Facts of the Case

The Petitioner, KRBL Limited, filed a writ petition seeking issuance of tax refunds along with applicable interest. The refund arose pursuant to:

  • Appeal effect order dated 05 April 2021 passed following the order of CIT(A), and
  • Order dated 09 May 2022 passed by the ITAT, whereby all additions against the Petitioner were deleted.

Despite favorable orders, the Respondents failed to:

  • Issue refund of ₹15,03,89,270/- with interest,
  • Grant additional refund of ₹17,96,10,730/- with interest, and
  • Release ₹60,00,000/- seized during search proceedings.

The Petitioner claimed entitlement to refund of approximately ₹33 crores along with statutory interest.

Issues Involved

  1. Whether the Revenue is obligated to issue refunds along with interest after appellate orders in favour of the assessee.
  2. Whether delay in passing appeal effect orders violates statutory provisions under the Income Tax Act, 1961.
  3. Whether withholding of refund despite ITAT order is contrary to Article 265 of the Constitution of India.

Petitioner’s Arguments

  • The ITAT had conclusively decided all issues in favour of the Petitioner and deleted all additions.
  • The Petitioner was legally entitled to refunds along with interest under Sections 244A and 244A(1A) of the Income Tax Act, 1961.
  • Despite submitting representations dated 20 May 2022 and 11 July 2022, no action was taken by the Revenue.
  • Non-issuance of refund violated:
    • Article 265 of the Constitution of India, and
    • Sections 237 and 240 of the Income Tax Act, 1961.

Respondent’s Arguments

  • The Revenue submitted that it was in the process of filing an appeal against the ITAT order.
  • No immediate compliance regarding refund issuance was assured.

Court’s Findings / Order

The Delhi High Court observed:

  • The Revenue had sufficient time to challenge the ITAT order.
  • As per law, an appeal effect order must be passed within three months from the date of appellate order.

The Court disposed of the writ petition with directions:

  1. To issue refund of ₹15,03,89,270/- along with applicable interest.
  2. To pass appeal effect order pursuant to ITAT order dated 09 May 2022.
  3. To issue additional refund of ₹17,96,10,730/- with interest.

Further, the Court directed that:

  • Necessary orders and refund payments must be completed within six weeks.
  • Rights and contentions of both parties were kept open.

Important Clarification

  • Filing or proposed filing of an appeal by the Revenue does not justify withholding of refunds due under law.
  • Statutory timelines for passing appeal effect orders are mandatory in nature.
  • Refunds along with interest are a legal right of the assessee once appellate relief is granted.

Sections Involved

  • Section 237 – Refunds
  • Section 240 – Refund on Appeal, etc.
  • Section 244A – Interest on Refund
  • Section 244A(1A) – Additional Interest
  • Article 265 – Constitution of India (No tax shall be levied or collected except by authority of law)

 Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/MMH01112022CW150682022_183328.pdf

 

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