By TIOL News Service

ERNAKULAM, FEB 27, 2019: THE ISSUE BEFORE THE DIVISION BENCH IS - Whether taxpayer is eigible to claim interest u/s 244 on income tax refund, only from the date of revised return and not original return, as the delay in claiming enhanced refund can only be attributable to the taxpayer himself. YES IS THE VERDICT.

Facts of the case:

Consequent to filing of its return, the assessee was issued with an order computing refund at Rs.34,53,882/-. Since there was no interest computed u/s 244, the assessee filed an application u/s 154, which was considered and an order was passed computing the interest from Apr 01, 2002 to Oct 31, 2006, on which later date the entire refund was effected. Subsequently, an assessment was completed u/s 143(3) r/w/s 147. The tax payable was as per Section 115JB, which exceeded the tax on the total income computed. The dispute arose when a rectification was made u/s 154 reducing the interest granted to the period between Aug 02, 2006 to Oct 31, 2006 @ 0.5%. This rectification order did not indicate as to why such a rectification was made. A representation was accordingy filed by the assessee which was however declined. Subsequently, an order came to be passed stating that the delay in granting refund was attributable to the assessee, and hence the interest was directed at a lower rate @ 5%.

High Court held:

++ in the present case, the assessee had filed Forum-29B only on Sep 07, 2006. However, the question is as to whether in carrying out verification u/s 143(1) and processing the refund, the existence of Form-29B is essential or not. In the present case, though Form-29B was filed only on Sep 07, 2006, it is seen that an intimation u/s 143(1) was issued before that on July 20, 2003. A refund was also issued computing the tax payable u/s 115JB on Aug 03, 2006. Hence, it is very clear that the filing of Form-29B was not at all required for processing the return and granting the refund which had been done prior to such filing of statement in Form- 29B. Hence, the date of filing of Form-29B cannot at all be relevant for attributing delay on the part of assessee for processing of refund;

++ now, the question arises as to clause (b) of Section 244A. Admittedly, the assessee had filed the original return on Oct 29, 2002, which was processed and a refund of Rs.86,333/- issued on May 15, 2003. Subsequently, revised return was filed on Mar 22, 2004 claiming a refund of Rs.1,71,76,655/-. Hence, necessarily, the refund as now ordered by the AO can only relate back to the date of filing of revised return. The delay in claiming the enhanced refund can only be attributable to the assessee and the same was claimed by a revised return only on Mar 22, 2004. Hence for an amount of Rs.1,70,90,322/-, the interest can be computed only from Mar 22, 2004.

(See 2019-TIOL-484-HC-KERALA-IT)