TaxTMI 
TaxTMI 
2023 (6) TMI 1037
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....the total income at Rs. 4,83,658/- was passed. The Assessing Officer (A.O.) also made an addition of Rs .6,63,500/- under Section 68 of the Act in respect of the amount of capital contributed by the five partners on the ground that it was not proved to be cash credit. The A.O. also initiated penalty proceedings under Section 271 (1)(c) of the Act and consequently, issued a notice of demand dated 23rd March 1987, demanding a sum of Rs. 4,31,815/-. 3. Being aggrieved by the Assessment Order dated 23rd March 1987 passed by the A.O., Petitioner filed an Appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] on 21st April 1987. The Appeal was dismissed by an order dated 22nd February 1989. 4. Impugning order passed by the CIT(A), Petitioner filed an appeal before the ITAT on 11th May 1989 (Appeal No. 1). 5. Upon the CIT(A) dismissing the Appeal, A.O. proceeded further with the penalty proceedings and vide order dated 4th August 1989 levied penalty of Rs. 6,37,411/- under Section 271(1)(c) of the Act. Against this order, on 15th September 1989, Petitioner preferred an appeal before CIT(A). This Appeal came to be dismissed by an order dated 3rd January 1991 which was imp....
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....passed on 5th July 2002 by the ITAT and to grant refund of the amount recovered along with interest under Sections 244/244A of the Act. 11. The A.O. passed an order under Section 154 of the Act on 4th June 2003 granting refund of Rs. 13,44,526/- and interest of Rs. 5,78,029/- under Section 244A of the Act, aggregating to Rs. 19,22,555/-. The refund was calculated as under:- (A) Principal Amount of Penalty refunded Rs. 637411 ========= (B) Interest granted on the above refund u/s. 244A (Rate of interest varied from 12% p.a. to 8% p.a. accordance with the amendment in the provision of section 244A from time to time) Rs. Rs. 1,65,519 (Collected by TRO on 25-01-93) Rs. 1,45,000 (Collected by TRO on various dates in installment in 1991) 1,96,405 Rs. 7,082 Refund of A. Y. 90-92 adjusted on 29-0993 Rs. 14,478 Refund of A. Y. 93-94 adjusted on 25-02-94 2,03,407 Rs. 3,05,332 Refund of various year adjusted on 18-08-99 1,78,217 --------------- Rs.6,37,411 Total Interest --------------- Rs.5,78,029 ======= (C) Principal amount of interest recovered u/s. 220(2) refunded without interest Rs.7,07,115 ------------- &nbs....
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....f interest on refund of the amount paid under Section 220(2) of the Act, Mr. Agrawal submitted that sub-section 1A of Section 244 provides that where the whole or any part of the refund referred to in sub-section 1 of Section 244 is due to the assessee as a result of any amount having been paid by him after 31st March 1975 in pursuance of order of penalty and such amount or any part thereof having been found in appeal or other proceedings under the Act to be in excess of the amount which such an assessee is liable to pay as penalty under the Act, Central Government should pay to such assessee simple interest at the rate specified in sub-section 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. Mr. Agrawal states that expression used in this subsection is "any amount having been paid" and "on the amount so found to be in excess". Sub-section does not say "on the tax having been paid". If the sub-section had to be read that way then law makers would have worded it or used the expression "on any amount of tax paid" and "not any amount having been paid." Therefore, the Act does not permit the segregation of ....
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....ourt came to a conclusion that there was an inordinate delay on the part of Revenue in refunding certain amount which included the statutory interest and therefore, may direct the Revenue to pay compensation, therefore, not interest on interest. 20. Therefore, the two issues which require to be answered in this Petition are:- (A) whether in the facts and circumstances of the case, Section 244 of the Act will apply or Section 244A of the Act will apply? and (b) whether Petitioner is entitled to interest on refund of the interest paid by Petitioner under Section 220(2) of the Act? 21. In view of what we have recorded earlier as conceded by Mr. Suresh Kumar, the first issue does not arise. We will proceed on the basis that, in the facts and circumstances of this case, Section 244 of the Act would apply. 22. On the second issue, undoubtedly, Petitioner had paid the penalty amount of Rs. 6,37,411/- together with interest thereon. Section 244 (1) of the Act reads as under:- "244. (1) Where a refund is due to the assessee in pursuance of an order referred to in section 240 and the Assessing Officer does not grant the refund within a period of three mont....
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....the amount of refund due in pursuance of the order referred to in section 240. Once it is clear that section 240 does not relate to any interest amount but speaks of the repayment of the excess amount paid by the assessee and section 244(1) refers to the order spoken of on such excess amount refundable to the assessee; it clearly means that the interest payable under section 244(1) is on such excess amount refundable to the assessee under section 240, and both the amounts are to be paid simultaneously. 24. The provisions of law comprised under section 244(1)ex facie discloses that if the Department fails to repay the excess amount within three months from the date it becomes due and payable to the assessee, then the assessee should be paid interest on such amount at the rate of 15 per cent per annum. In other words, on the failure to refund the amount within the specified time, and without there being any demand, the Department is bound to pay along with such refund, the interest thereon as specified in section 244(1). Even the subtitle of the section reads "Interest on refund where no claim is needed" . It is thus clear that the obligation to pay interest in terms of section 24....
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.... "Further, the expression, "amount" in the earlier part of the section 244 (1A) would refer to not only the tax but also the interest and the expression "amount" is a neutral expression and it cannot be limited to the tax paid in pursuance of the order of assessment. We are of the opinion that the expression "tax or penalty" found in the later part of the section 244(1A) would not qualify or restrict the scope of the expression "amount" found in the earlier part to mean only "tax or penalty". As already seen, the function of the later part of section 244 (1A) of the Act is to find out the excess of the amount which the assessee paid by way of tax or penalty and that is the reason the expression "tax or penalty" has been employed. However, to determine the amount on which the Revenue is liable to pay interest, section 244 (1A) gives emphasis on the amount paid by the assessee in pursuance of the order of assessment and the amount, in our opinion, cannot be limited to the amount of tax or penalty, but would encompass the amount of interest paid by the assessee. The clear intention of Parliament is that the right to interest will compensate the assessee for the excess....