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AO is of the opinion that grant of refund for the A.Y. 2017-18 and 2018- 19 before completion of scrutiny assessment is likely to adversely affect the collection of revenue as huge demand is likely to be raised in scrutiny assessments. Therefore, in accordance with the powers conferred under the provisions of section 241A, the refund due for the A.Y. 2017-18 and 2018-19 is withheld till finalization of scrutiny assessment after obtaining approval of Hon'ble Pr. Commissioner of Income Tax, Gurgaon dated 8.11.2019.” We have perused the record, no reasons apart from one mentioned in the order are there. The note of approval of the Princial Commissioner was also perused by us, the only reason mentioned was that there was an amount outstanding of Rs. 5 crores odd against the petitioner and for the said reason, the refund is withheld. Learned counsel for the petitioner disputed the fact and submitted that the said demand was set aside. Be that as it may, the pendency of demand of Rs. 5 crores cannot be a ground for withholding almost refund of Rs. 300 crores, as per Section 245, the due amount could be set off against the refund due. In the absence of any material and reason for forming opinion that refund is likely to adversely affect the revenue withholding cannot be sustained. Considering the facts that in spite of there being no justifiable reason as per provisions of the statute, yet the refund was withheld for which the petitioner would be entitled to statutory interes

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Sec.  241A Of Income Tax Act, 1961— Refund --- the assesseewas engaged in the business of manufacturing and trading of telecom network equipment. The returns for the assessment years 2017-18 and 2018-19 were filed declaring taxable claiming refund respectively. After various notices, reply and direction in refund as per communication under Section 143(1) for the assessment year 2017-18 and for the assessment year 2018-19 filed by the assessee for direction to process the returns and seeking refund, the respondents filed written statement annexing order dated 8.11.2019 withholding the refund for both the years.  In accordance with the powers conferred under the provisions of section 241A, the refund due for the A.Y. 2017-18 and 2018-19 is withheld till finalization of scrutiny assessment after obtaining approval of Hon'ble Pr. Commissioner of Income Tax, dated 8.11.2019.” The petition was filed  by assessee against the order of withholding.
The court allowed the writ petition. The impugned order was quashed. The respondents were directed to issue refund for the assessment year 2017-18 and 2018-19 along with statutory interest not later than within four weeks from receipt of certified copy. --- HUAWEI TELECOMMUNICATIONS (INDIA) COMPANY PRIVATE LIMITED vs. UOI [2020] 23 ITCD Online 24 (P&H)