AI Drafter 
TaxTMI 
TaxTMI 
2018 (10) TMI 441
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....me to Rs. 50,77,588/=. The petitioner had claimed refund of Rs. 31,69,265/= which was excess tax paid in advance. The return of the petitioner was taken in scrutiny. The Assessing Officer passed order of assessment under Section 143 (3) of the Incometax Act, 1961 ["the Act" for short] on 29th December 2006 in which, he assessed the petitioner's total income at Rs. 6,81,90,670/= and consequently raised the tax demand of Rs. 97,41,109/=. Against such order of assessment, petitioner preferred appeal before the Appellate Commissioner. While this appeal was pending, the Department recovered tax of Rs. 97,41,109/=, pursuant to the order of assessment, by adjusting part of the petitioner's refund in relation to AY 200203. The Commissioner (Appeals) disposed of the petitioner's appeal on 5th March 2009 giving substantial relief. On 23rd April 2009, the petitioner, therefore, sought refund of the tax already recovered, but which, by virtue of the order of the Appellate Commissioner became refundable. The Department did not grant such refund presumably because the Revenue had filed appeal against the order of Commissioner (Appeals) before the Income Tax Appellate Tribunal ["IT....
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....n. The total income of the assessee remains unchanged as per order under Section 250 of the I.T Act dated 08.03.2018 ie., Rs. 5,56,35,547/=." Consequently, along with statutory interest under Section 244A, on the principal sum required to be refunded, he ordered total payment of Rs. 1,22,83,620/=. The petitioner does not dispute computation of principal sum to be refunded, nor disputes the computation of interest payable under Section 244A of the Act. The petitioner's surviving grievances, however, are two fold - Firstly, according to the petitioner, there was enormous delay on the part of the department in refunding the excess tax adjusted by the Department. The petitioner would point out that the Commissioner [Appeals] had substantially allowed the petitioner's appeal on 5th March 2009 and actual refund was granted only in June 2018. Inbetween, the petitioner had made several representations and filed grievance petitions. Thus, the Department took nine years in giving effect to the Commissioner's appellate order. The second grievance of the petitioner is that no interest under the newly inserted subsection [1A] of Section 244A of the Act has been granted. A subsidiary issue....
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.... frame is provided in such order. The aggrieved person may reasonably pursue the appeal options but not wait indefinitely to implement the adverse order. Mere pendency of the appeal would not prevent implementation of the order under challenge. Unless the order is stayed, the same must be given effect to within a reasonable period. The Department therefore cannot take shelter of pendency of the appeal before the Tribunal and thereafter before the High Court, since in both cases, the appellate fora had not granted any stay against the order of the Appellate Commissioner. In the present case, even after the Tribunal dismissed the Department's appeal on 30th June 2011, no steps were taken by the Department to refund the excess tax. First proactive step taken by the departmental authorities was passing of an order dated 8th March 2018. Even such order was a mere paper order not giving any relief to the petitioner, since as noted, in such order the authority noted that the petitioner's request for refund of adjusted tax of Rs. 97.41 lakhs [rounded off] cannot be granted since the same is not reflected in the Department's portal. Only after High Court issued notice in the present peti....
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....the period during which such interest would be computed and the rate of interest to be paid are specified. Subsection [1A] was inserted in Section 244A of the Act by the Finance Act, 2016 w.e.f 1st June 2016 and reads as under:- "[1A] Where the whole or any part of the refund referred to in subsection (1) is due to the assessee, as a result of any amount having been paid by him after the 31st day of March 1975, in pursuance to any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty, as the case may be, under this Act, the Central Government shall pay to such assessee simple interest at the rate specified in subsection (1) on the amount so found to be in excess from the date on which such amount was paid to the date on which the refund is granted." Simultaneously, the legislature has also amended Section 153 of the Act which pertains to timelimit for completion of assessment, reassessment and recomputation. Entire section 153 was substituted for the original by the Finance Act 2016 w.e.f 1st June 2016. Subse....
