Court Orders Explanation for Delay in Tax Refund, Warns of Penalties

The court directed the respondents to explain the delay in issuing a substantial income tax refund and why the responsible officer should not be penalized or pay interest from their pocket. Emphasizing the importance of complying with the Citizen's Charter 2014 commitments, the court highlighted the need for timely refund issuance to avoid taxpayers resorting to legal action. The Central Board of Direct Taxes (CBDT) was to be informed of the order to ensure prompt refund orders. The petitioner was granted the refund with 6% interest, with the matter adjourned for further proceedings on 13th April 2022.

---

---

Issues: Delay in issuing income tax refund, Failure to comply with Citizen's Charter 2014

Delay in issuing income tax refund:
The petitioner's grievance was that despite being informed of entitlement to a refund under Section 143(1) of the Income Tax Act, 1961, the refund of Rs. 64,92,16,450 had not been received. Despite reminders, the petitioner had not received the refund and was asked to wait further. The court noted that the Citizen's Charter 2014 declared a commitment to taxpayers that refunds, along with interest, would be issued within six months from the date of the return. The return in this case was filed on 15th February 2021. The respondents were directed to file an affidavit explaining the delay in issuing the refund, and why the officer responsible for the delay should not be penalized or directed to pay the interest from their pocket on the refund. The court emphasized that although the petitioner would receive the refund with 6% interest, it was public money being used to pay the interest.

Failure to comply with Citizen's Charter 2014:
The court highlighted the importance of complying with the Citizen's Charter 2014 commitment to taxpayers regarding the issuance of refunds within a specified timeframe. The court expressed concern over the Department's reluctance to issue refund orders promptly, leading taxpayers to resort to legal action. The court directed that the Central Board of Direct Taxes (CBDT) be informed about the order, emphasizing the need for timely issuance of refunds when they are due, to avoid unnecessary delays and burdens on taxpayers to approach the court for relief.

The court granted two weeks for the respondents to file a reply, considering the deadline of 31st March 2022 for completing the assessment. The matter was adjourned to 13th April 2022 for further proceedings.

---