Facts of the Case

The Petitioner, MUFG Bank Ltd., filed multiple writ petitions seeking directions against the Income Tax Department for failure to give effect to various appellate orders. These included orders passed by the Income Tax Appellate Tribunal (ITAT), the Assessment Order dated 18 March 2021, and an order of the Calcutta High Court dated 07 August 2019.

Despite favorable orders, the Respondents failed to pass consequential appeal effect orders and release refunds amounting to several crores across multiple assessment years (1991-92, 1996-97, 2001-02, 2009-10, and 2016-17), along with applicable statutory interest.

 Issues Involved

  1. Whether the Income Tax Department can delay passing appeal effect orders despite binding ITAT and Court decisions.
  2. Whether withholding legitimate tax refunds violates statutory provisions under the Income Tax Act, 1961.
  3. Whether such delay infringes constitutional protections under Articles 265 and 300A of the Constitution of India.

 Petitioner’s Arguments

  • The Respondents failed to implement binding appellate orders without any justification.
  • Legitimate refunds along with interest were unlawfully withheld.
  • Multiple representations were made, but no action was taken.
  • The delay violates:
    • Section 153(5) (time limit for giving effect to appellate orders)
    • Section 244A(1) (interest on refund)
    • Section 244(1A) (additional interest)
  • The inaction amounts to violation of constitutional rights under Article 265 (no tax without authority of law) and Article 300A (right to property).

 Respondent’s Arguments

  • The Revenue submitted that the process of issuing refunds was underway.
  • No substantive legal justification was provided for the delay in passing appeal effect orders.

Court Findings / Order

  • The Delhi High Court acknowledged the limited relief sought by the Petitioner.
  • The Court directed the Respondents to:
    • Pass appeal effect orders
    • Release refunds in accordance with ITAT and Court orders
  • The timeline prescribed: within six weeks from the date of the judgment.
  • The Court clarified that rights and contentions of all parties remain open.

 Important Clarifications

  • Authorities are legally bound to implement appellate orders within prescribed timelines.
  • Administrative delay in granting refunds is not permissible without valid reasons.
  • The Court refrained from adjudicating broader issues but ensured compliance through directions.
  • Reinforces taxpayer rights against arbitrary withholding of refunds.

 Sections Involved

  • Section 153(5), Income Tax Act, 1961 – Time limit for giving effect to appellate orders
  • Section 244A(1), Income Tax Act, 1961 – Interest on refunds
  • Section 244(1A), Income Tax Act, 1961 – Additional interest on delayed refunds
  • Article 265, Constitution of India – No tax shall be levied or collected except by authority of law
  • Article 300A, Constitution of India – Right to property

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/MMH19102022CW147452022_190917.pdf

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