The Bombay High Court, displeased with the assessing officer's negligent approach, has ordered Income Tax authorities to repay Vodafone Idea over Rs 1,128 crores, along with interest, for the 2016-17 assessment year due to the officer's lack of diligence in performing duties.

The justices, KR Shriram and Neela Gokhale, when issuing the order, urged for a thorough investigation into the shortcomings of the Faceless Assessing Officer (FAO) in adhering to the Income Tax Act's provisions. The court stressed the importance of taking stringent measures against those accountable for the negligence that led to a substantial loss to the government's revenue and, consequently, the nation's citizens.

This legal matter stemmed from Vodafone's submission of their Return of Income (ROI) for the Assessment Year 2016-2017. In their filing, Vodafone reported a loss as per the standard provisions of the Income Tax Act, as well as under Section 115JB of the Act. Additionally, they made a request for a refund of prepaid taxes totaling Rs 1,128.47 crores.

Vodafone argued that the Faceless Assessing Officer (FAO) did not issue the final order within the mandated 30-day period, as directed by the Dispute Resolution Panel (DRP). Consequently, Vodafone requested the acceptance of their original Return of Income (ROI) and the refund of excess taxes paid, along with interest.

The directions from the Dispute Resolution Panel (DRP) were issued on March 25, 2021, but the assessment order was not issued until August 31, 2023. The Income Tax Department attributed this delay to the Faceless Assessment Regime, asserting that the Faceless Assessing Officer (FAO) did not receive the DRP's directions. Vodafone, however, provided evidence to challenge this assertion and present their case.

The court stressed that the failure of officers responsible for adhering to the precise requirements of the law has extensive implications for both the government's finances and the overall economic stability of the nation. It highlighted that such negligence can undermine any efficient and transparent system put in place by the government to manage tax laws and regulations, ultimately resulting in negative consequences for government revenue.