DTVSV Act Section 7 excludes interest on tax refunds but requires proper adjustment procedures for settlement cases

The Madras HC ruled on a petitioner's claim for interest on tax refunds under the DTVSV Act, 2020. The court held that Section 7 of DTVSV Act is a complete code that excludes interest under Section 244-A of the IT Act, 1961 on excess amounts paid under the settlement scheme. However, the court directed that amounts adjusted from refunds for AY 1999-2000 and 2000-2001 be treated as payments under DTVSV Act, requiring issuance of Form 5 to close these cases. The department must process excess refunds for AY 2004-2005 and 2005-2006 with interest under Section 244-A, subject to DTVSV Act provisions.

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Issues Involved:
1. Entitlement to interest under Section 244-A of the Income Tax Act, 1961.
2. Adjustment of refunds against tax liabilities.
3. Validity of forms issued under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act, 2020).

Summary:

Issue 1: Entitlement to interest under Section 244-A of the Income Tax Act, 1961

The petitioner sought interest on delayed payments/adjustments under Section 244-A of the Income Tax Act, 1961. The Designated Authority declined to recognize this interest, citing the Explanation to Section 7 of the DTVSV Act, 2020, which clearly states that a declarant shall not be entitled to interest on any excess amount paid before filing the declaration. The court upheld this interpretation, noting that Section 7 of the DTVSV Act, 2020 is a complete code by itself, and thus, no interest under Section 244-A is available.

Issue 2: Adjustment of refunds against tax liabilities

The petitioner adjusted refundable amounts from Assessment Years 2004-2005 and 2005-2006 towards liabilities for Assessment Years 1999-2000 to 2002-2003. The Designated Authority accepted these adjustments and ordered refunds accordingly. However, for the Assessment Years 1999-2000 and 2000-2001, the court noted that the refunds were merely adjusted and not paid in excess, hence no interest under Section 244-A was warranted. For the Assessment Years 2001-2002 and 2002-2003, excess amounts were refundable, but without interest due to the DTVSV Act, 2020.

Issue 3: Validity of forms issued under the Direct Tax Vivad Se Vishwas Act, 2020 (DTVSV Act, 2020)

The petitioner filed declarations under the DTVSV Act, 2020 for various assessment years. The Designated Authority issued Form-3, quantifying the amounts payable and refundable. The petitioner contested the amounts, seeking recalculations including interest under Section 244-A. The court found that the amounts quantified by the Designated Authority were correct as per the DTVSV Act, 2020, and the petitioner was not entitled to additional interest.

Court Orders:

1. The amounts adjusted for the Assessment Years 1999-2000 and 2000-2001 are treated as paid under the DTVSV Act, 2020. The Designated Authority shall issue Form 5 for these years and close the cases.
2. The Income Tax Department is directed to process excess amounts refundable with interest under Section 244-A for Assessment Years 2004-2005 and 2005-2006, subject to Section 7 of the DTVSV Act, 2020.
3. For Assessment Years 2001-2002 and 2002-2003, the amounts quantified by the Designated Authority are correct. The Designated Authority shall issue Form 5 and close the cases. No interest under Section 244-A is warranted.
4. The petitioner's writ petitions for the Assessment Years 2001-2002 and 2002-2003 are dismissed.
5. For the Assessment Years 2003-2004 to 2006-2007, the Designated Authority shall issue Form 5 and close the cases within three months.
6. Refunds and interest for Assessment Years 2004-2005 and 2005-2006 shall also be processed within three months.

Conclusion:

The court balanced the interests of both the petitioner and the Income Tax Department, ensuring compliance with the provisions of the DTVSV Act, 2020, and the Income Tax Act, 1961. The petitioner was granted refunds but denied interest under Section 244-A for the relevant assessment years as per the DTVSV Act, 2020.

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