Nafissa Shaikhally vs The Commissioner of Income Tax-26 and Others

This Petition under Article 226 of the Constitution of India, challenges the order dated 21st July, 2014 passed by the Commissioner of Income Tax. By the impugned order, the Petitioner''s claim for interest under Section 244A of the Income Tax Act, 1961 (the Act) on the delayed refund of amount due to the Petitioner, has been rejected.

The Petitioner is a senior citizen who had in an earlier Writ Petition being Writ Petition No. 2594 of 2013 challenged the action of the Respondent-Assessee in not entertaining the Petitioner''s application for refund of Tax Deducted at Source (TDS) by her employer the Reserve Bank of India (RBI). This TDS was deducted on the payment made to her in the year 2004 when she opted for Optional Early Retirement Scheme (Scheme) from the RBI. The Respondent-Revenue did not entertain the Petitioner''s application for refund on the ground that there was a delay of more than six years from the end of the relevant Assessment Year i.e. A. Y. 2004-05. The Respondent-Revenue was of the view that in view of Instruction No. 13 of 2006 dated 22nd December, 2006 issued by the CBDT that an application for condonation of delay for refund made beyond a period of six years from the relevant Assessment Year could not be considered under Section 119 (2)(b) of the Act. This Court in its order dated 15th January, 2014 in W.P. No. 2594 of 2013 inter alia held in paragraphs 6 and 7 as under:--

"6:-- It is not disputed by the respondent revenue that on merits the petitioner is entitled to the benefit of refund of TDS as the payment received under the scheme is exempted under Section 10(10C) of the Act. The decision of the Apex Court in the matter of Chandra Ranganathan and Others Vs. Commissioner of Income Tax--> concludes the issue. This is also the view of the revenue as clarified in CBDT Circular dated 8th May 2003. The application under Section 119(209b) of the Act is being denied by adopting a very hyper technical view that the application for condonation of delay was made beyond 6 years from the date of the end of the assessment year 2004-05. In this case the revised return of income filed on 30 September 2009 should itself be considered as application for condonation of delay under Section 119(2)(b) of the Act and refund granted.

7:-- It is to be noted that the respondent revenue do not dispute the claim of the petitioner for refund on merits but the same is being denied only on hyper technical view of limitation. It will be noted that on 8 May 2009 the CBDT issued a circular clarifying and reviewing its earlier decision to declare that the employees of RBI who opted for early retirement scheme under the Scheme will be entitled to the benefit of Section 10(10C) of the Act. Immediately after the issue of circular dated 8 May 2009 by the CBDT the petitioner filed on 30 September 2009 a revised return of income seeking refund of TDS paid on her behalf by RBI."

(emphasis supplied)

In view of the above, it was clear that the date of filing of revised return of income on 30th September, 2009 was to be considered as an application for condonation of delay and grant of refund under Section 119 (2)(b) of the Act. Further, Respondent did not dispute the claim of the Petitioner for refund on merits but pleaded helplessness only on the ground of limitation as provided in the Instruction No. 13 of 2006 dated 22nd December, 2006 issued by CBDT. It is further observed that on 8th May, 2009, the CBDT had issued circular wherein it had clarified that the employees of RBI who opted for early Retirement Scheme would be entitled to the benefit of Section 10(10C) of the Act. Consequently there was no occasion to pay tax as the amount received on retirement would not form part of total income. Thus, it was immediately after issuance of Circular dated 8th May, 2009 that on 30th September, 2009, the Petitioner filed its revised return. There is no dispute on the quantum of refund payable to the Petitioner. This Court by an order dated 15th January, 2014 directed the Respondent to grant the undisputed refund payable to the Petitioner.

Thereafter, the Petitioner claimed interest on the delayed refund of the TDS retained by the Revenue. The CIT(A) by the impugned order dated 21st July, 2014 rejected the claim for interest as made in Petitioner''s application by inter alia holding in paragraph 7 as under:--

"7:-- Therefore, on a consideration of the totality of the facts and in the light of the decisions rendered by you, and in accordance with the provisions of Section 244A wherein a decision on the granting of a refund is to be decided by me, I hold that no interest is payable on the refund since this refund became due to you only on the directions of the Hon''ble Court. Since the refund has been granted to you even before the receipt of certified copy of the order of the Hon''ble High Court no interest become due to you."

(emphasis supplied)

From the above, it is clear that the CIT(A) has completely mis-read the order of this Court dated 15th January, 2014. Before the Court, in the earlier Writ Petition leading to the order dated 15th January, 2014, there was no dispute between the parties that the Petitioner was entitled to refund under the Act, nor there was any dispute with regard to the quantum of refund. The only objection which was urged before us at that time the application for refund seeking to invoke under Section 119(2)(b) of the Act was time barred as it was filed beyond the period of six years from the end of the relevant Assessment Year. This court on consideration of the facts, in the order dated 15th January, 2014 came to the conclusion that filing of the revised refund with the Respondent-Revenue on 30th September, 2009 should be taken as a date/application made under Section 119(2)(b) of the Act. It was in the above view, Court directed the Respondent-Revenue to grant refund of the amount claimed by the Petitioner. The refund which was granted to the Petitioner consequent to the order of this Court dated 15th January, 2014 was under the Act and not granted de-hors the Act as seems to have been misunderstood by the Commissioner of Income Tax.

In the above view, we set aside the impugned order dated 21st July, 2014 of the Commissioner of Income Tax, we restore the Petitioner''s application for fresh consideration on merits of the claim for interest made by the Petitioner to the Commissioner of Income Tax.

Needless to state that the Commissioner of Income Tax would pass a fresh order after following the principles of natural justice i.e. making available any circular, instructions and/or any other evidence in support of its stand to the Petitioner before granting a personal hearing and, thereafter, the application for interest as the alleged delayed refund made by the Petitioner would be disposed of by reasoned order in accordance with law.

It is further made clear that in case Petitioner wants to file any further representation before the CIT(A), they shall be at liberty to do so.

With the above directions, Petition disposed of. No order as to costs.