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Issues Involved:
Petition for quashing orders declining interest payment u/s 244A(2) of Income-tax Act, 1961 for assessment year 1996-97. Judgment Summary: The petitioner filed a petition seeking to quash orders by the Income-tax Officer and Commissioner of Income-tax declining interest payment u/s 244A(2) of the Income-tax Act, 1961 for the assessment year 1996-97. The petitioner sought a writ of mandamus directing the respondents to pay interest on the tax amount paid. The dispute arose when the authorities declined to award interest on the tax amount refunded to the petitioner. The petitioner contended that interest should be paid from the date of application for exemption. The respondents argued that the delay in approaching the Department for rectification was attributable to the assessee. The court initially declined the petitioner's prayer for interest from a specific date and issued notices on a limited question regarding interest payment. The court analyzed the provisions of section 244A(1) and (2) governing interest on refunds and concluded that the right to receive interest does not depend on the submission of an application by the assessee. The court held that the mere expeditious decision on the application cannot be a ground for denying interest. Consequently, the court allowed the writ petition, declaring the orders illegal, and directed the respondents to pay interest to the petitioner in accordance with section 244A(1)(b) for the specified period. The judgment highlighted the importance of section 244A(1) and (2) of the Income-tax Act, emphasizing that the assessee is entitled to interest on the refund amount as compensation for the deprivation of property rights due to unlawful tax collection. The court clarified that if the delay in refund proceedings is attributable to the assessee, the period of delay should be excluded from the interest calculation. However, the court rejected the argument that interest payment depends on the submission of an application by the assessee, stating that interest follows as a natural corollary to the right to receive a refund. The court directed the authorities to pay interest to the petitioner as per the provisions of section 244A(1)(b) for the specified period, emphasizing that the expeditious decision on the application cannot be a reason to deny interest payment.
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