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2025 (3) TMI 1014 - HC - Income TaxRefunds due to the inaction of the Income Tax Department in complying with the ITAT s order - Petitioners grievance is that the time limit for giving effect to the Tribunal s order dated 31st July 2006 has long expired still by not issuing the order giving effect refunds are being denied to the Petitioner. HELD THAT - Petitioners now submits that due to not passing the order giving effect within the prescribed period of limitation the Petitioners would be entitled to the above refund returns. On instructions he states that if the refunds are given by 30th April 2025 the Petitioners will not claim any interest on the refunds. Accordingly based on the statements in the affidavit filed by the Principal Commissioner of Income Tax we direct the Respondents to pass appropriate orders on the issue of refunds by 15 April 2025. If any refunds are found due they must be made to the Petitioners on or before 30 April 2025. If there is a delay the refund amounts will carry interest at 6% p.a. and must be paid to the petitioners. After such payment the interest component must be recovered from the Officers responsible for the delay. There is no point in burdening the State Exchequer and consequently the taxpayer for inaction whether deliberate or otherwise on the part of the department officials. We dispose of the petitions in the above terms by directing the Respondents to file a compliance report by 5th May 2025 with an advance copy to the learned counsel for the Petitioners. This direction is issued given the fair statement made by Petitioners that the Petitioners would not claim interest provided the amounts are refunded by 30th April 2025. In the facts of this case it will not be proper to require the Petitioners to once again approach this Court by filing a fresh petition.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Delay in Issuing Orders to Give Effect to ITAT's Order Relevant Legal Framework and Precedents: The legal framework involves the application of Articles 300A, 265, and 14 of the Constitution of India, which protect the right to property, prohibit arbitrary taxation, and ensure equality before the law, respectively. The ITAT's order required the Assessing Officer (AO) to make a de-novo decision with adequate hearing opportunities for the assessees. Court's Interpretation and Reasoning: The Court noted that despite the ITAT's order being communicated to the department, no assessment orders were made for nearly 16 years. This delay was deemed arbitrary and in violation of the constitutional provisions, as it deprived the Petitioners of their rightful refunds. Key Evidence and Findings: The affidavits submitted acknowledged the lapses, with records not being traceable and no action taken against responsible officials. The restructuring and jurisdictional changes within the department were cited but deemed insufficient to justify the delay. Application of Law to Facts: The Court applied constitutional principles to determine that the delay was unjustified and arbitrary, thus entitling the Petitioners to relief. Treatment of Competing Arguments: The Respondents attempted to attribute the delay to the Petitioners' lack of diligence and departmental restructuring. However, the Court found these arguments unconvincing and emphasized the department's duty to act within the prescribed limitation period. Conclusions: The Court concluded that the delay violated the Petitioners' constitutional rights, necessitating immediate action to rectify the situation. 2. Entitlement to Refunds Relevant Legal Framework and Precedents: The Petitioners' entitlement to refunds is based on compliance with the ITAT's order and the statutory time limits for issuing assessment orders. Court's Interpretation and Reasoning: The Court reasoned that due to the department's failure to act within the limitation period, the Petitioners were entitled to the refunds without further delay. Key Evidence and Findings: The Principal Commissioner's affidavit admitted the lapse and the expiry of the time limit for issuing orders, supporting the Petitioners' claim for refunds. Application of Law to Facts: The Court applied the statutory provisions to conclude that the Petitioners were entitled to refunds, given the department's inaction. Treatment of Competing Arguments: The Respondents did not provide any substantial counterarguments regarding the entitlement to refunds, leading the Court to favor the Petitioners. Conclusions: The Court directed the Respondents to issue the refunds by a specified date, failing which interest would accrue. 3. Remedies for Acknowledged Lapses Relevant Legal Framework and Precedents: The Court considered the implications of departmental negligence and the need for accountability within the Income Tax Department. Court's Interpretation and Reasoning: The Court criticized the routine acceptance of lapses without assigning responsibility and emphasized the need for accountability to prevent future occurrences. Key Evidence and Findings: The affidavits revealed systemic issues within the department, including record-keeping failures and jurisdictional changes. Application of Law to Facts: The Court applied principles of administrative accountability to mandate an investigation and potential recovery of interest from responsible officials. Treatment of Competing Arguments: The Respondents' arguments regarding systemic changes were insufficient to absolve them of responsibility, leading to the Court's directive for accountability. Conclusions: The Court ordered an investigation and potential recovery of interest from responsible officials, emphasizing the need for systemic reform. SIGNIFICANT HOLDINGS
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