Revenue Ordered to Refund Rs. 2,60,000 with 12% Interest for Non-Compliance; Disciplinary Action Suggested for Officials.

The HC ruled against the Revenue for failing to comply with ITAT and PCIT orders, directing the refund of Rs. 2,60,000/- with 12% p.a. interest from 25th September 2014 until payment. The Court mandated the amount be credited to the Petitioner's account within two weeks, urging disciplinary action against responsible officials. The Petition was disposed of, allowing the Revenue until 30th September 2023 to complete the payment.

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Issues Involved:
1. Inaction of the Revenue in complying with ITAT and PCIT orders.
2. Entitlement to interest for delayed refund of seized cash.
3. Compensation for inordinate delay by the Revenue.

Summary:

Inaction of the Revenue in complying with ITAT and PCIT orders:
Petitioner approached the Court due to the Revenue's failure to comply with the orders of the Income Tax Appellate Tribunal (ITAT) and the Principal Commissioner of Income Tax (PCIT). The ITAT had decided in favor of the assessee on 24th September 2014, and the PCIT directed the release of seized gold and cash on 31st December 2019. Despite these orders, the cash of Rs. 2,60,000/- was not returned, leading to the Petition.

Entitlement to interest for delayed refund of seized cash:
Petitioner sought a direction for the return of Rs. 2,60,000/- with interest for both pre-assessment and post-assessment periods. The Revenue delayed filing an affidavit-in-reply, and when it was finally filed, the affiant blamed the manual record-keeping system for the delay. The affidavit indicated that the refund processing was transmitted to the Centralised Processing Unit (CPC) for verification. The computation form indicated an amount of Rs. 8,10,983/- to be paid, including Rs. 5,50,983/- as interest.

Compensation for inordinate delay by the Revenue:
The Court disagreed with the Revenue's argument that Section 244A(1A) did not apply to the refund of seized amounts, noting that Petitioner was entitled to interest due to the inordinate delay. The Court cited precedents, including the Supreme Court's decision in Sandvik Asia Ltd., which established that the Revenue must compensate for wrongful withholding of amounts. The Court emphasized that Petitioner was deprived of Rs. 2,60,000/- since 25th September 2014 due to the Revenue's inaction, which warranted compensation.

Judgment:
The Court found the Revenue's inaction unjustifiable and directed that Petitioner is entitled to interest at 12% p.a. for the post-assessment period from 25th September 2014 until payment. The Court ordered the amount to be credited to Petitioner's account within two weeks and suggested action against the erring officials. The Petition was disposed of, with the Revenue granted time until 30th September 2023 to make the payment.

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