Facts of the Case

The Petitioner filed a writ petition seeking directions to the Respondents to issue a refund of Rs. 24,03,89,270/- along with up-to-date interest, pursuant to an appeal effect order dated 05 April 2021 arising from the order of the Commissioner of Income Tax (Appeals).

Further, the Petitioner sought issuance of an additional refund of Rs. 9,96,10,730/- along with interest, pursuant to the order of the Income Tax Appellate Tribunal dated 09 May 2022.

The ITAT had deleted all additions and ruled in favour of the Petitioner, making the Petitioner entitled to a refund of the entire tax paid under protest amounting to approximately Rs. 34 crore along with applicable interest.

Despite multiple representations made by the Petitioner, the refund was not issued.

Issues Involved

  1. Whether the Revenue is obligated to issue refund along with interest pursuant to appellate orders.
  2. Whether delay in granting refund violates statutory provisions and constitutional mandate.
  3. Whether pendency of appeal by Revenue can justify withholding of refund.

Petitioner’s Arguments

  • The ITAT had deleted all additions; therefore, the Petitioner is legally entitled to full refund along with interest under Section 244A/244A(1A).
  • Non-issuance of refund despite appellate orders is illegal and arbitrary.
  • Such non-payment violates Article 265 of the Constitution of India and Section 237 of the Income Tax Act.
  • Several representations were made to the authorities, but no action was taken.

Respondent’s Arguments

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

Court’s Findings / Order

  • The Court observed that the Revenue had sufficient time to file an appeal against the ITAT order.
  • As per law, appeal effect orders must be passed within three months of the appellate order.
  • The Court disposed of the writ petition with directions to the Respondents to:
    1. Consider issuance of refund of Rs. 24,03,89,270/- along with interest pursuant to the CIT(A) order.
    2. Pass appeal effect order pursuant to ITAT order dated 09 May 2022 and issue additional refund of Rs. 9,96,10,730/- along with interest.
  • The Court directed that necessary orders and refunds be issued within six weeks.
  • Rights and contentions of all parties were kept open.

Important Clarification

  • Filing or proposed filing of appeal by Revenue does not automatically justify withholding of refund.
  • Statutory timelines for passing appeal effect orders must be adhered to.
  • Tax refunds along with interest are enforceable rights when appellate orders are in favour of the assessee.

Sections Involved

  • Section 237 of the Income Tax Act, 1961
  • Section 244A & Section 244A(1A) of the Income Tax Act, 1961
  • Article 265 of the Constitution of India

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/MMH19102022CW147672022_190807.pdf

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