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 and consequential refund claims.

The Petitioner relied upon:

  • Orders of the Income Tax Appellate Tribunal (ITAT) dated 21 May 2020, 06 December 2018, and 13 September 2019
  • Assessment Order dated 18 March 2021
  • Order of the Calcutta High Court dated 07 August 2019

Despite these orders, the Respondents failed to pass appeal effect orders and issue refunds amounting to several crores across multiple assessment years along with statutory interest.

Issues Involved

  1. Whether the Income Tax Department can delay or withhold refunds despite binding appellate orders.
  2. Whether failure to pass appeal effect orders violates statutory provisions under the Income Tax Act.
  3. Whether such withholding of refund is contrary to constitutional protections under Articles 265 and 300A.

Petitioner’s Arguments

  • The Respondents failed to implement binding orders of ITAT and High Courts without any justification.
  • Refund amounts legally due were unlawfully withheld.
  • Multiple representations were made, but no action was taken.
  • The conduct of the Respondents violates:
    • Section 153(5) of the Act (mandatory compliance timeline)
    • Constitutional provisions under Articles 265 and 300A
  • The Petitioner is entitled to:
    • Refund of amounts
    • Interest under Section 244A(1)
    • Additional interest under Section 244(1A)

Respondent’s Arguments

  • The Revenue submitted that the process of issuing refunds was underway.
  • No substantive justification was provided for the delay in giving effect to appellate orders.

Court Findings / Order

  • The grievance of the Petitioner was limited to non-implementation of appellate orders.
  • The Respondents are duty-bound to give effect to such orders within statutory timelines.
  • The Court directed the Respondents to:
    • Pass appeal effect orders
    • Issue refunds along with applicable interest
    • Comply within six weeks
  • The writ petitions were disposed of with these directions.
  • Rights and contentions of all parties were kept open.

Important Clarifications

  • The Court did not adjudicate on merits of tax liability but focused on implementation of already decided matters.
  • It reaffirmed that administrative delay cannot defeat taxpayer rights.
  • Compliance with appellate orders is mandatory and time-bound.

Sections Involved

  • Section 244A(1), Income Tax Act, 1961 (Interest on Refund)
  • Section 244(1A), Income Tax Act, 1961 (Additional Interest)
  • Section 153(5), Income Tax Act, 1961 (Time limit for giving effect to appellate orders)
  • Article 265 & Article 300A of the Constitution of India

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

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