Facts of the Case

The Petitioner, MUFG Bank Ltd., filed a writ petition before the Delhi High Court seeking directions against the Income Tax Department for failure to give effect to the order passed by the Income Tax Appellate Tribunal (ITAT) dated 13 September 2019.

The Petitioner contended that pursuant to the ITAT order, it was entitled to carry forward losses, including unabsorbed depreciation, amounting to ₹38,73,42,584 for Assessment Year 2000–01 to subsequent years.

Despite multiple reminders sent via emails between April 2021 and May 2022, the Assessing Officer failed to pass an order giving effect to the ITAT decision and consequently did not grant the refund due for Assessment Year 2005–06.

Issues Involved

  1. Whether the Revenue authorities are obligated to pass an order giving effect to the ITAT order within a reasonable time under Section 153(5) of the Income Tax Act, 1961.
  2. Whether failure to grant consequential refund along with statutory interest violates the legal rights of the assessee.
  3. Whether such inaction is violative of Articles 265 and 300A of the Constitution of India.

Petitioner’s Arguments

  • The Petitioner argued that it had a statutory right to carry forward losses as allowed by the ITAT order.
  • The Respondent failed to pass an order giving effect to the ITAT ruling, thereby blocking legitimate refund claims.
  • The inaction of the Revenue was contrary to Section 153(5) of the Act, which mandates implementation of appellate orders.
  • The withholding of refund was alleged to be arbitrary and unconstitutional, violating Articles 265 and 300A.

Respondent’s Arguments

  • The Revenue submitted that the Assessing Officer was in the process of giving effect to the ITAT order dated 13 September 2019.
  • It was implied that administrative processing delays were the reason for non-compliance.

Court Order / Findings

  • To pass the order giving effect to the ITAT decision dated 13 September 2019.
  • To recompute losses for AY 2000–01 and allow carry forward to subsequent years.
  • To pass the order for AY 2005–06 by setting off such losses.
  • To issue consequential refund along with interest under Section 244A(1) and additional interest under Section 244(1A).
  • The entire exercise was directed to be completed within eight weeks.

Important Clarification by the Court

  • The Court reaffirmed that implementation of appellate orders is not discretionary but mandatory.
  • Delay in granting refunds after appellate relief is legally unsustainable.
  • Tax authorities are bound to act within statutory timelines, failing which writ jurisdiction can be invoked.

Sections Involved

  • Section 153(5) – Time limit for giving effect to appellate orders
  • Section 244A(1) – Interest on refunds
  • Section 244(1A) – Additional interest on delayed refunds
  • Articles 265 & 300A – Constitutional protection against unlawful tax retention

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/58917102022ITA9052010_163357.pdf

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