McNally Bharat Engineering Co Ltd and another Vs ACIT Circle 1(1),Kolkata
Forum-Calcutta High Court
Date-6th August 2021

Sub-Whether refunds determined in pursuance of an assessment order u/s 143(1) can be withheld without passing an speaking order as required by law as per Section 241A read with Section 245- Landmark decision

The Single Bench of Calcutta High Court in this case was considering the delay in grant *of refund of Rs 18.31 crores and interest thereon amounting to Rs 1.83 crore (totalling to Rs 20.14 Crore) **which was determined on 13/11/2019 but was not given and after one year was sought to be adjusted with subsequent demand of Rs 47 crores. The Court while dealing with the law on subject came down upon heavily on the department and relying on the decision of the *Apex Court in the case of Union of India Vs Mohan Lal Capoor AIR 1974 SC 87* in support of the dicta re a speaking order to withhold refund where the apex court observed that *Reasons are the links between the materials on which certain conclusions are based and actual conclusions.

They should reveal a rational nexus between the facts considered and conclusions reached **and further relying on the decision on the apex court in the case of *Vodafone IDea ltd Vs DCIT reported in 421 ITR 253 **in support of the proposition that *the powers under this revenue friendly provision cannot be used in a mechanical manner without application of mind, wherein the Assessing Officer being of the opinion that the grant of refund may make recovery of pending demands, **directed the department to grant the refund within a period of four weeks.

This judgement will be helpful to all the assessees in whose case large amount of refund is determined but is not being issued

Ramesh Patodia
08-08-2021