1986 (9) TMI 122 - AT - Income Tax

Summary

Issues:
- Appeal against rejection of interest under section 243 of the Income-tax Act in relation to belated payment of refund for three assessment years.
- Maintainability of appeal against orders refusing to pay interest.
- Interpretation of sections 243 and 246(1)(f) of the Income-tax Act.

Analysis:
1. The three second appeals were filed against the common order passed by the Commissioner (Appeals) rejecting the assessee's request for interest under section 243 of the Income-tax Act for belated payment of refund for three assessment years. The ITO had initially not granted credit for tax deducted at source, leading to the refund requests by the assessee.

2. The ITO later accepted the mistake of not giving credit for TDS and ordered refunds to be issued but rejected the claim for interest under section 243 without providing any reason for the denial. The Commissioner (Appeals) dismissed the appeals as not maintainable, stating that there could be no appeal against orders refusing to pay interest.

3. The issue of whether the assessee rightly acted under section 154 for claiming interest under section 243 was raised. The Appellate Tribunal held that the assessee was entitled to seek rectification for refund and related interest under section 154, as provided under section 246(1)(f) of the Act.

4. The Tribunal disagreed with the Commissioner (Appeals) and the ITO, emphasizing that the Legislature did not intend for rectification requests to deprive taxpayers of the right to appeal. The ITO's failure to analyze the request for interest on refund and the Commissioner (Appeals) equating it with other provisions were deemed incorrect.

5. Consequently, the Tribunal reversed the Commissioner (Appeals) order and directed the ITO to compute and allow necessary interest under section 243 to the appellant. The Tribunal also allowed the assessee's appeals partially and dismissed certain grounds as per the permission granted.

6. In conclusion, the Tribunal clarified the applicability of sections 243 and 246(1)(f) in granting interest on belated refunds and upheld the assessee's right to appeal against the refusal of interest under section 243.