2020 (11) TMI 230 - HC - Income Tax

Court Orders Refund with Interest; Criticizes Tax Department Delay

The Court directed the respondents to pass the Appeal Effect Order, grant the refund with interest under Section 244A of the Income Tax Act, and pass ... Effect of an Order in appeal - Rectification of mistake u/s 154 - refund of ₹ 2 Crores for the Assessment Year 2006-07 along with interest under Section 244A - ITAT stayed the demand subject to deposit of Rupees two Crores by the petitioner - TPO reduced the addition to Rupees Thirty Six Lakhs Three Thousand Four Hundred Ninety One AND upon the petitioner filing an application under Section 154 TPO reduced the demand to Nil BUT such order was not given effect to, the petitioner filed the present writ petition. HELD THAT:- It is strange that the Appeal Effect Order was not passed for more than a year. The fact that an assessee after succeeding in a protracted litigation has to file another legal proceeding i.e. a writ petition to implement and execute the said order, does not reflect well on the functioning of the Tax Department. This Court is of the view that the respondents should have given effect to the Appeal Effect Order as well as issued the refund immediately and there should have been no occasion for the petitioner to file the present writ petition. Request for adjournment, once again, is declined and the respondents are directed to pass the Appeal Effect Order in pursuance to Transfer Pricing Officer’s order dated 11th September, 2019 and to grant refund along with interest under Section 244A of the Act as well as to pass rectification orders on the petitioner’s applications dated 25th July, 2019 and 12th September, 2019 within four weeks in accordance with law. Issues:Seeking directions for Appeal Effect Order and refund under Income Tax Act for Assessment Year 2006-07.Analysis:The petitioner filed a writ petition requesting directions for the Assessing Officer to pass the Appeal Effect Order based on the Transfer Pricing Officer's order from September 11, 2019. The petitioner also sought a refund of approximately Rupees Two Crores for the Assessment Year 2006-07, along with interest under Section 244A of the Income Tax Act, and rectification orders on previous applications. The respondents requested more time to obtain instructions due to changes in office incumbents and jurisdictional rearrangements.Upon review, it was found that the Assessing Officer had made an addition of Rupees Eleven Crores Thirty Three Lakhs Fifty Five Thousand Eight Hundred Six in the final assessment order under Section 143(3) of the Act. The Income Tax Appellate Tribunal (ITAT) stayed the demand subject to a deposit of Rupees Two Crores by the petitioner. Following a remand order by the ITAT, the Transfer Pricing Officer reduced the addition to Rupees Thirty Six Lakhs Three Thousand Four Hundred Ninety One. Subsequently, the Transfer Pricing Officer, upon the petitioner's application under Section 154 of the Act, reduced the demand to Nil on September 11, 2019.The Court noted the delay in passing the Appeal Effect Order for over a year and criticized the Tax Department's functioning, stating that it was unacceptable for the petitioner to have to file a writ petition to enforce the order. Consequently, the Court directed the respondents to pass the Appeal Effect Order, grant the refund with interest under Section 244A of the Act, and pass rectification orders on the petitioner's previous applications within four weeks. The writ petition was disposed of with these directions, and the order was to be uploaded on the website and forwarded to the counsel via email.