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....4 or section 260 or section 262 or section 263 or section 264; wholly or partly, otherwise than by making a fresh assessment or reassessment, the assessee would be entitled to receive, in addition to the interest payable under subsection (1), an additional interest on such amount of refund calculated at the rate of three per cent per annum for the period beginning from the date following the date of expiry of the time allowed under subsection (5) of Section 153 of the Act to the date on which the refund is granted. Provisions of subsection [1A] can be summarized, thus [i] this subsection would be applicable : (a) where the refund arises as a result of giving effect to an appellate or revisional order under the sections mentioned therein. (b) is otherwise than by making a fresh assessment or reassessment; [ii] In such circumstances, in addition to interest under subsection (1), the assessee would receive additional interest at the rate of three per cent per annum. [iii] the period during which such interest would be computed would begin from the date of expiry of the time limit referred to in subsection (5) of Section 153 of the Act and w....
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.... governed separately. The time limit prescribed therein would be same as in subsection (3) of Section 153. In absence of the provisions contained in subsection (5) of Section 153, the Assessing Officer was under no obligation to pass order giving effect to the appellate or revisional orders within a particular time. Subsection (5) now lays down such time limit. Likewise, in absence of provisions contained in subsection (1A) of Section 244A, there was no further adverse effect on the revenue for not passing consequential orders giving effect to appellate or revisional order which may be in favour of the assessee; except for paying interest as prescribed under subsection (1) of Section 244A. These provisions, therefore, on one hand lay down time limits for giving effect to the appellate or revisional orders and on the other hand, provide for payment of additional interest at the rate of three per cent per annum from the end of the period for passing order giving effect to such appellate or revisional orders. For obvious reasons, the inability of the Assessing Officer to pass orders giving effect to the appellate or revisional orders which had given relief to the assessee within th....
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....tion 244A of the Act. Subsection [5] of Section 153 introduced time limits for passing such orders. Such time limits were also prescribed in graded manner. Ordinarily, the Assessing Officer would have three months to pass orders giving effect to appellate or revisional orders. If the Commissioner was satisfied that it was not possible for the Assessing Officer to do so within such time, he could extend the time by further six months but no more. In cases where the order required verification of any issue by way of submission of document by the assessee or any other person, or where an opportunity of being heard is to be provided to an assessee, the time limit from the outset would be longer. This laying down of the time limit per se would be of no consequence unless non adherence to the time would result into some adverse consequences to the Revenue. It is therefore that subsection [1A] of Section 244A provides for additional interest at the rate of three per cent per annum upon the Assessing Officer failing to pass an order giving effect to the appellate or revisional order withing the time frame. These provisions thus are in the nature of deterrence to the Assessing Officer's ....
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.... would apply. In the latter, if harmonious construction approach is not adopted, the Assessing Officer could contend that he is under no obligation to pass order giving effect to the appellate or revisional order, nor would the revenue be liable to pay additional interest even after the time available to the Assessing Officer for passing such order has expired. The legislature could not be expected to have brought about such a situation. Any such interpretation would also restrict the prospective effect of these provisions. In such circumstances, the harmonious construction of the statutory provisions would require that if any order giving effect to the appellate or the revisional order is not passed by the Assessing Officer within the time permitted under section 153 [5], after the amendments were made in the statute book, even though the appellate or revisional order was passed before 1st June 2016, the liability to pay additional interest under subsection [1A] of Section 244A would arise upon completion of such period as if the starting point for computing such period for passing the order was 1st June 2016. To this limited extent, the petitioner would be entitled to additional ....
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....view that in Sandvik case [Supra] this Court had directed the Revenue to pay interest on the statutory interest in case of delay in the payment. In other words, the interpretation placed is that the Revenue is obliged to pay an interest on interest in the event of its failure to refund the interest payable within the statutory period. 7. As we have already noted, in Sandvik case [Supra] this Court was considering the issue whether an assessee who is made to wait for refund of interest for decades be compensated for the great prejudice cause to it due to the delay in its payment after the lapse of statutory period. In the facts of that case, this Court had come to the conclusion that there was an inordinate delay on the part of the Revenue in refunding certain amount which included the statutory interest and therefore, directed the Revenue to pay compensation for the same not an interest on interest." For subsequent year also, in the case of the same assessee Gujarat Flourochemicals Limited, a similar issue came up before the Supreme Court. Upon an appeal against the judgment passed by the High Court, the Supreme Court remanded the proceedings before the Court after maki....