2024 (1) TMI 613 - HC - Income Tax

Interest on refunds u/s 244A - whether the assessee was responsible for the delay? - HELD THAT - Assessee submitted its return of income in respect of the AY 2021-22 and provided information relating to an account with the Comerica Bank in the USA. The income tax return discloses that the IBAN was provided but not the SWIFT code. After the assessment order was issued, since the refund was not made, the petitioner raised grievances through the CPC. The grievance raised on 22.04.2022 is of particular relevance. The petitioner specifically called upon the respondents to enable the petitioner to update the bank account details of its foreign bank account by inputting the SWIFT code and IBAN. In response, the respondents called upon the petitioner to retry. Significantly, the respondent did not inform the petitioner that only a bank account with an Indian bank is eligible for receipt of refund. In any event, the press release dated 24.07.2017 of the CBDT enables a non-resident to provide a foreign bank account for purposes of refund. Therefore, after the petitioner requested the respondents to enable the petitioner to provide the SWIFT code and IBAN, the delay in processing the refund cannot be attributed to the petitioner. Even allowing for a reasonable time of about seven days for the respondents to respond appropriately to the request to enable the portal, the refund should have been processed. Instead, the respondents appeared to have orally informed the petitioner that bank account in an Indian bank is necessary for purposes of refund. In those circumstances, such bank account was opened in January 2023. Such account was validated in July 2023 and the refund was made in October, 2023. If the delay is not attributable to the assessee, Section 244A provides for refund at the rate of % per month or 6% per annum. The petitioner has provided a calculation memo in which credit has been given for interest already paid for the period running from 01.04.2021 to 31.03.2022. As regards the period subsequent thereto, the documents on record indicate that the petitioner endeavoured to input the SWIFT code and IBAN in April 2022. Therefore, the petitioner is entitled to interest for the period from 01.05.2022 until the date of receipt of refund. This writ petition is therefore disposed of by directing the respondents through the Central Processing Centre to pay interest on the sum of Rs. 2,27,20,180/- at the rate specified in Section 244-A from 01.05.2022 to 05.10.2023. The refund shall be made within a maximum period of two months from the date of receipt of a copy of this order.

Summary

Issues:
The petitioner sought a mandamus for the grant of refund with interest for Assessment Year 2021-22. The refund was made after the petition was filed, leading to an amendment request for interest only.

Details of the Judgment:
The petitioner, a Limited Liability Company (LLC) from the USA, sold equity shares in India and claimed a refund of Rs. 2,19,51,010/-. An intimation on 21.03.2022 stated a refund of Rs. 2,27,20,180/-. Despite raising grievances, the refund was delayed until 05.10.2023.

The petitioner argued that the delay was solely due to the respondents' actions, citing relevant legal provisions and judgments. The respondents claimed no interest is payable if the delay is due to the assessee, mentioning the need for an Indian bank account for refunds to non-residents.

The court analyzed Section 244A of the Income Tax Act which governs interest on refunds. It was noted that interest is not payable if the delay is due to the assessee. The petitioner had provided necessary details, and the delay in processing the refund was attributed to the respondents.

The judgment highlighted that the delay was not the petitioner's fault and directed the respondents to pay interest on the refund amount from 01.05.2022 to 05.10.2023 as per Section 244-A of the Income Tax Act. The refund was to be made within two months from the date of the order.

This writ petition was disposed of with the direction for interest payment and no costs were imposed.