Facts of the Case

The petitioner filed his return of income for Assessment Year 2016–17 declaring total income of ₹33,64,160. The assessment was completed under Section 143(3) and tax demand of ₹36,85,243 was raised and duly paid by the petitioner.

The petitioner preferred an appeal before the Commissioner of Income Tax (Appeals), who partly allowed the appeal and directed verification and allowance of indexed cost of acquisition and cost of improvement in respect of a property partly purchased and partly inherited by the petitioner.

Both the Revenue and the assessee approached the Income Tax Appellate Tribunal. By order dated 20 January 2023, the ITAT directed the Assessing Officer to allow indexation of cost of acquisition and improvement in accordance with settled judicial precedents, including Manjula J. Shah and Arun Shungloo Trust.

Despite clear directions, the Assessing Officer failed to give effect to the ITAT order within the statutory period prescribed under Section 153(3). Repeated reminders sent by the petitioner elicited no response, compelling the petitioner to approach the Delhi High Court by way of the present writ petition.

Issues Involved

Whether the Income Tax Department can delay implementation of an ITAT order without justification, whether the petitioner is entitled to refund along with statutory interest for such delay, and whether directions ought to be issued to ensure timely compliance with appellate orders.

Petitioner’s Arguments

The petitioner contended that the ITAT order dated 20 January 2023 had attained finality and was binding on the Assessing Officer. It was submitted that the Department’s inaction for over two years was arbitrary and violative of statutory provisions.

The petitioner further argued that once excess tax had been retained by the Department due to delay in giving effect to the ITAT order, the petitioner became entitled to refund along with statutory interest under Section 244A. It was also submitted that departmental action was initiated only after the writ petition was filed.

Respondent’s Arguments

The counsel for the Revenue, appearing on advance notice, submitted that he had no instructions in the matter and was unaware of the order dated 14 October 2025 passed by the Assessing Officer during pendency of the writ petition, whereby revised computation was undertaken.

Court Order / Findings

The Delhi High Court expressed serious concern over the inaction of the Income Tax Department in not giving effect to the ITAT order for a prolonged period. The Court noted that the Department became active only after the writ petition was filed and passed an order on 14 October 2025 revising the assessment and computing the refund.

The Court held that the petitioner was clearly entitled to refund of ₹36,85,243 along with statutory interest for the delayed period. The Court observed that the failure of the Department to act with alacrity, despite repeated reminders, could not deprive the petitioner of interest mandated under law.

Important Clarification

The Court clarified that once an appellate order is passed by the ITAT, the Assessing Officer is duty-bound to give effect to the same within the statutory timeline. Any unjustified delay entitles the assessee to refund along with statutory interest, and administrative inefficiency cannot override statutory rights.

Final Outcome

The writ petition was allowed. The Delhi High Court directed the Income Tax Department to credit the refund amount of ₹36,85,243 along with statutory interest under Section 244A to the petitioner within one week. The Court further directed that if the amount was not credited within the stipulated time, the concerned departmental official would be required to remain personally present before the Court.

Link to download order- https://www.mytaxexpert.co.in/uploads/1769506743_SANTOSHKUMARSURIVsDEPUTYCOMMISSIONEROFINCOMETAX.pdf

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