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Department must pay 6% interest on delayed tax refund despite assessee's incomplete bank details The HC held that the assessee was not responsible for the delay in processing the refund. The assessee provided IBAN details but not SWIFT code initially. ...
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Department must pay 6% interest on delayed tax refund despite assessee's incomplete bank details
The HC held that the assessee was not responsible for the delay in processing the refund. The assessee provided IBAN details but not SWIFT code initially. When the assessee requested to update foreign bank account details with SWIFT code through CPC grievance, the department failed to inform that only Indian bank accounts were eligible for refunds. The department's delay in clarifying requirements and processing the refund after Indian bank account was opened in January 2023 was not attributable to the assessee. The court directed payment of interest under Section 244A at 6% per annum from 01.05.2022 to 05.10.2023 on the refund amount of Rs. 2,27,20,180/-.
Issues: The petitioner sought a mandamus for the grant of refund with interest for Assessment Year 2021-22. The refund was made after the petition was filed, leading to an amendment request for interest only.
Details of the Judgment: The petitioner, a Limited Liability Company (LLC) from the USA, sold equity shares in India and claimed a refund of Rs. 2,19,51,010/-. An intimation on 21.03.2022 stated a refund of Rs. 2,27,20,180/-. Despite raising grievances, the refund was delayed until 05.10.2023.
The petitioner argued that the delay was solely due to the respondents' actions, citing relevant legal provisions and judgments. The respondents claimed no interest is payable if the delay is due to the assessee, mentioning the need for an Indian bank account for refunds to non-residents.
The court analyzed Section 244A of the Income Tax Act which governs interest on refunds. It was noted that interest is not payable if the delay is due to the assessee. The petitioner had provided necessary details, and the delay in processing the refund was attributed to the respondents.
The judgment highlighted that the delay was not the petitioner's fault and directed the respondents to pay interest on the refund amount from 01.05.2022 to 05.10.2023 as per Section 244-A of the Income Tax Act. The refund was to be made within two months from the date of the order.
This writ petition was disposed of with the direction for interest payment and no costs were imposed.
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