Facts of the Case

  • The Petitioner, KRBL Limited, succeeded before the ITAT vide order dated 09 May 2022.
  • ITAT deleted all additions and allowed the appeal of the Petitioner.
  • Consequently, the Petitioner became entitled to refund of ₹38,35,24,882/- along with interest.
  • Despite repeated representations dated 20 May 2022 and 11 July 2022, the Respondents failed to pass the appeal effect order or release the refund

Issues Involved

  1. Whether the Revenue can delay passing of appeal effect order after ITAT decision.
  2. Whether the Petitioner is entitled to refund along with statutory interest under the Income Tax Act.
  3. Whether non-grant of refund violates Article 265 of the Constitution.

Petitioner’s Arguments

  • ITAT has already decided the matter in favour of the Petitioner; hence refund is legally due.
  • Delay in issuing refund is illegal and violates Sections 237 & 240 of the Act.
  • Petitioner is entitled to interest under Sections 244A & 244A(1A).
  • Non-payment of refund amounts to violation of Article 265 (no tax shall be collected except by authority of law).

Respondent’s Arguments

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

Court’s Findings / Order

  • The Court held that the Revenue had sufficient time to file an appeal.
  • As per law, appeal effect order must be passed within three months of appellate order.
  • The writ petition was disposed of with directions:
    • To issue refund of ₹38,35,24,882/- along with up-to-date interest.
    • To grant additional interest of ₹1,26,30,272/- after giving effect to CIT(A) order.
  • The Court directed compliance within six weeks.
  • Rights and contentions of parties were kept open.

Important Clarification

  • Filing or proposed filing of appeal by Revenue does not justify delay in granting refund.
  • Statutory timelines for passing appeal effect orders are mandatory.
  • Refund along with interest is a legal right, not discretionary.

Link to download the order -https://delhihighcourt.nic.in/app/showFileJudgment/MMH28102022CW149742022_194600.pdf

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