Sri Goutam Sengupta vs Union of India and Others

Jayanta Kumar Biswas, J:

The petitioner in this WP under art. 226 dated February 7, 2006 is seeking the following relief: - a) A writ in the nature of Mandamus commanding the respondent authorities to act in accordance with law and to grant interest in accordance with law on the refunded amount of Rs. 37117/- as per Section 244A of the Income Tax Act, 1961.

As an individual assessee the petitioner submitted his tax return under the income tax Act, 1961 for the Assessment Year 1996-97 (Financial Year 1995-96). He claimed deduction under s. 80RRA of the Act for Rs. 86,575. The Assessing Officer processed the return disallowing the claim on the grounds that he failed to submit the original approval certificate of the Ministry of Finance, Department of Revenue (FT & TR Division), New Delhi.

The petitioner submitted application contending that the Assessing Officer was wrong in disallowing the deduction claimed by him. Entertaining the application the Assessing Officer took up the matter for consideration under s.154 of the Act, and finally passed an order dated September 13, 2002 (at p.32) accepting the petitioner''s contention and directing refund of Rs. 37,117. This refundable amount was paid by a cheque dated March 27, 2003.

Interest on the refundable amount at the statutory rate under s. 244A was paid for the period from September 13, 2002 to March 27, 2003. Feeling aggrieved, the petitioner made representations claiming interest on the refundable amount for the period from April 1, 1996 to September 12, 2002. The Assessing Officer held that delay in refund was for reasons wholly and exclusively attributable to the petitioner in that he submitted the relevant documents only on August 30, 2002. The decision was made known by a letter dated October 31, 2003 (at p.43). Feeling aggrieved the petitioner has brought this WP.

The income tax Officer concerned was requested to appear and give assistance to this Court, because advocate for the respondents was unable to say whether the proviso to sub-s.(1) of s. 80RRA was applicable to the case. The proviso was inserted by the Finance Act, 1996 with effect from April 1, 1997. The proviso is that no deduction under sub-s.(1) of s. 80RRA shall be allowed unless the assessee furnishes a certificate, in the prescribed form, with the return of income, certifying that the deduction has been correctly claimed in accordance with s. 80RRA.

As noted hereinbefore the return concerned was submitted for the Assessment Year 1996-97 (Financial Year 1995-96). The income tax Officer present has said that advocate for the petitioner is right in saying that the proviso was not applicable to the case. The petitioner was not required to justify his claim for deduction producing any certificate. However, the admitted position is that he produced the certificate subsequently, though not in prescribed form. But then, this does not make any difference, because at the relevant point of time the certificate was not required at all.

It is, therefore, evident that the Assessing Officer wrongly disallowed the deduction claimed by the petitioner. Nothing was attributable to the petitioner, for the mistake was committed by the Assessing Officer. At the date the s. 154 order was passed the refundable amount was to be paid with interest under s. 244A. No interest was paid for the period from April 1, 1996 to September 12, 2002. The petitioner was entitled to interest for this period. I am also of the view that for the period from September 13, 2002 the respondents were liable to pay the petitioner interest on the total amount.

In my opinion, the petitioner is entitled to interest on the refundable amount for the period from April 1, 1996 to September 12, 2002 at the statutory rate under s. 244A; and it will be fair if the respondents are directed to pay him interest on the unpaid part of the total amount at the rate of 5% per annum from September 13, 2002 till the date of actual payment. For these reasons, I allow the WP and order as follows. The respondents shall pay the petitioner interest on the sum of Rs. 37,117 at the statutory rate under s. 244A for the period from April 1, 1996 to September 12, 2002; on the unpaid part of the total amount at the rate of 5% per annum from September 13, 2002 till the date of actual payment. These directions shall be complied with within four weeks from the date of service of this order. No costs. Certified xerox.