Whether provision of section 143(1D) permits processing of returns / refunds where notice under section 143(2) has been issued – CBDT Clarification Instruction No. 1/2015, dated 13-1-2015
The CBDT has clarified that the processing of a refund cannot be undertaken after issuance of notice for scrutiny under section 143(2) of the Act.
Section 143(1D) of the Act was introduced by the Finance Act, 2012 with effect from 01.07.2012 to provide that where a notice has been issued to a taxpayer under section 143(2) of the Act, it shall not be necessary to process the return in such a case. Some doubts were raised in view of the words “shall not be necessary” used in the said section, as to whether this provision permits processing of returns having a refund claim, where notice under section 143(2) of the Act has been issued.
The matter was examined by the CBDT, which, has in exercise of it’s powers conferred under section 119 of the Act, clarified that the processing of a return / refunds cannot be undertaken after notice has been issued under section 143(2) of the Act. It shall, however, be desirable that scrutiny assessments in such cases are completed expeditiously.
The said instructions states that in cases where an unprocessed return is selected for scrutiny, the legislative intent is to prevent the issue of refund after processing, as scrutiny proceedings may result in demand for taxes on finalisation of the assessment subsequently.