2015 (9) TMI 967 - HC - Income Tax

Interest under Section 244A - interest on the delayed refund of the TDS retained by the Revenue - delayed refund of amount due to the Petitioner - condonation of delay for refund made beyond a period of six years from the relevant Assessment Year whether could not be considered under Section 119 (2)(b) - Held that - Before the Court, in the earlier Writ Petition leading to the order dated 15th January, 2014, there was no dispute between the parties that the Petitioner was entitled to refund under the Act, nor there was any dispute with regard to the quantum of refund. The only objection which was urged before us at that time the application for refund seeking to invoke under Section 119(2)(b) of the Act was time barred as it was filed beyond the period of six years from the end of the relevant Assessment Year. This court on consideration of the facts, in the order dated 15th January, 2014 came to the conclusion that filing of the revised refund with the Respondent Revenue on 30th September, 2009 should be taken as a date/ application made under Section 119(2)(b) of the Act. It was in the above view, Court directed the Respondent Revenue to grant refund of the amount claimed by the Petitioner. The refund which was granted to the Petitioner consequent to the order of this Court dated 15th January, 2014 was under the Act and not granted dehors the Act as seems to have been misunderstood by the Commissioner of Income Tax. In the above view, we set aside the impugned order of the Commissioner of Income Tax, we restore the Petitioner s application for fresh consideration on merits of the claim for interest made by the Petitioner to the Commissioner of Income Tax. - Decided in favour of assessee statistical purposes.

Summary

Issues:
Challenge to order rejecting interest claim under Section 244A of the Income Tax Act, 1961 on delayed refund.

Analysis:
1. The petitioner, a senior citizen, challenged the rejection of her claim for interest under Section 244A of the Income Tax Act on a delayed refund. The initial dispute arose when the respondent revenue did not entertain the petitioner's application for a refund of Tax Deducted at Source (TDS) by her employer, the Reserve Bank of India, due to a delay of more than six years from the relevant Assessment Year. However, the court found that the petitioner was entitled to the refund on merits, as clarified by CBDT Circular and Supreme Court precedent.

2. The court held that the date of filing the revised return of income on 30th September, 2009 should be considered as an application for condonation of delay under Section 119(2)(b) of the Act. The CBDT circular issued on 8th May, 2009, clarified that employees of RBI opting for early retirement were entitled to certain benefits under the Act, including exemption from tax on retirement payments. The court directed the respondent to grant the undisputed refund to the petitioner.

3. Subsequently, the petitioner claimed interest on the delayed refund of TDS. The CIT(A) rejected this claim, citing that no interest was payable since the refund was granted only on the court's direction. The court found the CIT(A) misinterpreted the earlier order, clarifying that the refund was granted under the Act and not outside it. Therefore, the court set aside the CIT(A)'s order and instructed a fresh consideration of the interest claim on its merits.

4. The court directed the Commissioner of Income Tax to pass a fresh order after providing the petitioner with an opportunity to present evidence and be heard. The decision on the interest claim should be made in accordance with the law and principles of natural justice. The petitioner was also given the liberty to file any further representations before the CIT(A) if desired.

In conclusion, the court disposed of the petition with directions to reconsider the interest claim on the delayed refund, ensuring a fair and reasoned decision in compliance with legal principles.