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TMI Blog2019 (8) TMI 1338X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to release the refund due to the petitioner for the Assessment Years 2004-05; (c) any other and further relief deemed just and proper be granted in the interest of justice; (d) to provide for the cost of this petition." 2.1 The writ applicant seeks to challenge the inaction on the part of the respondent in not releasing the refund for the Assessment Year 2004-05 legitimately issued to the writ applicant under the provisions of the Income Tax Act, 1961 (for short "the Act, 1961"). The writ applicant is engaged in the business of trading in textiles. The writ applicant filed his return of income for the Assessment Year 2004-05 (i.e. the year under consideration) on 01.11.2004 declaring total income at Rs.NIL. The said return of income was initially processed under Section 143(1) of the Act. Later, the case of the writ applicant for the year under consideration was selected for scrutiny assessment. Eventually, the assessment was framed under Section 143(3) of the Act vide order dated 30.12.2011 determining the total income of the writ applicant at Rs. 9,58,11,340/- as against the returned income of Rs.NIL. 2.2 It appears from the materials on record that four additions i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on 31/01/2019 and duly forwarded to the CPC Bangalore so that the resultant effect would entail the assessee to receive refund of Rs. 77,76,561/-. But unfortunately, due to some technical problem beyond the control of the undersigned, the uploaded appeal effect had not been processed which resulted into non issuance of refund to the assessee. A request with incident ID 717939 was registered with ITBA helpdesk on 04/05/2019 vide which it was brought to the notice of the ITBA help desk that the refund has not been issued to the assessee. In response, it was replied by the ITBA Helpdesk that "It is seen from CPC portal for the PAN and AY, return has been processed and determining refund. Refund for the same is being issued. Request taxpayer / AO to wait for the same." Subsequently, the incident ID 717939 was auto closed by ITBA Helpdesk. On 23/05/2019, a fresh request was raised on ITBA helpdesk with incident ID 746064 recalling the previous instances and it was again requested to issue refund in favour of the petitioner. In response, it was replied by the ITBA Helpdesk that "As seen in CPC portal for given AY refund of Rs. 7776561/- determined and same has been in under process. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of excess tax collected. Though the Department had filed appeal against the order of Commissioner [Appeals], there was no stay granted by the Tribunal. Thereafter, the Tribunal also dismissed the Department's appeal on 30th June 2011. Again, the Department filed appeal before the High Court. Such appeal is pending without any stay. 10. It is well settled legal proposition that an order passed by the judicial or quasi judicial authority should be implemented within a reasonable period; if no specific time frame is provided in such order. The aggrieved person may reasonably pursue the appeal options but not wait indefinitely to implement the adverse order. Mere pendency of the appeal would not prevent implementation of the order under challenge. Unless the order is stayed, the same must be given effect to within a reasonable period. 11. The Department therefore cannot take shelter of pendency of the appeal before the Tribunal and thereafter before the High Court, since in both cases, the appellate for a had not granted any stay against the order of the Appellate Commissioner. In the present case, even after the Tribunal dismissed the Department's appeal on 30th June 2011, no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are subdivided into three parts contained in clauses (a), (aa) and (b). Clause (a) of subsection [1] of Section 244A covers situations where the refund is out of any tax collected at source under section 206C or paid by way of advance tax or treated as paid under section 199 of the Act. Clause (aa) refers to refund which arises out of any tax paid under section 140A of the Act which pertains to self-assessment and clause (b) pertains to claim of refund in any other case. For all the three situations, the period during which such interest would be computed and the rate of interest to be paid are specified. 14. Subsection [1A] was inserted in Section 244A of the Act by the Finance Act, 2016 w.e.f 1st June 2016 and reads as under: "[1A] Where the whole or any part of the refund referred to in subsection (1) is due to the assessee, as a result of any amount having been paid by him after the 31st day of March 1975, in pursuance to any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty, as the case may be, under this Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 [3] were brought into effect from 1st June 2016, the Legislation did not envisage any interest on refund in addition to the interest prescribed under subsection [1] of Section 244A. Likewise, Section 153 of the Act did not contain any provision prescribing time limit for giving effect to the appellate or revisional orders. With the amendment, subsection [1A] of Section 244A now provides that in case where a refund arises as a result of giving effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264; wholly or partly, otherwise than by making a fresh assessment or reassessment, the assessee would be entitled to receive, in addition