Image Source : PTI Bombay high court building
The Bombay High Court has ruled in favour of Vodafone Idea Limited, directing the Income Tax department to refund Rs. 1,128 crore paid by the telecom giant for the assessment year 2016-2017. The court deemed the assessment order passed in August this year as “time-barred” and criticised the assessing officer for “laxity and lethargy,” causing a substantial loss to the exchequer. The judgment underscored the officer’s negligence, stating it has repercussions on the nation’s economic stability.
Vodafone Idea’s petition highlighted the excess tax payment, describing the case as “quite elementary.” The court recommended a thorough investigation into the assessing officer’s failure to adhere to the Income Tax Act and urged strict action against those responsible, with the order copy circulated to the Union Ministry of Finance.
The legal saga began when the assessing officer issued a draft order in December 2019, prompting Vodafone Idea to file objections before the Dispute Resolution Panel (DRP) in January 2020. The DRP issued directions in March 2021. Vodafone Idea argued that the final order, mandated within 30 days, was not passed by the officer, justifying its entitlement to a refund with interest. The company filed a petition in the Bombay High Court in June 2023, leading to the assessing officer’s final assessment order in August.
The Income Tax department claimed non-receipt of DRP’s directions due to the “Faceless Assessment Regime.” However, the court rejected this, asserting that DRP’s directions were accessible on the Income Tax Business Application (ITBA) portal. The court questioned the assessing officer’s inactivity for two years and emphasized that the August 31, 2023 assessment order, issued two years after DRP’s directions, was time-barred and unsustainable.
The Bombay High Court’s verdict not only secures a substantial refund for Vodafone Idea Limited but also raises concerns about the efficiency and transparency of the tax administration system. The court’s recommendation for a detailed inquiry and strict action underscores the potential consequences of bureaucratic negligence on the national exchequer. The decision serves as a reminder of the critical role officers play in upholding the law and ensuring the proper functioning of financial systems.
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