for processing of returns and/or passing any order refusing to process the returns for 2014-15 to 2016-17 had elapsed on May 31.
Besides, no hearing was given to Vodafone before issuing the letter, the appeal stated, adding that even the mandatory approval of the Principal Commissioner as required under the income tax law is absent.
It further said that such withholding of refunds is contrary to the letter and spirit of Section 143(1) of the Income Tax Act and the Citizens Charter, 2014, issued by the Central Board of Direct Taxes, in terms of which processing of refunds at the earliest and not later than one year from the end of the relevant financial year in which the return has been filed has been mandatorily prescribed under the Act.
“Even if all the additions proposed by the revenue department are made in AY 2014-15 to 2017-18, yet after exclusion of the covered issues and rectifiable/palpable mistakes, it would be entitled to a refund of around Rs 3,500 crore,” senior counsel Arvind Datar, appearing for the company, argued.
The high court, while rejecting Vodafone Idea’s plea for refund, had said that there was merit in the tax department’s argument that substantial outstanding demand was pending against the company and there was a likelihood of more demands being made after the assessment for the AYs in question were scrutinised.
(With inputs from FE)