My refund came out of an appeal effect order and was paid years late. Can the department refuse the extra interest by blaming its own portal?
No. Where the refund arises from giving effect to an appellate order, the additional interest is statutory. It can be refused only in the one situation the Act allows, namely delay attributable to the assessee. A broken departmental portal, an amalgamation the department was told about, and the pandemic are not delays attributable to the assessee.
Decided by the High Court (Yashwant Varma J and Purushaindra Kumar Kaurav J) on 2024-02-27, reported as W.P.(C) 15296/2022 (Delhi)(HC); law-report citation not printed on the fetched source. It bears on section 244A, section 245, section 250, section 154, section 143(3), section 144C of the Income Tax Act 1961, in Refunds, Interest & Condonation matters.
Refusals of the extra interest under s.244A(1A) are almost always dressed up as delay 'attributable to the assessee' under s.244A(2), and the taxpayer is told the Commissioner's decision on that is final. This judgment shows what the sub-section does and does not cover, and that equity cannot be used to fill the gap.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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The assessee filed its return for AY 2010-11 on 4 October 2010 declaring income of Rs 505,89,69,298, revised on 27 December 2011 to Rs 493,87,67,156. The case was scrutinised and an order under s.143(3) read with s.144C followed. On 23 December 2020 the Assessing Officer passed an appeal effect order granting a refund with interest under s.244A(1), and an intimation under s.245 was issued proposing to adjust the determined refund against demands for later years. The assessee objected, wrote to the Board on 6 April 2021 pointing out that about Rs 211.96 crores had been outstanding for two years, and received Rs 187,68,28,630 on 30 July 2021. A rectification order of 19 May 2022 under s.154 read with s.250 and s.143(3) determined a balance refund of Rs 21,61,76,130 with interest under s.244A(1) but no additional interest. On 18 November 2022 the department rejected the claim to additional interest, saying the delay was caused by the assessee's amalgamation, by the absence of any functionality on the departmental portal to move tax credits from the old permanent account number to the new one, and by the pandemic, and that the Principal Commissioner's approval had been obtained under s.244A(2) to refuse it.
The writ petition was allowed and the order of 18 November 2022 quashed. The Revenue was directed to grant the statutorily prescribed additional interest with due expedition. The only contingency in which the statutory interest can be denied is delay attributable to the assessee, and none of the reasons given fell within it (paras 15, 21, 27, 28 and 29).
Where the right to refund originates in an appeal effect order under s.250 and no fresh assessment or reassessment has been directed, the additional interest of three per cent per annum is payable in addition to interest under s.244A(1), running from the day after the time allowed for giving effect expires until the refund is granted (para 14). Sub-section (2) is the only exception, and so every reason offered for non-payment has to be weighed on the single question whether it is attributable to the assessee (paras 15 and 16). The amalgamation had been intimated to the Revenue on 18 April 2016, so it was not a new fact and the assessee had discharged the duty of intimation noted in CIT v. Mahagun Realtors (P) Ltd. (para 20). A lawful amalgamation cannot later be turned against the assessee to deny statutory benefits, and the failure of the departmental portal to allow transfer of tax credits was an administrative difficulty of the Revenue's own, a contingency it ought to have resolved (para 21). On the pandemic, the Court held that equity supplements the law and does not supplant it, following National Spot Exchange Ltd. v. Dunar Foods Ltd. and the line of authority collected there, and observed that it was not the Revenue's case that the pandemic was attributable to the assessee (paras 25 to 27). Finally, the Revenue had already granted interest under s.244A(1) for the same period without attributing any delay to the assessee, which left no cogent reason for refusing the additional interest (para 28). The Court set out the object of s.244A from Board Circular No. 549 dated 31 October 1989, which replaced ss.214, 243 and 244 from AY 1989-90, and relied on Union of India v. Tata Chemicals Ltd. for the proposition that interest under s.244A is a substantive statutory right and its payment a non-discretionary obligation (paras 22 and 23).
The non-functionality of the ITBA portal is an administrative difficulty on the part of the Revenue.
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Handle my notice → Ask a CA on WhatsAppNo. Where the refund arises from giving effect to an appellate order, the additional interest is statutory. It can be refused only in the one situation the Act allows, namely delay attributable to the assessee. A broken departmental portal, an amalgamation the department was told about, and the pandemic are not delays attributable to the assessee. This was decided by the High Court (Yashwant Varma J and Purushaindra Kumar Kaurav J) and bears on section 244A, section 245, section 250, section 154, section 143(3), section 144C of the Income Tax Act 1961. It is reported as W.P.(C) 15296/2022 (Delhi)(HC); law-report citation not printed on the fetched source. Refusals of the extra interest under s.244A(1A) are almost always dressed up as delay 'attributable to the assessee' under s.244A(2), and the taxpayer is told the Commissioner's decision on that is final. This judgment shows what the sub-section does and does not cover, and that equity cannot be used to fill the gap. If it applies to you, the first step is this: Establish first that the refund arose from an appeal effect order and that no fresh assessment or reassessment was directed; that is what brings the additional interest into play.
