Facts of the Case

  • The Petitioner filed a writ seeking refund of ₹35,63,56,882/- along with interest arising from appeal effect order dated 05 April 2021.
  • Further, the Petitioner sought:
    • Additional refund of ₹20,36,43,118/- with interest
    • Release of ₹60,00,000/- seized during search with interest
  • The ITAT, vide order dated 09 May 2022, decided all issues in favour of the Petitioner and deleted entire additions.
  • Despite multiple representations dated 20 May 2022 and 11 July 2022, the Respondents failed to issue refund.

Issues Involved

  1. Whether the Income Tax Department is obligated to issue refund pursuant to ITAT order within prescribed time.
  2. Whether delay in granting refund violates statutory provisions and constitutional mandate under Article 265.
  3. Whether interest on delayed refund is mandatorily payable under Section 244A.

Petitioner’s Arguments

  • ITAT order has attained finality and all additions stand deleted, making refund due.
  • Non-issuance of refund is:
    • Violative of Article 265 of the Constitution
    • Contrary to Sections 237 and 240 of the Income Tax Act
  • Petitioner is entitled to interest under Sections 244A/244A(1A).
  • Authorities failed to act despite repeated communications.

Respondent’s Arguments

  • Revenue submitted that it is in the process of filing an appeal against the ITAT order.

Court Findings / Order

  • The Court held that:
    • Revenue had sufficient time to file appeal.
    • As per law, appeal effect order must be passed within three months.
  • The Court directed the Respondents to:
    1. Issue refund of ₹35,63,56,882/- with interest
    2. Pass appeal effect order pursuant to ITAT order dated 09 May 2022
    3. Issue additional refund of ₹20,36,43,118/- with interest
  • Time Limit: Within 6 weeks for compliance.
  • Rights and contentions of parties were kept open.

Important Clarification

  • Filing or proposed filing of appeal does not justify withholding statutory refunds.
  • Refunds must be issued within prescribed timelines irrespective of pending appeal unless stayed.
  • Interest under Section 244A is a statutory right and not discretionary.

Sections Involved

  • Section 237 – Refunds
  • Section 240 – Refund on Appeal
  • Section 244A & 244A(1A) – Interest on Refund
  • Article 265 – Constitution of India

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/MMH01112022CW150672022_183249.pdf

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