to the interest payable under subsection (1), an additional interest on such amount of refund calculated at the rate of three per cent per annum for the period beginning from the date following the date of expiry of the time allowed under subsection (5) of Section 153 of the Act to the date on which the refund is granted. Provisions of subsection [1A] can be summarized, thus - [i] this subsection would be applicable : (a) where the refund arises as a result of giving effect to an appellate or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sional order is passed. Such time limit could be extended by additional period of six months by the Principal Commissioner or Commissioner, if he is satisfied that it was not possible for the Assessing Officer to give effect to such order within time prescribed, for reasons beyond his control. Cases where appellate or revisional order requires verification of any issue by way of submission or documents, or where opportunity of being heard is to be given to the assessee, would be governed separately. The time limit prescribed therein would be same as in subsection (3) of Section 153. 21. In absence of the provisions contained in subsection (5) of Section 153, the Assessing Officer was under no obligation to pass order giving effect to the appellate or revisional orders within a particular time. Subsection (5) now lays down such time limit. Likewise, in absence of provisions contained in subsection (1A) of Section 244A, there was no further adverse effect on the revenue for not passing consequential orders giving effect to appellate or revisional order which may be in favour of the assessee; except for paying interest as prescribed under subsection (1) of Section 244A. These provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose for which the amendment was being made by the legislature. 24. We have noticed that prior to the relevant amendments made in the Act and introduced w.e.f 1st June 2016, there was neither a limit prescription for passing orders giving effect to appellate or revisional orders in which relief - partially or fully may have been given to the assessee nor was there any adverse impact on the revenue if such action was delayed; except for paying statutory interest under sub-sec. [1] of Section 244A of the Act. Subsection [5] of Section 153 introduced time limits for passing such orders. Such time limits were also prescribed in graded manner. Ordinarily, the Assessing Officer would have three months to pass orders giving effect to appellate or revisional orders. If the Commissioner was satisfied that it was not possible for the Assessing Officer to do so within such time, he could extend the time by further six months but no more. In cases where the order required verification of any issue by way of submission of document by the assessee or any other person, or where an opportunity of being heard is to be provided to an assessee, the time limit from the outset would be lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y not have passed the order within the time provided ion such amendments. Even in such a case, if the amended provision of subsection [1A] of Section 244 of the Act is not applied for the period past 1st June 2016, the same would give rise to two class of cases - [I] where the appellate or revisional order is passed after 1st June 2016 and the other where such order is passed before such date. In the former, all the provisions of subsection [1A] of Section 244A as well as subsection (5) of Section 153 of the Act would apply. In the latter, if harmonious construction approach is not adopted, the Assessing Officer could contend that he is under no obligation to pass order giving effect to the appellate or revisional order, nor would the revenue be liable to pay additional interest even after the time available to the Assessing Officer for passing such order has expired. The legislature could not be expected to have brought about such a situation. Any such interpretation would also restrict the prospective effect of these provisions. In such circumstances, the harmonious construction of the statutory provisions would require that if any order giving effect to the appellate or the revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest for decades should be compensated for great prejudice caused to it due to delay in its payment after the lapse of statutory period. It was in this background, the Court directed the Revenue to pay compensation which cannot be seen as a direction for payment of interest on interest. The Supreme Court held and observed as under : "6. In our considered view, the aforesaid judgment has been misquoted and misinterpreted by the assesses and also by the Revenue. They are of the view that in Sandvik case [Supra] this Court had directed the Revenue to pay interest on the statutory interest in case of delay in the payment. In other words, the interpretation placed is that the Revenue is obliged to pay an interest on interest in the event of its failure to refund the interest payable within the statutory period. 7. As we have already noted, in Sandvik case [Supra] this Court was considering the issue whether an assessee who is made to wait for refund of interest for decades be compensated for the great prejudice cause to it due to the delay in its payment after the lapse of statutory period. In the facts of that case, this Court had come to the conclusion that there was an ino ..... X X X X Extracts X X X X X X X X Extracts X X X X
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