2025 (2) TMI 126 - HC - Income Tax

Condonation of delay in filing a revised income tax return and the entitlement to a refund with interest - Single Judge directing the appellants to consider the claim of the respondent for refund with applicable interest if any - HELD THAT - In the case in hand the refund being Rs. 24, 83, 851/- which is less than Rs. 50, 00, 000/- surely an application for refund was required to be filed within six years from the end of the assessment year for which the application/claim is made. The assessment year in the present case being 2008-09 the six years started running with effect from 01.04.2009 and expired on 31.03.2015 and in that sense the respondent could not have filed application seeking condonation of delay after 31.03.2015. The application having been filed only on 25.07.2016 which is beyond the time of limitation as prescribed by the above instruction No.13/2006 the communication dated 05.07.2018 which was the subject matter of challenge in the writ petition is justified. Surely in the facts the respondent cannot be given the benefit of his own wrong though the claim for refund even if genuine and bonafide but surely the direction for grant of applicable interest if any could not have been directed. This is for the reason the interest is payable for the delay attributed to the opposite party. In this case despite the instruction dated 22.12.2006 stipulates filing of application seeking condonation of delay the same having not been filed till 31.03.2015 but only on 25.07.2016 was rightly rejected by the appellants. So the instruction contemplates any claim for refund within six years from the end of the assessment year for which the application/claim is made necessarily has to be with an application for condonation of delay which claim/refund has arisen as a result of excess tax deducted/collected at source. Hence the order of learned Single Judge to the extent claim of the respondent was to be considered with interest is set aside. It is made clear that the appellant shall consider the claim for refund of the respondent as directed by the learned Single Judge within four weeks from today if not already implemented.

Summary

The judgment from the Karnataka High Court involves an appeal against an order by a learned Single Judge allowing a writ petition filed by an individual assessee. The core issue revolves around the condonation of delay in filing a revised income tax return and the entitlement to a refund with interest for the assessment year 2008-09.

The primary issues considered were:

• Whether the delay in filing the revised income tax return for the assessment year 2008-09 should be condoned.
• Whether the respondent is entitled to a refund of excess tax paid along with applicable interest.

For the first issue, the relevant legal framework includes Section 139(5) of the Income Tax Act, 1961, which allows for the filing of a revised return before three months prior to the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. Additionally, Section 119(2)(b) of the Act empowers the Board to authorize the condonation of delay in certain cases to avoid genuine hardship.

The Court's interpretation highlighted that the respondent's revised return was filed beyond the prescribed period, and the application for condonation of delay was also submitted after the limitation period had expired. The learned Single Judge initially allowed the condonation of delay and directed the refund with interest, considering the respondent's communications and the genuine nature of the refund claim due to a revision in the respondent's salary by the Ministry of Corporate Affairs.

In addressing the issue of interest, the Court considered the appellant-Revenue's argument that the respondent's delay in filing the revised return precluded the entitlement to interest. The Court noted that the instruction dated 22.12.2006 specified a six-year limitation for filing refund claims and that no interest would be admissible on belated refund claims. Thus, while the refund claim was genuine, the direction to grant interest was deemed unjustified.

The significant holding of the Court was the modification of the learned Single Judge's order. The direction to consider the refund claim with interest was set aside, and the respondents were instructed to process the refund claim without interest within four weeks.

The final determination concluded that the respondent's claim for a refund should be considered without interest, and the appeal was disposed of with this modification.