2023 (12) TMI 506 - HC - Income Tax

Refund due adjustment against the demand raised - recourse to a statutory remedy for payment of interest and the balance refund claimed - HELD THAT - As revenue, has returned with instructions, which indicate that the respondents/revenue have computed the amount refundable to the petitioner/assessee. As pointed out by Respondents that Rs. 44.60 lakhs has been computed as the amount which is refundable to the petitioner/assessee. Petitioner/assessee says that the amount claimed by way of refund is Rs.46 lakhs, as indicated in the prayers made in the writ petition. Petitioner also says that the petitioner/assessee should also be granted interest. To be noted, in the application interest at the rate of 18% per annum has been claimed, which is way beyond the statutory rate of interest. As a matter of fact, at the time when the writ petition was filed, interest at the applicable rate was claimed. As would be evident upon perusal of the extract of the order date 27.09.2023, in the instant writ action, counsel for the petitioner had clearly indicated that he would not be claiming interest if the amount is paid forthwith. Writ petition is disposed of with the following directions- (i) The respondents/revenue will remit to the petitioner/assessee the amount of refund already crystallized i.e., Rs.44.60 lakhs within the next two (2) weeks. (ii) The petitioner will be at liberty to take recourse to a statutory remedy for payment of interest and the balance refund claimed by him. The order passed today or those passed on previous dates will not come in the way if such a remedy is taken recourse to. (iii) The concerned authority will decide the matter concerning interest and the balance principal amount by the petitioned/assessee in accordance with the law.

Summary

Issues:
The issues involved in this case relate to the petitioner seeking a writ of mandamus for the refund of a substantial amount for Assessment Years 2010-11 and 2014-15, which was adjusted against a demand raised for Assessment Year 2015-16 without prior notice under the Income Tax Act, 1961.

Judgment Details:

Issue 1: Refund Adjustment without Notice
The petitioner's grievance was that the refund due for Assessment Years 2010-11 and 2014-15, totaling approximately Rs. 46 lakhs, was adjusted against a demand for Assessment Year 2015-16 without issuing notice under the Income Tax Act, 1961. The petitioner had deposited 20% of the demand for 2015-16 and filed an appeal, but no formal application for stay was made. The court allowed the petitioner to file a formal application before the Assessing Officer (AO) and directed the AO to rule on the application within ten days.

Issue 2: Clarification of Order
The petitioner sought clarification of the order directing the AO to decide on the application for stay. The court reiterated the petitioner's claim for a refund of Rs. 46,42,955 for Assessment Years 2010-11 and 2014-15, adjusted against the demand for 2015-16. The petitioner requested the refund of the remaining amount, including the balance of the demand for 2015-16, without claiming interest if paid promptly.

Issue 3: Dispute Over Refund Amount
The respondents/revenue computed the refundable amount to be Rs. 44.60 lakhs, while the petitioner claimed Rs. 46 lakhs as per the writ petition prayers. The petitioner also requested interest, although the statutory rate was not specified in the initial claim. The respondents contested paying interest since the refund had been adjusted, leading to a dispute over the facts and the amount claimed as a refund.

Judgment Outcome:
The court disposed of the writ petition with directions for the respondents/revenue to remit the crystallized refund amount of Rs. 44.60 lakhs to the petitioner within two weeks. The petitioner was granted liberty to pursue statutory remedies for interest and the remaining refund, with previous orders not hindering such actions. The concerned authority was tasked with deciding on interest and the balance principal amount claimed by the petitioner in accordance with the law, leading to the closure of pending applications and cancellation of the fixed date for the matter.