2022 (5) TMI 1708 - HC - Income Tax

Statutory interest under Section 244A must cover period until actual credit; AO to pass manual order enabling refund release.

Statutory interest under Section 244A accrues beyond the date of intimation under Section 143(1) where actual credit to the taxpayer occurs later; if CPC ... Interest u/s 244A on tax refunds - manual order to grant interest pending CPC system functionality - Entitlement to interest under Section 244A for the period between intimation u/s 143(1) and date of credit of refund and the procedural direction for its grant where CPC functionality is unavailable - HELD THAT: - The petitioner conceded receipt of the refund shown in the intimation under Section 143(1) but stated interest was paid only up to that intimation date; the Court noted its earlier order entitling the petitioner to interest until credit to the bank account. The revenue produced CPC, Bangalore instructions that the functionality to grant interest from the date of intimation to the date of refund is under development and that in the meantime the Assessing Officer may grant the interest by passing a manual order and uploading it on the ITBA portal so that CPC can issue the refund. The Court therefore directed the Assessing Officer to pass a manual order granting interest under Section 244A and to upload it on ITBA so CPC can process the refund, recognising a procedural remedy where system limitations prevent automatic grant of interest. Final Conclusion: The petition is disposed of by directing the Assessing Officer to grant interest under Section 244A by manual order and upload it on ITBA, enabling CPC to issue the refund within six weeks. Issues: Whether the petitioner is entitled to interest under Section 244A of the Income-tax Act, 1961 beyond the date of intimation under Section 143(1) - specifically interest up to the date of credit to the petitioner's bank account, and whether the Assessing Officer is to be directed to grant such interest by passing a manual order and uploading it on the ITBA portal so CPC may release the refund.Analysis: The petitioner had received the refund intimated under Section 143(1) but interest was paid only up to the date of that intimation. The petitioner seeks interest up to the date of actual credit to its bank account (a further period). The revenue/CPC has indicated that the functionality to grant interest for the intervening period is under development at CPC and that the Assessing Officer can grant the required interest by passing a manual order and uploading the order on the ITBA portal, following which CPC will issue the refund.Conclusion: The Assessing Officer is directed to grant interest under Section 244A of the Income-tax Act, 1961 by passing a manual order and, upon uploading the order on the ITBA portal, the refund due shall be issued by CPC within six weeks. This direction is in favour of the assessee.Ratio Decidendi: Where statutory interest under Section 244A is due beyond the date of intimation under Section 143(1) but automated CPC functionality is unavailable, the Assessing Officer must grant such interest by a manual order and upload it on the ITBA portal to enable CPC to release the refund.