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2019 (1) TMI 477 - HC - Income TaxInterest of refund u/s 244A - responsibilty for delay in the refund claim - Held that - As per sub-section (2) of Section 244A, if the proceedings resulting in refund are delayed for the reasons attributable to the assessee, whether wholly or in part, the period of delay so attributable shall be excluded from the period for which the interest is payable. In the present case, the assessing officer was wholly incorrect in invoking sub-section (2) of Section 244A since we do not find any reasons attributable to the assessee which delayed his refund claim. During the assessment proceedings itself, relying on the note to the return filed, the assessee had argued that certain interest income had not accrued and therefore, not chargeable to the tax. AO did not accept this stand. CIT(A), however, allowed the claim of the assessee which resulted in the refund claim of the assessee. In plain terms, the assessing officer was incorrect in holding that the assessee was responsible for delay in the refund claim. Gujrat High Court in the case of Ajanta Manufacturing Ltd Vs. Deputy CIT 2016 (8) TMI 165 - GUJARAT HIGH COURT as observed that the act of the assessee revising the return or the fact that the claim was allowed by the Commissioner in Appeal would not be a ground for holding that it was for the reasons attributable to the assessee that the refund was delayed.
Issues:
Challenge to Tribunal's judgment on interest refund under Section 244A of the Income Tax Act, 1961. Analysis: 1. The appeal was filed by the revenue challenging the Tribunal's judgment directing the assessing officer to grant interest under Section 244A from the date the refund became due. The main issue was whether the delay in refund was attributable to the assessee. 2. The assessee had argued that a portion of interest income offered to tax had not accrued and should not be taxed. The CIT(A) allowed the appeal, resulting in a refund claim. The assessing officer granted interest only from the date of the CIT(A) order, leading to the dispute. The Tribunal held that the assessing officer was incorrect in invoking sub-section 2 of Section 244A. 3. Section 244A of the Act deals with interest on refunds. Sub-section 1 recognizes interest to an entitled assessee, while sub-section 2 excludes the period of delay attributable to the assessee from the interest payable. The assessing officer erred in applying sub-section 2 without valid reasons attributable to the assessee. 4. The assessing officer's decision was flawed as there was no delay attributable to the assessee in the refund claim. The assessee's argument during assessment proceedings did not cause the delay. Legal precedents, including judgments from the Gujarat and Kerala High Courts, supported the assessee's position that delay due to a claim allowed in appeal does not make the assessee responsible for the delay. 5. In a previous case, the Bombay High Court clarified that Section 244A does not allow rejecting interest claims due to mistakes by the assessee. The Act mandates interest payment on refunds, and delays not caused by the assessee should not disentitle them from interest. The Court emphasized that the Act does not empower authorities to deny interest due to assessee's mistakes. 6. While acknowledging the Tribunal's reliance on a previous case, the High Court independently confirmed the Tribunal's view. No legal question arose, and the appeal was dismissed. The judgment upheld the assessee's entitlement to interest from the due date of the refund, rejecting the assessing officer's decision to exclude interest based on delay not attributable to the assessee.
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