Aegis Limited vs The Union Of India And 3 Ors
2016 Latest Caselaw 6852 Bom

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              IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                      
                  ORDINARY ORIGINAL CIVIL JURISDICTION
                          WRIT PETITION NO.1619 OF 2016




                                              
     M/s. Aegis Limited,
     a Company incorporated under the




                                             
     Companies Act, 1956, having its
     office at Essar House, 11, K.K. Marg,
     Mahalaxmi, Mumbai-400 034.                        ....  Petitioner




                                     
              - Versus -

     1. The Union of India
                             
          through Secretary,
                            
          Ministry of Finance, 
          North Block, New Delhi.

     2. The Central Board of Direct Taxes
      

          through the Secretary, 
          Department of Revenue,
   



          Ministry of Finance, 
          Government of India, 
          Central Secretariat, North Block,
          New Delhi-110 001.





     3. The Additional Commissioner of
          Income Tax 6(1), having his
          office at 5th Floor, Aayakar
          Bhawan, M.K. Road,





          Mumbai-400 020.

     4.  The Deputy Commissioner of Income
           Tax 6(1), having his office at
           Aayakar Bhawan, M.K. Road,
           Mumbai-400 020.                             ....  Respondents




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     Mr. Deepak Chopra with Mr. Jas Sanghavi, Ms Manasvini
     Bajpai and Mr. Aseem Mewar i/by M/s. PDS Legal for




                                                          
     the Petitioner.
     Mr. Anil C. Singh, Additional Solicitor General, with 
     Mr. A.R. Malhotra, Ms Geetika Gandhi and Ms C.S. Xavier
     for the Respondents.




                                                         
                                         CORAM: S.C. DHARMADHIKARI &
                                                        B.P. COLABAWALLA, JJ.

ig DATE : DECEMBER 01, 2016

ORAL JUDGMENT (Per Shri S.C. DHARMADHIKARI, J.):

1. By these writ petition under Article 226 of the

Constitution of India, the petitioner prays for the following

reliefs:

"(a) that this Hon'ble Court be declare that the provisions of sub-section (1D) of section 143 of the Income Tax Act, 1961 is unconstitutional and hence, liable to be struck down;

(b) that this Hon'ble Court be pleased to declare that the impugned Instruction/Circular No.1 of 2015 dated 13.1.2015 issued by the Central Board of Direct Taxes is illegal, void and unsustainable in law and accordingly is liable to be set aside;

(c) that this Hon'ble Court be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari

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or any other writ, order or direction under Article 226

of the Constitution of India calling for the records pertaining to the Petitioner case and after going into

the validity and legality thereof to quash and set aside impugned Instruction/Circular No.1 of 2015 dated 13.1.2015 issued by the Central Board of Direct Taxes;

(d) that this Hon'ble Court be pleased to issue a Writ of Prohibition, prohibiting the Respondents by themselves, their servants and agents from in any

manner whatsoever giving effect to the Impugned Instruction/Circular No.1/2015 dated 13.01.2015 in

a manner that returns are not processed even in deserving cases, where notices under Section 143(2) of the Act have been issued;"

2. In prayer (e) of the writ petition, without prejudice

and as an alternative relief, the petitioner seeks a writ of

mandamus or any other appropriate writ, order or direction,

ordering and directing the respondents, their subordinate

servants, agents and officers to forthwith process and sanction

the refund claims with appropriate interest, if any, for the

Assessment Year 2014-15.

3. Given the concession of both sides that, this Court

need not record any elaborate reasons or set down in detail the

arguments, the points for consideration, etc., we take up the

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request as made in the alternative and without prejudice. We

have noted it, as above.

4. That arises from a peculiar situation inasmuch as is

that the petitioner is a Company incorporated under the

provisions of the Indian Companies Act, 1956. The respondents

to this petition are the Union of India, the Central Board of

Direct Taxes, the Additional Commissioner of Income Tax and

the Deputy Commissioner of Income Tax.

