Assessee entitled to additional 3% interest under Section 244A(1A) when refund originates from appeal order without fresh assessment

Delhi HC allowed assessee's writ petition challenging denial of additional interest under Section 244A(1A). Court held that once refund right originates from appeal effect order under Section 250 without fresh assessment, assessee is entitled to additional 3% interest per annum. Additional interest can only be denied if delay is attributable to assessee per Section 244A(2). Revenue's attribution of delay to COVID-19 pandemic was rejected as not attributable to assessee. Court quashed Revenue's order and directed grant of statutory additional interest with expediency.

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Issues Involved:
1. Entitlement to additional interest under Section 244A(1A) of the Income Tax Act, 1961.
2. Attribution of delay for the issuance of refund.
3. Applicability of principles of equity in the context of statutory obligations.

Summary of Judgment:

1. Entitlement to Additional Interest under Section 244A(1A):
The core issue is whether the assessee is entitled to additional interest under Section 244A(1A) of the Income Tax Act, 1961. The Court noted that Section 244A(1A) mandates an additional interest of three percent per annum on refunds arising from an appeal effect order, provided the delay is not attributable to the assessee. The assessee argued that the additional interest is statutory and should not be denied based on reasons like amalgamation, non-availability of functionality on the ITBA portal, and the COVID-19 outbreak.

2. Attribution of Delay:
The Revenue contended that the delay in issuing the refund was due to the amalgamation of the assessee, non-functionality of the ITBA portal, and the COVID-19 pandemic. The Court found no merit in these contentions, noting that the assessee had informed the Revenue about the amalgamation in 2016, well before the CIT(A) order. The Court held that the non-functionality of the ITBA portal and administrative difficulties were issues on the part of the Revenue and could not be attributed to the assessee. Therefore, the delay was not attributable to the assessee under Section 244A(2) of the Act.

3. Applicability of Principles of Equity:
The Revenue argued that due to the COVID-19 pandemic, principles of equity should be considered to justify the denial of additional interest. The Court rejected this argument, stating that equity cannot override clear statutory provisions. The Court emphasized that the statutory obligation to pay interest is non-discretionary and must be adhered to, regardless of the pandemic.

Conclusion:
The Court quashed the impugned order dated 18 November 2022, which denied additional interest to the assessee. It directed the Revenue to grant the additional interest as mandated under Section 244A(1A) of the Act. The petition was disposed of in these terms, along with any pending applications.

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