2018 (10) TMI 741 - HC - Income Tax

Non disbursal of refund amount - delay in refund - Held that - Petitioner in all these Petitions would submit that the substantive prayers in the Petitions stand granted and the Petitioner would accept the amounts as disbursed under protest and without prejudice to their legal rights and contentions, particularly to claim interest on delayed refund. The Writ Petitions are, therefore, disposed off by keeping open the issue and controversy in relation to interest, if any, payable on such delayed refunds. We hope and trust that all pending refund applications are processed in the order in which they are received by the Respondents. If refunds are generated on account of orders of Higher Forums, Authorities and Courts, then, it is the bounden duty of the Revenue to grant such refund and disburse the amount expeditiously.

Summary

Issues:
Refund processing and disbursement under the Income Tax Act, 1961; Granting of substantive prayers in the petitions; Controversy regarding interest on delayed refunds; Duty of the Revenue to process refunds promptly; Imposition of interest by the Courts on delayed refunds; Bringing order and discipline in refund processing.

Analysis:
The High Court of Bombay addressed the issue of refund processing and disbursement under the Income Tax Act, 1961. The Respondents had processed the refund and sanctioned them as per the proceedings under the Act. The Court accepted the statements made on behalf of the Respondents regarding the disbursement, which was to be completed within four weeks. The Petitioner accepted the amounts disbursed under protest, reserving the right to claim interest on delayed refunds. The substantive prayers in the petitions were granted, and the issue of interest on delayed refunds was left open for further consideration.

Regarding the duty of the Revenue to process refunds promptly, the Court emphasized that all pending refund applications should be processed in the order received. It was highlighted that if refunds were generated due to orders from Higher Forums, Authorities, or Courts, the Revenue must grant and disburse the amount without delay. The Court indicated that in the absence of a clear policy, interest on delayed refunds could be imposed by the Courts, and the Revenue would be responsible for paying the determined rates of interest.

In an effort to bring order and discipline in refund processing, the Court directed that the copy of the order be forwarded to the Principal Commissioner-3 and the Chairperson of the Central Board of Direct Taxes. The Registry officials were instructed to ensure the necessary actions within two weeks. This decision aimed to streamline the refund process and ensure timely disbursement while addressing the issue of interest on delayed refunds effectively.