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of <h1>Department must pay 6% interest on delayed tax refunds despite technical delays under Section 244A</h1> <h3>Bhamabai Versus The Union of India, The Principal Commissioner Income Tax – 1, Pune. The Income Tax Officer, Ahmednagar.</h3> Bhamabai Versus The Union of India, The Principal Commissioner Income Tax – 1, Pune. The Income Tax Officer, Ahmednagar. - TMI Issues involved:The issues involved in the judgment are delay in payment of refund under the Direct Tax Vivad Se Vishwas Scheme 2020, non-payment of interest on the refund amount, and the legal obligation of the government to pay interest on delayed refunds.Delay in Payment of Refund:The Petitioner sought the quashing of the impugned order for Assessment years 2010-11 and 2012-13 due to delays in refund issuance despite the issuance of Form No. 5 under the VSV Scheme. The Petitioner repeatedly requested the refund from the Income Tax Officer, highlighting the delay in processing. The department eventually refunded the amounts on different dates in 2022, after significant delays as indicated in the chart provided.Non-Payment of Interest on Refund Amount:Despite the dropping of penalty proceedings under Section 271(1)(c) of the Income Tax Act, the Petitioner did not receive the refund amount promptly. The Petitioner received a letter questioning the validity of Form Nos. 3 and 5, to which a response was provided. However, no interest was paid on the delayed refund amount until the refunds were finally issued in March 2022 for both assessment years.Legal Obligation to Pay Interest on Delayed Refunds:The Court referred to a previous order where it was established that the government is obligated to pay interest on delayed refunds. Citing the case of Tata Chemicals Limited, it was emphasized that the government, having retained and used the money without right, is bound to reimburse the amount with accrued interest for the period of undue retention. The Court concluded that the Petitioner is entitled to interest on the refund amount at the rate of 6% per annum, as prescribed under Section 244(A) of the Income Tax Act. The department was directed to calculate and pay the interest within 30 days.The judgment partly allowed the Writ Petition, directing the department to pay interest on the delayed refund amount. The ruling highlighted the legal obligation of the government to provide interest on delayed refunds, as established in previous legal precedents.
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