Facts of the Case

  • The petitioner filed a writ seeking implementation of the ITAT order dated 09 May 2022, which had decided all issues in favour of the petitioner.
  • ITAT had deleted all additions, thereby entitling the petitioner to refund of taxes paid under protest.
  • The refund amount claimed was ₹16,45,98,588 along with interest, including ₹1,14,76,268.
  • Despite representations dated 20 May 2022 and 11 July 2022, the department failed to issue refund or pass appeal effect order.

Issues Involved

  1. Whether the Revenue can delay passing of appeal effect order after ITAT decision.
  2. Whether failure to grant refund violates statutory provisions and constitutional mandate.
  3. Whether interest under Sections 244A/244A(1A) is mandatory on delayed refund.

Petitioner’s Arguments

  • ITAT has already allowed the appeal completely, hence refund is legally due.
  • Non-issuance of refund violates:
    • Section 237 & 240 of the Income Tax Act
    • Article 265 of the Constitution
  • The department is obligated to issue refund with statutory interest under Section 244A.
  • Delay despite repeated representations is arbitrary and unlawful.

Respondent’s Arguments

  • The Revenue submitted that it was in the process of filing an appeal against the ITAT order.

Court’s Findings / Observations

  • The Court held that the Revenue had sufficient time to file an appeal.
  • As per law, appeal effect order must be passed within three months.
  • Mere intention to file appeal cannot justify withholding refund.
  • Statutory compliance regarding refunds cannot be delayed indefinitely.

Court Order

The Delhi High Court directed:

  1. Issuance of refund of ₹16,45,98,588 with up-to-date interest.
  2. Payment of ₹1,14,76,268 as additional interest after giving effect to CIT(A) order.
  3. Completion of appeal effect order and refund process within six weeks.

Important Clarification

  • Filing or proposed filing of appeal by Revenue does not automatically stay refund obligation.
  • Refund must be processed within statutory timelines, irrespective of future litigation.
  • Interest under Section 244A is mandatory and compensatory in nature.

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/MMH28102022CW149642022_194530.pdf

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