2019 (6) TMI 616 - HC - Income Tax

Interest payable u/s 244A - proceedings resulting in the refund which are delayed for the reasons attributable to the assessee - HELD THAT - There is no allegation or material on record to suggest that any of the proceedings hit the assessee s appeal before the Tribunal or remanded the proceedings before the CIT(A) whether in any manner delayed on accounts of the reasons attributable to the assessee. The Tribunal, was, therefore correct in allowing the interest to the assessee. We may notice that in the case of Ajanta Manufacturing Ltd Vs. Deputy CIT (Guj) 2016 (8) TMI 165 - GUJARAT HIGH COURT had occasion to consider a similar issue. The assessee had made a belated claim during assessment of filing revised return. According to the Revenue, this would entitle the assessee for claim of interest to the extent of delay. Provisions of sub-rule (2) of Section 244A of the Act were sought to be pressed in service. No question of law arises

Summary

Issues:
1. Jurisdiction of the Income Tax Appellate Tribunal to hear the appeal under Section 244A(2) of the Income Tax Act.
2. Entitlement of interest to the assessee under Section 244A of the Income Tax Act.
3. Application of sub-section (2) of Section 244A in cases of delayed proceedings attributable to the assessee.

Analysis:
1. The appeal challenged the jurisdiction of the Income Tax Appellate Tribunal (ITAT) to hear the appeal under Section 244A(2) of the Income Tax Act. The Revenue contended that since delay in proceedings leading to the refund was attributable to the assessee, the assessee should not be entitled to interest. The Tribunal, however, concluded that the delay could not be attributed to the assessee, and thus directed the payment of interest to the assessee.

2. The issue revolved around the entitlement of interest to the assessee under Section 244A of the Income Tax Act. The Tribunal found that the delay in proceedings leading to the refund was not due to any actions by the assessee. Sub-section (2) of Section 244A stipulates that if the delay in proceedings is attributable to the assessee, the period of delay would be excluded from the interest payable under sub-section (1). In this case, as there was no evidence to suggest that the delay was due to the actions of the assessee, the Tribunal rightly allowed the interest to the assessee.

3. The judgment referred to a similar case in the Gujarat High Court where it was held that raising a belated claim during assessment proceedings does not necessarily entitle the assessee to claim interest for the delay. The Court emphasized that for the delay to be attributable to the assessee, there must be a causal link between the actions of the assessee and the delay in proceedings. Mere filing of an appeal or raising a claim during assessment proceedings, which is later allowed, does not automatically imply that the delay is attributable to the assessee. The Court stressed that the delay must be directly caused by the assessee's actions for them to be disentitled to claim interest on the refund.

In conclusion, the High Court dismissed the appeal as it found no question of law arising from the Tribunal's decision to allow interest to the assessee under Section 244A of the Income Tax Act. The judgment highlighted the importance of establishing a direct causal link between the actions of the assessee and the delay in proceedings to determine entitlement to interest on refunds.