5. The petitioner claims that it is engaged in providing

customer interaction, back office and related services. They are

claimed to be in the nature of information technology/enabled

services. The petitioner claims to be known as and operates by

the name "Aegis Group of Companies". For the Assessment Year

2014-15, the petitioner filed its return of income electronically

on 26-11-2014. It declared a total loss of Rs.28,14,68,635/-,

including long term capital loss of Rs.26,45,57,970/- while

claiming a refund amounting to Rs.19,75,98,310/-. This return

was required to be processed, according to the petitioner, in

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terms of the second proviso to sub-section (1) of Section 143 of

the Income Tax Act, 1961 (for short, "the Act") on or before

31-3-2016. A notice under Section 143(2) of the Act was issued

by the fourth respondent on 31-8-2015 since the case of the

petitioner was selected under the CASS System.

6. A representation was filed on 30-5-2016 before the

third respondent, requesting the processing of the refunds for

the Assessment Years 2014-15 and 2015-16 vide a letter, copy of

which is at Annexure-C, dated 30-5-2016.

7. A reminder was issued on 8-6-2016.

8. A meeting was also held but the petitioner states that

it was informed that, once a notice under Section 143(2) had

been issued, the provisions of Section 143(1D) of the Act come

into play and in terms of the instruction of the second

respondent being Instruction No.1 of 2015, dated 13-1-2015, the

returns cannot be processed.

9. It is in these circumstances, the petitioner raised the

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above challenge but at the same time placed before the Court its

peculiar factual scenario. In para 13, it states as to how the

delay in processing the refund applications prejudices it and

causes severe financial hardship. In para 14, it states that though

the returns for the Assessment Years 2012-13 and 2013-14 were

pending for assessment, they were processed despite the fact

that provision of Section 143(1D) of the Act was in existence

and in force. These returns were processed with the objective to

adjust the disputed tax demand for the Assessment Years 2009-

10 and 2010-11. However, when it came to issuance of refunds,

the respondents are denying them the same in the garb of

Section 143(1D) and the CBDT Instruction. This selective

approach also prejudices the petitioner.

10. It is in the above factual background and reply of

respondent No.4, which proceeds on the footing that the return

of income for the Assessment Year 2015-16 was filed

electronically on 27-11-2015 declaring a certain loss while

claiming a refund of taxes, a notice was issued. A representation

for processing of the refund was filed and its pendency being not

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disputed, that we called upon both sides to take appropriate

instructions.

11. Mr. Chopra, learned counsel appearing for the

petitioner, on instructions, submits that if this Court were to

direct the processing of the refund application in the peculiar

facts and circumstances of the petitioner's case, then, the

petitioner would not press the constitutional challenge or the

challenge to the Circular of the CBDT.

12. The Additional Solicitor General of India Mr. Anil

Singh was appearing on the earlier occasion and we requested

him equally to take instructions.

13. After taking instructions, the Additional Solicitor

General informs us that while it is true that the representation is

pending, so also the refund application, the processing could not

be undertaken in the light of the constitutional challenge raised

and given the presumption that the provision is constitutional

and must be established and proved not to be so. Till then, there

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is no question of not giving effect to it. Hence, the respondents

have not processed the application. However, he does not

dispute the pendency of the representation and the refund

application.

14. Once the petitioner gives up the constitutional and

the larger challenge and are agreeable that their refund

application if processed in accordance with law and

expeditiously they would be satisfied and would not press the

petition thereafter, we are of the opinion that the following

order will serve the ends of justice. While clarifying that this

order is passed in the peculiar facts and circumstances of the

petitioner's case and shall not be treated as a precedent for any

future case and that we have expressed no opinion on the rival

contentions, particularly on the larger challenge raised in the

writ petition and they are kept open for being considered and

decided in an appropriate case, we dispose of this petition in the

following terms:-

15. We direct that the refund application of the

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petitioner pending with the Department shall be processed by

the Competent Authority, namely, respondent No.4, as

expeditiously as possible and in accordance with law.

16. We grant two weeks' time for the same. The time to

commence from the date of receipt of a copy of this order.

17.

We clarify that we have expressed no opinion on the

merits of the refund application. This application shall be dealt

with in accordance with law.

18. Once we direct disposal of the refund application,

needless to clarify that the refund application pertaining to the

Assessment Year 2014-15 shall be processed and disposed of in

terms of our directions.

19. Rule is made absolute in the above terms. There will

be no order as to costs

(B.P. COLABAWALLA, J.) (S.C. DHARMADHIKARI, J.)