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Issues involved: Claim of interest on refund u/s.244A of the Income Tax Act, 1961.
The appellant claimed a refund on tax by filing a delayed return of income for the assessment year 1997-98. The Hon'ble High Court condoned the delay and directed the Income-tax authorities to process the refund claim. The real dispute arose regarding the interest u/s.244A, which was denied by the Department citing the return as invalid. The matter was appealed before the CIT(Appeals) and subsequently brought before the Tribunal by the assessee. The argument put forth by the appellant's counsel was that once the delay in filing the return had been condoned, the return could not be deemed invalid, and interest u/s.244A should be paid on the refund amount. On the other hand, the Department's representative contended that if the return itself was not valid, no interest was payable u/s.244A, quoting Explanation (2) to section 244A to support this stance. After considering the submissions and relevant precedents, the Tribunal noted that the quantum of refund was undisputed, with the only point of contention being the interest on the refund. Referring to the Supreme Court's decision in the case of CIT vs. Narendra Doshi, it was established that interest upon interest is to be paid. The Tribunal emphasized the importance of determining whether the interest was consequential to the refund or attributable to delays by the parties. The Hon'ble High Court's decision to condone the delay due to genuine hardship faced by the assessee was highlighted. The Tribunal set aside the lower authorities' order and remitted the issue back to the Assessing Officer to decide in accordance with Explanation (2) to section 244A(b) and relevant Supreme Court decisions, affording the assessee an opportunity to be heard. The assessee was also granted the liberty to seek a decision from the Chief Commissioner or Commissioner for the calculation of interest related to the refund. In conclusion, the Tribunal treated the appeal of the assessee as allowed for statistical purposes.
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