Section 241A

Section 241A — the law in short

What the courts have decided on section 241A, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Vodafone Idea Ltd v ACIT Supreme CourtHelps departmentSuperseded by amendment
  My refund is being held back because scrutiny is pending. Can the officer simply sit on it?
  Not for AYs 2017-18 to 2022-23 without doing the statutory paperwork first. Section 241A required the Assessing Officer to separately record satisfaction that granting the refund would adversely affect the revenue, and to obtain the PCIT's previous approval with reasons in writing. On these facts the Court found that those steps had been taken — satisfaction recorded, approval obtained, order passed in time — so the withholding was upheld and the appeal was dismissed; the ₹733 crores the Court directed flowed from the final assessment order under s.143(3) for AY 2014-15, not from any failure under s.241A, and even that direction was made subject to any proceedings the Revenue might initiate, including set-off under s.245. For years before AY 2017-18 s.143(1D) governed, and issue of a s.143(2) notice was itself enough to hold back the refund until assessment was complete. Section 241A ceased to apply from 1 April 2023 (Finance Act 2023); for AY 2023-24 onwards the equivalent power, in the same terms, is s.245(2).
• GE Capital Mauritius Overseas Investments v DCIT High CourtHelps departmentSuperseded by amendment
  The s.241A order gives detailed reasons I say are legally wrong. Will the High Court quash it in a writ?
  Usually not. The Delhi High Court dismissed this petition, holding that in a challenge to a s.241A order the writ court will not determine the tax liability that the pending scrutiny is meant to determine. Its scrutiny is confined to whether there is any basis at all for the opinion that granting the refund would adversely affect the revenue; only in a gross case, where nothing at all controverts the return, will it quash the order. The year was AY 2018-19 and the provision was s.241A, which ceased to apply from 1 April 2023; for AY 2023-24 onwards the withholding power is s.245(2), and this reasoning about the limits of writ review reads across to an order under that provision.
• Maple Logistics P Ltd v Pr Chief CIT High CourtHelps taxpayerSuperseded by amendment
  My refund is being withheld under s.241A because my case is in scrutiny. Is a scrutiny notice enough?
  No — but fix the year first. For AYs 2017-18 to 2022-23 the return had to be processed and the refund determined, and s.241A was the only route to hold it back: it needed a written, reasoned, approved order showing why paying THIS refund was likely to hurt the revenue, and repeating the words of the section, or pointing to the s.143(2) notice, is not a reason. Section 241A ceased to apply from 1 April 2023 (Finance Act 2023) and the withholding power now sits in s.245(2), which requires the same written reasons and the same previous approval of the Principal Commissioner or Commissioner. The reasoning below transfers, but for AY 2023-24 onwards the order to demand, and to attack, is a s.245(2) order.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.