Refund couldn't be withheld on ground that assessee declared income in prior AY and claimed loss in current AY

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Refund couldn't be withheld on ground that assessee declared income in prior AY and claimed loss in current AY
The assessee-Vodafone Idea Ltd. was engaged in the business of providing telecommunication services. It filed loss return and claimed refund of the entire amount deducted or collected at source.
Assessing Officer (AO) withheld the refund determined under section 241A on the ground that the assessee had declared huge amount during AY 2016-17, whereas it had declared huge losses in the current Assessment Year. Thus, the issue of huge losses needed thorough investigation.
On writ, the HC held that the auto-generated communication containing the note of withholding of refund in terms of section 241A didn’t satisfy any of legal tests, as the order was not passed by the AO who was competent to do so and secondly, it was not even an order.
The communication didn’t contain any reasons recorded in writing. Further, it was not passed with the prior approval of PCIT or CIT. The very essence of passing order under section 241A is application of mind by the AO. Therefore, the department’s practice of sending such auto-generated responses to the assessees for withholding the returns was to be deprecated.
Merely because the assessee had declared positive income in the preceding assessment year couldn’t be a ground to doubt the contents of return or assessee’s claim with respect to the loss suffered.

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