Brief of the case is to be sorted properly
Brief of the case:
- The High Court held that the amount paid was held by the Government till a direction was issued by the appellate authority to refund the same, therefore, it should carry interest as a matter of course. Furthermore, it was held that interest was in the nature of compensation for use and retention of money collected unauthorisedly by the department.
- The High Court further held that refund due and payable to the assessee is debt owed and payable by the revenue. Furthermore, it was held that merely because there is no express statutory provision for payment of interest on refund of excess amount collected by the Revenue, the Government cannot evade its obligation to refund the money with accrued interest for the period of undue retention
Fact of the Case:
The facts and circumstances briefly stated are as follows:-
The assessee paid tax in respect of the relevant assessment years including self-assessment tax u/s.140A of the Act. Subsequently, the assessment u/s.143(3) was completed for both the assessment years 1992-93 and 1993-94 and certain additions were made. The assessee referred an appeal before the Commissioner of Income Tax (Appeals) (hereinafter referred to as ‘CIT(A)’) who allowed certain relief resulting in an order for refund. While giving effect to the said order of the learned CIT(A), an order for refund along with interest was allowed to the assessee for both the years under consideration. Subsequently, the assessing officer issued a notice u/s.154 and the interest previously allowed u/s.244A(1)(b) on the refund of excess self assessment tax was withdrawn. In his order u/s.154 the assessing officer held that interest u/s.244A(1)(a) is not payable on refund of excess self assessment tax whereas s.244A(1)(b) is not attracted in view of the explanation appended thereto. He relied on the explanation to Clause (b) which provides that the “date of payment of tax or penalty” u/s.244A(1)(b) means the date on and from which the amount of tax or penalty specified in the notice of demand issued u/s.156 is paid in excess of such demand. The assessing officer, therefore held that “since any tax paid after issue of notice of demand does not include self-assessment tax, the interest is not payable on excess payment u/s. 140A.” The assessee preferred an appeal against the order of the assessing officer before the CIT(A). The CIT(A) reversed the order of the assessing officer by an order dated 20th November 2002 relying upon a judgement of Delhi High Court in the case of CIT –Vs- MMTC Ltd. reported in 246 ITR 725 and held that the provisions of Section 154 could not be applied to the present case. The revenue unsuccessfully appealed before the Tribunal, which also relied upon CIT -Vs- MMTC (supra) and upheld the order of CIT(A). The revenue is, as such, in appeal before this Court against the order of the Tribunal dated 22nd March 2004.
Contention of Assessee:
