2023 (2) TMI 1123 - HC - Income Tax

Non grant of Refund along with interest u/s. 244A - Refund as approved which sent to CPC, Bangalore which had shown as accounting closed by the CPC - HELD THAT - Refund after marathon litigation had been culminated in favour of the petitioner. It had also been given with interest. The reasons which are not in the hands of the Assessing Officer could not be actually verified in favour of the petitioner because all that was needed to be at the end of the Assessing Officer had been done. It is reiteratively written in the affidavit-in-reply that once the refund is finalized and interest under Section 244A of the Income Tax Act is given, the same had been sent to the Range Head for refund approval and it was also approved. It had been sent to CPC, Bangalore which had shown as accounting closed by the CPC and therefore, no action could be initiated or pursued as the same would be visible to the Assessing Officer. According to us, this is nothing but pure harassment to the assessee, the assessing officer himself has shown difficulties and this helplessness in helping the assessee who has otherwise done what all it needed to do at his ends. This appears to be a classic case where, there is a technical glitch which no officer could have helped. The CPGRMS was approached by the petitioner and thereafter, it had on number of occasions attempted to approach the respondent No.2 - the Principal commissioner of Income Tax for its redressal . However, in wake of the technical glitch in the system, the payment of refund was not possible. Approval was already granted and sent to CPC, Bangalore for issuance of the refund. It had declared the accounting closed as per the version of the respondent in affidavit-in-reply, no action was permissible as nothing would be visible to the AO. We need also to take note of Section 119A of the I.T. Act where, it is an obligation of the Board to adopt and declare a Taxpayer s Charter and issue such instructions, directions and guidelines to the Income Tax authorities as upon administratively necessary. The Centralized Public Grievance Redress and Monitoring System (CPGRMS) also approached the number of occasions by the petitioner as the application had been filed and there are merely 5 communications without any success. The legislature and executives have taken due care of the grievances of the commoners or the assessees to be redressed at the earliest without putting them any jeopardize. However, if there is any technical glitch which does not resulted the grant of refund which is otherwise the entitlement of the petitioner from the year 2018. This petition deserves to be allowed directing the respondent to release the refund of amount of Rs.17,15,34,707/- with statutory interest within two weeks from the date of receipt of this order .

Summary

Issues Involved:

1. Non-issuance of Income Tax refund despite favorable appellate order.
2. Errors in computation of interest on the refund.
3. Technical glitches preventing the issuance of the refund.
4. Legal obligation of the Income Tax Department to issue refunds.
5. Request for additional compensation due to delay.

Detailed Analysis:

1. Non-issuance of Income Tax refund despite favorable appellate order:

The petitioner, a limited company engaged in manufacturing and selling detergents, filed its income return for AY 1998-99. Following a series of appeals, including a favorable order from the High Court on 11.10.2017, the revised total income was determined, resulting in a refund due to the petitioner. Despite the order giving effect to this determination being passed on 4.4.2018, no refund was issued.

2. Errors in computation of interest on the refund:

The petitioner pointed out errors in the computation of interest due on the refund in a communication dated 24.1.2020. However, no response was received from the respondents, and the refund was still not issued.

3. Technical glitches preventing the issuance of the refund:

The respondent, Deputy Commissioner of Income Tax, stated that the refund of Rs. 17,15,34,707/- was approved and sent to the CPC, Bangalore, which showed the status as "Accounting Closed." This technical glitch prevented further action. Despite multiple efforts and reminders, the refund was not processed due to limitations in the system.

4. Legal obligation of the Income Tax Department to issue refunds:

The court noted that the petitioner faced harassment due to the delay, despite the Assessing Officer completing all necessary steps. The court referenced Section 119A of the Income Tax Act, which mandates the Board to adopt a Taxpayer's Charter to ensure timely redressal of grievances. The court emphasized that technical difficulties should not override the legal obligation to issue refunds.

5. Request for additional compensation due to delay:

The petitioner sought additional compensation citing the Gujarat High Court's decision in Gujarat Flourochemicals Ltd. The court, however, decided not to grant additional compensation beyond the statutory interest, but awarded a token cost of Rs. 10,000/- for the inconvenience caused by the delay and the need to approach the court.

Conclusion:

The court directed the respondents to release the refund amount of Rs. 17,15,34,707/- with statutory interest within two weeks from the date of receipt of the order. The court highlighted the need for the Income Tax Department to address technical issues promptly to prevent similar cases from arising. The judgment underscores the department's obligation to issue refunds without unnecessary delay and the importance of addressing taxpayer grievances efficiently.