M. Ahammadkutty Haji vs Chief Commissioner of Income Tax and Others

C.N. Ramachandran Nair, J.—Petitioner is challenging Ext. P16 order issued by the Chief CIT declining petitioner''s demand for interest u/s 244A(2) of the IT Act, hereinafter referred to as ''the Act'', over and above the amount granted under Ext. P14.

Petitioner remitted advance tax for the years 1988-89, 1989-90 and 1990-91. However, returns were filed declaring loss but with substantial delay. While delay in filing returns for 1988-89 and 1989-90 was around three years, for the year 1990-91 the return was delayed by around five years. Since returns filed were belated, those returns were not acted upon by the AO. Therefore, petitioner filed application for condonation of delay in filing the returns before the CIT, who rejected it by Ext. P4 order dt. 26th Feb., 1996. Thereafter, petitioner filed another petition. Ext. P5, on 31st May, 1996, requesting the CIT to reconsider Ext. P4. Then, CIT allowed the petition to condone the delay. Since Ext. P5 was not considered for a long time, the petitioner filed a writ petition in this Court for direction to consider Ext. P5. However, the writ petition itself was filed only in the year 1999 and vide Ext. P7 judgment dt. 28th June, 1999 this Court directed the CIT to consider Ext. P5. Thereafter, vide order dt. 13th Oct., 1999 (Ext. P13), the CIT condoned the delay and directed the officer to complete assessment which led to Ext. P14 order dt. 16th Nov., 1999. It is seen from the said order that apart from refund of Rs. 1,14,303 petitioner was granted a further sum of Rs. 8,093 by way of interest, which the standing counsel for Revenue has explained to this Court as eligible interest payable to the petitioner u/s 244A(1) of the Act. It is against this order of the officer petitioner filed application before the Chief CIT u/s 244A(2) of the Act which is seen rejected vide Ext. P16. Petitioner is challenging Ext. P16 on the ground that the reasons for delay in completion of proceedings resulting in the refund are not attributable to the petitioner and therefore, petitioner is entitled to interest for the same period.

I heard counsel appearing for the petitioner and the standing counsel for Revenue for respondents 1 to 3.

Even though Ext. P16 does not disclose the reasons for declining interest claimed by the petitioner. Standing counsel has furnished a statement to this Court today giving details of interest granted and the reason for declining the same. Though in the normal course, the matter should be sent back to the Chief CIT for reconsideration, having regard to the convincing reasons furnished by the respondents through the statement filed in this Court. I do not think, petitioner will get relief even if the matter is remanded to the Chief CIT.

The returns were filed by the petitioner with substantial delay of three to five years and such returns could not be entertained unless delay is condoned by the CIT, in terms of Section 119(2)(b) of the Act. Even though petitioner''s first effort was unsuccessful, substantial delay in filing returns was later condoned by Ext. P13 order dt. 13th Oct., 1999. It is seen from Ext. P14 that revised order was issued granting refund with interest by the officer on 16th Nov., 1999, i.e., within one month from the date of condonation of delay by the CIT. Therefore, obviously, there was no delay on the part of the AO in processing of the returns and granting of refund. Petitioner would have been entitled to interest on the refund amount in terms of Section 244A(1) of the Act, if the delay in completion of assessment proceeding which led to refund is not attributable to the petitioner. Even though the Chief CIT in the impugned order has not stated the reason for declining interest to the petitioner beyond the amount granted by the officer under Ext. P14, it is clearly stated that delay in completion of assessment which led to refund is on account of delay in filing the returns by the petitioner which is the admitted position. If the petitioner had filed returns in time then, petitioner was entitled to interest u/s 244A(1) of the Act for the entire period, i.e., from the first day of the assessment year till date of granting refund. However, when a return is filed with delay, the return cannot be acted upon until delay is condoned by the statutory authority. As and when delay was condoned, the assessing authority granted refund within one month from the date of condonation of delay. Interest granted to the petitioner was from first April of the year till the date on which the return was due, though not filed by the petitioner. In other words, delay in filing the return being attributable to the petitioner, petitioner was held (not) entitled to interest u/s 244A(2) of the Act for the period of delay in filing the returns.

Counsel for petitioner contended that delay in disposal of the application filed for condonation of delay is attributable to the Department and so much so such period should be included for the purpose of interest. Of course, if there was undue delay in disposal of the statutory application, the delay should not be treated as attributable to the petitioner. However, in this case, it is seen that the first application for condonation was disposed of vide Ext. P4. The delay happened in disposal of revised application filed for reconsideration of Ext. P4. Here, it has to be noted that CIT cannot be blamed for delay in action on the application because it was virtually request for review of an earlier order. Even though Ext. P5 was filed on 31st May, 1996 and CIT did not pass any orders on it, petitioner slept over the matter and filed a writ petition only in June, 1999 and soon after direction was issued by this Court, the matter was reconsidered which led to orders favourable to the petitioner. The counsel for petitioner contended that petitioner had sent a reminder to Ext. P5 and even without any direction by this Court the CIT was duty-bound to pass orders on Ext. P5. However, I do not think this will justify this Court to hold that the CIT was indifferent or negligent in the matter because he had already issued orders on statutory application vide Ext. P4 within a reasonable time. If petitioner was confident of getting favourable orders in review, petitioner should have, within a reasonable time, approached this Court for appropriate direction in reconsidering the matter based on Ext. P5, which in fact petitioner did after three years from filing of Ext. P5. Therefore, the entire period of delay, i.e., from the date of filing returns till date of condonation of delay vide Ext. P13 has to be treated as attributable to the petitioner while determining the eligible interest in terms of Section 244A(2) of the Act. Since this view is the basis on which Ext. P16 was issued, though not stated in so much details but supplemented by the statement, the OP is devoid of any merits and is dismissed. No costs.