Facts of the Case

The petitioner, MUFG Bank Ltd., filed a writ petition seeking direction to the Income Tax Department to give effect to the order passed by the Income Tax Appellate Tribunal dated 13 September 2019.

The petitioner contended that losses, including unabsorbed depreciation amounting to Rs. 38,73,42,584/- for Assessment Year 2000–01, were required to be carried forward to subsequent assessment years.

Despite repeated communications and reminders, the Assessing Officer failed to pass the consequential order and compute the losses for carry forward, thereby withholding the refund due for Assessment Year 2005–06 along with statutory interest.

Issues Involved

  1. Whether the Revenue is obligated to give effect to the ITAT order within a reasonable time under Section 153(5) of the Income Tax Act.
  2. Whether failure to grant consequential relief and refund violates statutory and constitutional rights.
  3. Whether the petitioner is entitled to refund along with interest under Sections 244A(1) and 244(1A).

Petitioner’s Arguments

  • The petitioner is legally entitled to carry forward losses as per the ITAT order dated 13 September 2019.
  • The Assessing Officer failed to implement the Tribunal’s order without assigning any reason.
  • Repeated representations made by the petitioner were ignored.
  • The delay in passing the order resulted in wrongful withholding of refund.
  • Such inaction violates:
    • Section 153(5) of the Income Tax Act
    • Articles 265 and 300A of the Constitution of India
  • The petitioner is entitled to refund along with applicable interest under Sections 244A(1) and 244(1A).

Respondent’s Arguments

  • The Revenue submitted that the Assessing Officer is in the process of giving effect to the ITAT order dated 13 September 2019.

Court Findings / Order

The Delhi High Court observed that the grievance of the petitioner was justified in light of the delay in giving effect to the ITAT order.

The Court disposed of the writ petition with the following directions:

  • The Respondents are directed to:
    • Pass the order giving effect to the ITAT order dated 13 September 2019
    • Compute the losses for Assessment Year 2000–01 to be carried forward
    • Pass the consequential order for Assessment Year 2005–06
    • Issue refund, if any, along with:
      • Interest under Section 244A(1)
      • Additional interest under Section 244(1A)
  • The entire exercise must be completed within eight weeks.

Important Clarification

  • The Court emphasized the mandatory duty of the Revenue to give effect to appellate orders within the statutory framework.
  • Delay in granting refunds and implementing Tribunal orders can lead to violation of constitutional protections relating to property and taxation.

Tax authorities cannot indefinitely withhold refunds once entitlement is established through judicial orders.

Sections Involved

  • Section 153(5), Income Tax Act, 1961
  • Section 244A(1), Income Tax Act, 1961
  • Section 244(1A), Income Tax Act, 1961
  • Articles 265 & 300A of the Constitution of India

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/MMH17102022CW145862022_184727.pdf

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