Law: Income Tax Act, 1961

Section: 214,240,241

Income-tax---Refund---Interest on refund---Power to withhold refund cannot be exercised merely because proceedings pending ---I.T.O. to form opinion that grant of refund would adversely affect Revenue---Assessment annulled by Tribunal and tax refunded---Interest on amount refunded withheld as proceedings pending against order of Tribunal annulling assessment---Appeal of Department also pending before Tribunal against order of C.I.T. (Appeals) granting interest on refund---Filing of appeal before Tribunal would not entitle Revenue to withhold interest ---Assessee, a running concern with good turnover and earning profits---Interests of Revenue would not be adversely affected if interest on refund is paid---Department directed to pay interest on amount already refunded---Indian Income Tax Act, 1961, Ss.214, 240, 241 & 244(1-A). Under section 241 of the Income Tax Act, 1961, power to withhold the refund cannot be exercised merely because some proceedings under the Act are pending. The Income-tax Officer has also to form an opinion that the grant of refund is likely to affect the Revenue adversely. It does not mean that whenever proceedings are pending, the Revenue can withhold the refund. Whether the grant of refund during the pendency of the proceedings would adversely affect the interest of the Revenue, would depend upon the facts and circumstances of each case. The Department charges interest on late deposit of tax and has a right to levy penalty as well. In fairness to the assessee, the Legislature has enacted sections 214 and 244(1-A) to pay interest on the amount of tax deposited in case levy of tax is set aside in appeal or in further proceedings. The assessment of the petitioner for the assessment year 1981-82 was annulled by the Tribunal and a sum of Rs.10,30,171 was determined as the refundable amount. After adjusting an outstanding amount of Rs.35,370 against the petitioner, a sum of Rs.9,94,801 was refunded to the petitioner on February 15, 1995. A further refund of Rs.38,200 was issued on June 28, 1995. No interest was paid to the petitioner on the amounts refunded. The petitioner claimed that the respondents were bound to refund the sum of…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492