The assessee filed its return for AY 2010-11 on 4 October 2010 declaring income of Rs 505,89,69,298, revised on 27 December 2011 to Rs 493,87,67,156. The case was scrutinised and an order under s.143(3) read with s.144C followed. On 23 December 2020 the Assessing Officer passed an appeal effect order granting a refund with interest under s.244A(1), and an intimation under s.245 was issued proposing to adjust the determined refund against demands for later years. The assessee objected, wrote to the Board on 6 April 2021 pointing out that about Rs 211.96 crores had been outstanding for two years, and received Rs 187,68,28,630 on 30 July 2021. A rectification order of 19 May 2022 under s.154 read with s.250 and s.143(3) determined a balance refund of Rs 21,61,76,130 with interest under s.244A(1) but no additional interest. On 18 November 2022 the department rejected the claim to additional interest, saying the delay was caused by the assessee's amalgamation, by the absence of any functionality on the departmental portal to move tax credits from the old permanent account number to the new one, and by the pandemic, and that the Principal Commissioner's approval had been obtained under s.244A(2) to refuse it. The matter was decided on 2024-02-27 by the High Court (Yashwant Varma J and Purushaindra Kumar Kaurav J). On those facts the High Court held as follows. The writ petition was allowed and the order of 18 November 2022 quashed. The Revenue was directed to grant the statutorily prescribed additional interest with due expedition. The only contingency in which the statutory interest can be denied is delay attributable to the assessee, and none of the reasons given fell within it (paras 15, 21, 27, 28 and 29).
Where the right to refund originates in an appeal effect order under s.250 and no fresh assessment or reassessment has been directed, the additional interest of three per cent per annum is payable in addition to interest under s.244A(1), running from the day after the time allowed for giving effect expires until the refund is granted (para 14). Sub-section (2) is the only exception, and so every reason offered for non-payment has to be weighed on the single question whether it is attributable to the assessee (paras 15 and 16). The amalgamation had been intimated to the Revenue on 18 April 2016, so it was not a new fact and the assessee had discharged the duty of intimation noted in CIT v. Mahagun Realtors (P) Ltd. (para 20). A lawful amalgamation cannot later be turned against the assessee to deny statutory benefits, and the failure of the departmental portal to allow transfer of tax credits was an administrative difficulty of the Revenue's own, a contingency it ought to have resolved (para 21). On the pandemic, the Court held that equity supplements the law and does not supplant it, following National Spot Exchange Ltd. v. Dunar Foods Ltd. and the line of authority collected there, and observed that it was not the Revenue's case that the pandemic was attributable to the assessee (paras 25 to 27). Finally, the Revenue had already granted interest under s.244A(1) for the same period without attributing any delay to the assessee, which left no cogent reason for refusing the additional interest (para 28). The Court set out the object of s.244A from Board Circular No. 549 dated 31 October 1989, which replaced ss.214, 243 and 244 from AY 1989-90, and relied on Union of India v. Tata Chemicals Ltd. for the proposition that interest under s.244A is a substantive statutory right and its payment a non-discretionary obligation (paras 22 and 23). In the words reproduced by the source cited on this page: "The non-functionality of the ITBA portal is an administrative difficulty on the part of the Revenue." The decision followed or applied Union of India v. Tata Chemicals Ltd. (2014) 6 SCC 335 — applied; CIT v. Mahagun Realtors (P) Ltd., 2022 SCC OnLine SC 407 — referred to on the duty to intimate amalgamation; National Spot Exchange Ltd. v. Dunar Foods Ltd. (2022) 11 SCC 761 — applied on law prevailing over equity; M/s. Clix Finance India Pvt. Ltd. v. DCIT, W.P.(C) 2315/2019 (Delhi), order dated 22 May 2019 — relied on by the assessee.
It was decided by the High Court on 2024-02-27 and is reported as W.P.(C) 15296/2022 (Delhi)(HC); law-report citation not printed on the fetched source. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 244A, section 245, section 250, section 154, section 143(3), section 144C, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The writ petition was allowed and the order of 18 November 2022 quashed. The Revenue was directed to grant the statutorily prescribed additional interest with due expedition. The only contingency in which the statutory interest can be denied is delay attributable to the assessee, and none of the reasons given fell within it (paras 15, 21, 27, 28 and 29). It arises in Refunds, Interest & Condonation matters, on section 244A, section 245, section 250, section 154, section 143(3), section 144C of the Income Tax Act 1961, and was decided by Yashwant Varma J and Purushaindra Kumar Kaurav J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Ask for the order refusing the additional interest and identify precisely what is said to be the delay attributable to you. Administrative or systems difficulties on the department's side are not. If the department has already paid interest under s.244A(1) for the same period without attributing any delay to you, point that out; the Court treated it as fatal to the refusal of the additional interest. Meet any appeal to 'the circumstances' or 'equity' head on: equity supplements the law, it does not displace a statutory entitlement.
Still good law. No decision overruling or doubting it was located, and no record of any Supreme Court outcome on it was found on the sources used. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The additional interest in issue is that provided by sub-section (1A) of s.244A, inserted with effect from 1 June 2016. Entries drawing on this judgment should not treat it as authority on interest under s.244A(1) generally. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petition was allowed and the order of 18 November 2022 quashed. The Revenue was directed to grant the statutorily prescribed additional interest with due expedition. The only contingency in which the statutory interest can be denied is delay attributable to the assessee, and none of the reasons given fell within it (paras 15, 21, 27, 28 and 29).
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
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