HC : Rejects Revenue's 'inequitable' stand to sit-on refund application until assessment conclusion

Gujarat HC holds that mere issuance of notice u/s. 143(2) & claiming extended period for processing of refund u/s. 143(1) would not be sufficient to withhold tax refund for AYs 2015-16 and 2016-17; Assessee (a turnkey projects contractor) had filed tax returns for both the years declaring high amount of tax losses and claimed tax refunds arising on account of TDS and for one of years i.e. AY 2015-16, notice u/s Sec 143(2) was issued but the assessment was not complete; Considering the financial crunch and liquidity problems, the assessee followed up several times with the IT Department for the release of the tax refunds, but did not receive any response after which the assessee decided to approach HC; Noting the amendments by Finance Act, 2017 and provisions as applicable to the assessee i.e. post deletion of section 241 of the Act and prior to insertion of section 241A, HC observes that "the Revenue cannot contend that even though no intimation under sub-section (1) of section 143 was issued within the time envisaged and no notice under sub-section (2) of section 143 was issued, the Assessing Officer can sit tight over the refund claimed by the assessee arising out of the return filed"; HC further adds that "We  simply  cannot  accept  the  interpretation  of  the counsel for the Revenue that once a notice under sub-section (2) of section 143 is issued, the suspension of the refund arising out of the return filed by the assessee would be automatic and till the passing of the order of assessment under sub-section (3) of section 143"; HC states that it would be 'wholly inequitable' for the AO to merely sit over the petitioner's request for refund citing the availability of time upto the last date of framing the assessment u/s 143(3); Applying the reasonable interpretation of the provisions, HC observes that AO is expected to take up an expeditious disposal of the processing of return u/s 143(1) once the assessee requests for release of the refund and send as an intimation to the assessee if he wishes to withhold the refund; For AY 2015-16, HC directs AO to complete the process of the assessee's return u/s 143(1) latest by October 31, 2017 and notes that for AY 2016-17 the time for processing the return under sub-section (1) of section 143 read with proviso is not yet over:HC