2022 (8) TMI 138 - HC - Income Tax

Interest on refund as per Section 244(A) - delay in refund - belated filing of return (ITR) - whether once the delay in filing the return has been condoned, it becomes a valid return and therefore grant of interest is consequential? - Eligible reason for delay occasioned in the adjudication of the writ petition - HELD THAT - The petitioner claimed for refund by condoning the delay. The delay is condoned and held that the petitioner is entitled to refund. Now the Department is strictly implementing what has been directed by this Court 2007 (11) TMI 294 - KERALA HIGH COURT - Therefore, it is not a case of the petitioner that either inspite of a direction for payment of interest, the interest is not paid to the petitioner. Therefore, any claim for interest by referring to the judgment in this appeal is unsustainable and the claim is accordingly rejected. Then coming to the explanation of the petitioner that because of limitations under Section 64 of the Societies Act, 1969 returns could not be filed in time. At best it could be said the delay between 1997 to 2000 alone could be attributed to the petitioner and the delay between 2000 to 2008 cannot be attributed to the petitioner as the delay occasioned in the adjudication of the writ petition. The argument though appears to be persuasive and fails to notice that the delay in adjudication of the petition filed for condonation of the delay for refund cannot burden the Department for payment of interest as compensation. The refund claim is complying with the direction of this Court. According to us, the effort was to get refund, the refund was ordered by this Court and what happened in the interregnum since cannot prejudice the writ petitioner and should not also prejudice the Department by directing the payment of interest for the delay period. The claim of the petitioner for interest on the refunded amount is rightly considered and rejected by both the Commissioner in Ext.P9 and the judgment under appeal. The judgments relied on by the petitioner, after going through the circumstances and ratio laid down therein, we are of the view that the judgments are distinguishable in all fours. No other ground is canvassed.

Summary

Issues:
1. Denial of interest on refund of advance tax.
2. Interpretation of Section 244A of the Income Tax Act.
3. Claim for interest on refunded tax amount.
4. Application of legal principles regarding delay in filing returns.
5. Compliance with court directions for refund.

Analysis:

Issue 1: Denial of interest on refund of advance tax
The petitioner, a Co-operative Society, sought interest on refund of advance tax paid, which was initially rejected through Ext.P9. The petitioner's claim for interest under Section 244A of the Income Tax Act for the period 01.04.1997 to 11.02.2008 was the subject of contention. The Court had previously allowed the petitioner's refund claim and directed the Department to process the refund within a specified time frame.

Issue 2: Interpretation of Section 244A of the Income Tax Act
The application of Section 244A, particularly in the context of delays in filing returns and processing refunds, was crucial in determining the petitioner's entitlement to interest. The Court examined the provisions of the Act, including the requirements for condoning delays and the implications of court directions on refund claims and interest payments.

Issue 3: Claim for interest on refunded tax amount
The petitioner's argument centered around the erroneous denial of interest on the refunded tax amount. The contention was that once the refund was ordered by the Court, the payment of interest should automatically follow. However, the Department maintained that there was no specific direction for payment of interest on the refunded amount, leading to the rejection of the interest claim.

Issue 4: Application of legal principles regarding delay in filing returns
Legal principles related to delays in filing returns, condoning delays, and attributing delays to the petitioner or the Department were extensively discussed. The Court analyzed the timeline of events, including the delays in filing returns, the condonation of delays, and the impact of court judgments on the refund process.

Issue 5: Compliance with court directions for refund
The Court emphasized the importance of compliance with its previous directions regarding the refund process. It clarified that the Department was implementing the Court's directives, and any claim for interest beyond the specified period was deemed unsustainable. The Court upheld the rejection of the interest claim based on the petitioner's compliance with the Court's orders.

In conclusion, the appeal challenging the denial of interest on the refunded tax amount was dismissed, with the Court affirming the decisions of the Commissioner and the Single Judge. The judgment highlighted the significance of adhering to court directions, interpreting statutory provisions accurately, and distinguishing precedents based on specific circumstances.