2012 (12) TMI 1067

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....nue in its appeal is aggrieved by the action of ld. CIT(A) in directing the A.O. to allow interest u/s 244A of the Act till the date of issue of refund. 4. The issue in hand has been dealt by the A.O. as under:- "The assessee vide its application dated 07/11/2011 has stated that the credit of Rs. 1,30,00,000/- was not given at the time of passing order u/s. 254 of the Act dated 04/10/2011 for the A. Y. 2005-06. On verification of records, it is noticed that the payment of Rs.l,30,00,000/-was made by the assessee company in two installments for A. Y. 2005-06 (one of Rs. 1,00,00,000/- and the other is of Rs. 30,00,000/- vide challan dated 30.03.2007 and 31.03.2007 respectively). While passing order u/s. 254 of the Act dat....

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.... grievance/ground before your Honour in substance. 4. We state that before issuing Refund of Rs. 1,30,00,000/-, the AO made an inquiry with our bankers vide letter dated 14/10/11 (pages 6 to 8). Our banker gave a suitable reply vide letter dated 14/10/11 along with details of Advance Tax paid by us (pages 9 to 12). The AO also sent two letters dated 18/10/11 and 4/1/12 respectively to Director of Income-tax (Systems), New Delhi for seeking their clarification, (pages 13 & 14) 5. Despite of making all the inquiries and having been satisfied himself that we have correctly paid Advance Tax in time for the correct assessment year i.e. 05-06, he did not issue the refund of Rs. 1,30,00,000/- along with interest u/s.244A. ....

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....oshi [2002]254 ITR 606 (SC) c) The Act recognizes the principle that a person should only be taxed in accordance with law and, hence, where excess amounts of tax are collected from an assessee or any amount is wrongfully withheld from an assessee without authority of law, revenue must compensate. Sandvik Asia Ltd. v. CIT [2006] 150 Taxman591 (SC). d) The revenue cannot say that they can recover interest on interest based on sections 156 and 220 but they are not liable to pay interest on interest because the statute does not provide for such payment . Equality is in the fabric of the Constitution. When the State itself is entitled to recover interest on interest on interest, then State is also liable to pay interest on inte....