In a decision that will benefit taxpayers and ensure faster refunds, the Delhi high court quashed an order of the income-tax department that linked tax refunds to scrutiny assessment.

The income-tax department, in a notification, had said that an assessing officer will mandatorily not process a refund to a taxpayer in case the return is under scrutiny. In its ruling, the high court said that giving refunds to the taxpayers should be at the discretion of the assessing officer and that the tax department cannot curtail the taxman’s discretion in a manner which causes more hardship to the taxpayer.

“The ruling comes as a welcome relief for taxpayers who were unnecessarily suffering denial of refunds even in the most genuine of cases. Scrutiny proceedings take a long time to complete and if one considers the extended timeline allowed for transfer pricing cases, the refunds for a financial year can get stuck with the tax authorities for as long as 3-4 years,” said Rahul Jain, partner, Nangia & Co.

“This ruling will certainly help taxpayers who have genuine refund claims pending with the authorities,” he said. #casansaar (Live Mint)