Facts of the Case

  • A batch of writ petitions filed by the petitioner bank had earlier been disposed of with directions to the Income Tax Department to credit refund amounts along with applicable interest within two weeks.
  • The respondents partially complied with the order for certain assessment years (2011–12 and 2014–15).
  • Subsequently, the respondents filed applications seeking three weeks’ additional time citing disruption caused by COVID-19, as several staff members tested positive and were in isolation.
  • The petitioner pointed out incorrect computation of interest for Assessment Year 2011–12 

Issues Involved

  1. Whether the respondent authorities should be granted additional time to comply with refund directions.
  2. Whether interest on refund was correctly computed as per statutory provisions.
  3. Whether COVID-19 related disruptions justify delay in compliance of judicial orders.

Petitioner’s Arguments

  • The petitioner accepted notice but contended that:
    • The interest amount had not been properly calculated, particularly for AY 2011–12.
    • The petitioner sought liberty to challenge incorrect computation 

Respondent’s Arguments

  • The respondents submitted that:
    • They had partially complied with earlier court orders.
    • Due to COVID-19 infections and mandatory isolation, administrative functioning was disrupted.
    • Hence, they requested three weeks’ additional time for compliance.

Court’s Findings / Order

  • The Court allowed the applications and granted three weeks’ additional time to the respondents.
  • It directed that:
    • Refunds must be paid in letter and spirit of the earlier order.
    • Interest must be paid up to the actual date of payment.
    • A proper computation of interest must accompany the payment.
  • The petitioner was granted liberty to file an appropriate application regarding incorrect interest computation.

Important Clarifications

  • The Court emphasized that statutory interest cannot be curtailed due to delay, even if caused by administrative or pandemic-related issues.
  • It reinforced that interest liability continues till actual payment, ensuring taxpayer protection 

 Provisions Involved

  • Income Tax Act, 1961
    • Section 244A – Interest on Refunds
  • Article 226 of the Constitution of India – Writ Jurisdiction

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2020:DHC:2788-DB/MMH17092020CW18882020_163913.pdf

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