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Issues:
1. Refusal to award interest under s. 244(1A) - appealable or not. 2. Applicability of s. 244(1A) to the case - whether s.104 proceeding is an order of assessment. Analysis: 1. Refusal to award interest under s. 244(1A) - Appealable or not: The Department claimed that the refusal to award interest under s. 244(1A) was not appealable. However, the Tribunal disagreed, stating that s. 244(1A) is not a section under which orders can be passed but a provision declaring the rights of the assessee. The Tribunal clarified that interest is part of the refund order under s. 237, which is appealable. The Tribunal emphasized that all refunds, whether under s. 237 or as a result of an appeal, are considered orders under s. 237, making them appealable. Therefore, the Tribunal held that the appeal against the refusal to award interest was competent and appealable. 2. Applicability of s. 244(1A) to the case - Whether s.104 proceeding is an order of assessment: The Department argued that s. 244(1A) did not apply as the order under s. 104, which led to the payment, was neither an assessment nor a penalty order. However, the Tribunal disagreed, stating that s. 104 proceedings should be considered an order of assessment for the purpose of s. 244(1A). The Tribunal highlighted that the amount paid under s. 104 was Income Tax, making the order compelling payment an assessment order. The Tribunal reasoned that the Parliament would not exclude amounts paid under s. 104 from the benefit of interest upon refund. Citing a Supreme Court ruling, the Tribunal concluded that the order under s. 104 should be treated as an assessment order for the purposes of s. 244(1A). Consequently, the Tribunal allowed the appeal and directed the ITO to provide interest as per s. 244(1A) of the IT Act, 1961.
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