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IMPOSES INTEREST ON INCOME TAX OFFICER FOR DELAYED REFUNDS

23/05/2025

IMPOSES INTEREST ON INCOME TAX OFFICER FOR DELAYED REFUNDS

The Petitioners' grievance is that the time limit for giving effect to the Tribunal’s order dated 31st July 2006 has long expired. Still, by not issuing the order giving effect, refunds of Rs.6,03,482/- and Rs.5,98,274/- are being denied to the Petitioner. The learned counsel for the Petitioners points out that such refunds were due because of taxes paid under the assessment orders. He submits that such inaction and delay violate Articles 300A and 265 of the Constitutions of India. He submits that such delay is also arbitrary by Article 14 of the Constitution of India.

The record shows, and it is not even disputed, that the ITAT order dated 31 July 2006 was communicated to the department concerned. The complaint in these petitions is that though almost 16 years have elapsed, the concerned AO has not made any assessment orders according to the remand by the ITAT. The learned counsel for the Petitioner submits that the Petitioners have been deprived of their refund for almost 17 years, and such retentions of the amount by the department is arbitrary and violates constitutional provisions.

The Respondents have filed affidavits before us. Apart from trying to blame the Petitioner for not pursuing the matter diligently, there is an acknowledgment that case papers are not traceable since more than 10 years have elapsed.

Held That From the records, we find that these were such search cases. Accordingly, the departmental officials were expected to be diligent, and the matter was required to be diligently pursued. The ITAT remand order needed to be complied with within a reasonable period and, in any event, within the limitation period prescribed by the law. If this is not done, then the officials responsible for not doing this will have to be held accountable. Based on some vague statements about restructuring or major upheaval, no attempt can be made to avoid fixing responsibility.

Accordingly, we direct the Principal Commissioner of Income Tax, Pune, to investigate these matters and file affidavits explaining the status of the investigation. The affidavits must be filed and served by 6 February 2025.

We direct the Respondents to pass appropriate orders on the issue of refunds by 15 April 2025. If any refunds are found due, they must be made to the Petitioners on or before 30 April 2025.

If there is a delay, the refund amounts will carry interest at 6% p.a. and must be paid to the petitioners. After such payment, the interest component must be recovered from the Officers responsible for the delay. There is no point in burdening the State Exchequer and, consequently, the taxpayer for inaction, whether deliberate or otherwise, on the part of the department officials.

Nirmalkumar Mulchand Puruswani V/S Income Tax Officer, Ward 6(3), Pune and ors.