2019 (2) TMI 1515 - HC - Income Tax

Refund under Section 244 - whether in carrying out verification under Section 143(1) and processing the refund, the existence of Form-29B is essential or not? - HELD THAT - In the present case, though Form-29B was filed only on 07.09.2006, it is seen that an intimation under Section 143(1) was issued before that on 20.07.2003. A refund was also issued computing the tax payable under Section 115JB on 03.08.2006. Hence, it is very clear that the filing of Form-29B was not at all required for processing the return and granting the refund which had been done prior to such filing of statement in Form- 29B. Hence, the date of filing of Form-29B cannot at all be relevant for attributing delay on the part of the assessee for processing of refund. Now, the question arises as to clause (b) as we extracted from the impugned order hereinabove. Admittedly, the assessee had filed the original return on 29.10.2002, which was processed and a refund of ₹ 86,333/- issued on 15.05.2003. Subsequently, revised return was filed on 22.03.2004 claiming a refund of ₹ 1,71,76,655/-. Hence, necessarily, the refund as now ordered by the AO can only relate back to the date of filing of the revised return. The delay in claiming the enhanced refund can only be attributable to the assessee and the same was claimed by a revised return only on 22.03.2004. Hence for an amount of ₹ 1,70,90,322/-, the interest can be computed only from 22.03.2004. Answer the questions partly in favour of the assessee and partly in favour of the Revenue. We do not think that the orders of the lower authorities restricting the interest till 08.09.2006 can be upheld. We have already found that Form-29B is not at all significant for processing of the return as is seen from the facts of the case which indicate that such processing having been done far earlier to the filing of such statement.

Summary

Issues:
1. Whether the Income Tax Appellate Tribunal was justified in declining interest to the assessee for the refund under Section 244 of the Income Tax Act, 1961 invoking sub-Section (2) of Section 244A?
2. Whether the Tribunal understood the issue incorrectly and the final decision was perverse concerning fact adjudication?

Analysis:

Issue 1:
The case pertains to the assessment year 2002-03 where the original return was filed on 29.10.2002, and a revised return on 22.03.2004. The assessee claimed a refund, which was initially not accompanied by interest under Section 244. Subsequently, a rectification order was issued under Section 154, reducing the interest granted. The dispute arose due to the delay in granting the full refund, attributed by the tax authorities to the assessee's actions. The Tribunal's decision to limit interest from a specific date was challenged by the assessee, arguing that the delay was not attributable to them.

Issue 2:
The key contention revolved around the significance of filing Form-29B (MAT computation statement) along with the return. The assessee argued that the filing of this form was not crucial for processing the refund under Section 143(1) and determining MAT. The delay in filing Form-29B was cited as the reason for reducing interest by the tax authorities. However, the Court found that the processing and refund computation were done before the filing of Form-29B, indicating that the delay was not caused by the assessee. The Court also highlighted a previous case where interest was granted in full despite a late claim, emphasizing the importance of assessing each situation on its merits.

In conclusion, the Court partially favored the assessee, directing the tax authorities to grant interest from the date specified by the Court, emphasizing that the delay in claiming the enhanced refund was attributable to the assessee only from the date of the revised return. The judgment highlighted the importance of considering the specific circumstances of each case and ensuring that interest is granted appropriately in line with the provisions of the Income Tax Act, 1961.