In a recent ruling, the Bombay High Court sharply criticized the Income Tax Department for delays in processing tax refunds. The Court warned of the growing interest burden on public funds caused by such administrative inefficiencies.
Bloomberg Data Services (India) Pvt. Ltd., the petitioner claimed that an admitted refund of Rs. 77,64,71,629 was due and payable but had not been granted by the Revenue Department.
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The petitioner filed a writ petition under Article 226 of the Constitution of India challenging the delayed tax refunds. The refunds were eventually processed on November 29, 2024 with amounts allocated as Rs. 45.84 crores for AY 2016-17 and Rs. 31.80 crores for AY 2013-14 after the court’s intervention.
Despite the release of principal refunds, the petitioner’s interest of Rs. 3.10 crore (Rs. 1.83 crore for AY 2016-17 and Rs. 1.27 crore for AY 2013-14) remained unresolved at the time of the hearing. The respondent’s counsel requested time for the payment of the interest.
The bench comprising G. S. Kulkarni & Advait M. Sethna expressed concern over repeated cases of refund delays by the Income Tax Department pinpointing the systemic inefficiencies and the unnecessary interest burden these delays impose on the public exchequer.
The court criticized that such interest payments are a direct result of departmental negligence, lack of quick action, and ineffective communication between tax officials.
The court directed the respondents, including officials from the Central Board of Direct Taxes ( CBDT ), to submit affidavits detailing the existing mechanisms or proposed solutions to avoid delays and interest burdens, data on interest paid due to delayed refunds over the past three assessment years and to hold accountability for officers responsible for such delays.
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The court explained that taxpayers are deprived of rightful refunds, and the government incurs unnecessary financial losses affecting public funds meant for developmental purposes.
The next hearing was scheduled for December 10, 2024, where the respondents were expected to provide updates on the interest payment and compliance with the court’s directives.
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