Income tax refund means a refund amount that is initiated by the income tax department if the amount paid in taxes exceeds the actual amount due (either by way of TDS or TCS or Advance Tax or Self-Assessment Tax). The tax is calculated after taking into consideration all the deductions and exemptions at the time of assessment by the income tax department.
Refund processing by the tax department starts only after the return is e-verified by the taxpayer. Usually, it takes 4-5 weeks for the refund to be credited to the account of the taxpayer. However, if a refund is not received during this duration, the taxpayer must check for intimation regarding discrepancies in ITR; and check email for any notification from the IT department regarding the refund. The taxpayer can also check the refund status on the e-filing as per the process detailed hereunder.
Who is eligible to pay?
Any person who has paid taxes over his actual tax liability in a financial year will be eligible for a tax refund. Sometimes, it might happen that your refund amount received will be higher than the refund amount claimed by you in your income tax return. This difference is nothing but an interest on income tax refund. It is payable by the income tax department in case the refund amount is greater than 10% of the tax paid.
Section 244A of the Income Tax Act, 1961 deals with the interest on the tax refund. It states that an interest at the rate of 0.5% per month or part of the month on the refund amount. Such interest will be computed from the 1st of April of the assessment year until the date of processing of the refund, provided that the refund is made due to excess advance tax or TDS paid.
The Delhi High Court directed to recompute the Income Tax refund payable. The period prescribed under Section 153(3) of the Income Tax Act,1961 would thus have to necessarily be computed from the date when the order of the Income Tax Appellate Tribunal ( ITAT ) was received by the respondents. Even if the benefits of TOLA were extended to the respondents, undisputedly, the order of assessment was liable to be framed lastly by 30 September 2021. A division bench comprising Justice Yashwant Varma and Justice Purushaindra Kumar Kaurav directed the respondents to re-compute the refund payable to the writ petitioner along with statutory interest which shall run up to the date of remittance per law. The order of refund shall also bear in consideration our decision having annulled the adjustments that were made concerning AYs 2008-09, 2009-10 and 2010-11 against a perceived outstanding demand for AY 2011-12. An order of refund be consequently framed and passed within three weeks from today.
India’s Life Insurance Corporation ( LIC ) recently disclosed receiving tax refund orders totaling ₹21,740.77 crore from the Income Tax Department. Notably, India’s largest insurer observed a 4.6% growth in net premium income, reaching ₹1.17 trillion in Q3 FY24, compared to ₹1.11 trillion in the corresponding quarter of the previous fiscal year.
The Central Board of Direct Taxes ( CBDT ) has recently issued an order, dated January 31, 2024, addressing the processing of Income Tax Returns ( ITRs ) that were validly filed electronically with refund claims under section 143(1) of the Income-tax Act, 1961. The order extends the time limits prescribed for such processing in non-scrutiny cases until 31st April 2024. Considering the ongoing grievances related to the issue of refunds and aiming to alleviate genuine hardships faced by taxpayers, the CBDT, under its power vested in section 119 of the Act, has partially modified its earlier orders. The revised order now extends the processing deadline mentioned in the previous directives until April 30, 2024, exclusively for returns of income validly filed electronically up to Assessment Year 2020-21. It’s important to note that all other aspects of the earlier orders under section 119 of the Act remain unchanged.
The Madras High Court directed to allow the refund within Two Months. The Income tax department delayed refunding tax even after the assessee requested to enable the SWIFT code and IBAN. The court disposed of the writ petition by directing the respondents through the Central Processing Centre to pay interest on the sum of Rs.2,27,20,180/- at the rate specified in Section 244-A of the Income Tax Act from 01.05.2022 to 05.10.2023. The refund shall be made within a maximum period of two months.
The Bangalore bench of the Customs Excise & Service Tax Appellate Tribunal (CESTAT) upheld the order of the Income Tax Appellate Tribunal (ITAT) for reassessment of the bill of entry rejection of the refund claim of Excess Customs Duty. “In the absence of any appeal challenging the ibid final order, Appellant is bound to follow the direction of this Tribunal and consider the request for re-assessment on merit”, the bench held.
In a major move, a Division Bench of the Rajasthan High Court has recently directed the Income Tax Department to pay 6% interest for delayed refund under Direct Tax Vivad Se Vishwas Scheme (DTVSV Scheme). “As the payment/adjustment has been made on various dates, interest would be calculated on the balance amount till each respective date. The payment of interest be made within 08 weeks from the date of this order”, the Rajasthan High Court Bench also added.
The Kerala High Court observed that the Jurisdiction to consider application under Section 119(2)(b) of the Income Tax Act, 1961 is not vested with Chief Commissioner of Income Tax as the refund claim was above 10 Lakhs. A Single Bench of Justice Dinesh Kumar Singh observed that “In the present case, the claim of refund is more than Ten Lakhs, and therefore, the jurisdiction to consider the application of the petitioner under Section 119(2)(b) of the Income Tax Act, is not vested with the Chief Commissioner of Income Tax. However, the Chief Commissioner of Income Tax-1, Kochi haspassed the order, and thus, the order passed is without jurisdiction.”
In a major relief to Wipro Limited, the Karnataka High Court allowed the additional 3% interest on the delayed Income Tax Refund. The Petitioner Assessee, Wipro Limited has been engaged in the business of manufacture of computer software and providing IT enabled services, is knocking at the doors of Writ Court for assailing the order whereby the respondent, DCIT having negatived its application filed under section 244A(1A) of the Income Tax Act, 1961 has denied additional 3% interest on the allegedly delayed refund of amount relatable to Assessment Year 2008-09. “If delay is brooked in complying with the above direction, the Revenue shall pay to the petitioner – Assessee an extra interest, at the rate of 1.5 % per month and this amount, after payment, may be recovered personally from the erring officials of the Department,” the court said.
The income tax refund process will be issued through online only from March 2019. The amount will be credited to the bank account linked with the Permanent Account Number (PAN). Further, the taxpayers have to pre-validate your bank account with the income tax department e-filing portal to receive a tax refund. On the other hand, in cases where the bank account is not integrated with the e-filing portal, then the income tax department will validate the bank account itself from the details filled up by you, states an advisory issued by CBDT. The department has asked the taxpayers to link their PAN with bank accounts in order to get the income tax refund directly, swiftly and securely in their bank account.
The Gujarat High Court while allowing the Income Tax Refund to Pilot of Kingfisher Airlines held that Mere deduction of TDS does not close the chapter of tax liability unless deposited in Government treasury. “The credit of the tax shall be given to the petitioner and if in the interregnum any recovery or adjustment is made by the respondent, the petitioner shall be entitled to the refund of the same, with the statutory interest, within eight (8) weeks from the date of receipt of copy of this order,” the bench ruled.
The Allahabad High Court has rejected a bail application by the then tax assistant for the alleged offense of granting fake refund claims by tampering with the electronic evidences and computer records. Referring to the above order, Justice Dinesh Kumar Singh observed that “Considering the fact that 482 applications filed by the said coaccused have already been rejected, this application is also rejected having no merit and substance. Interim order, if any, stands vacated.”
The Orissa High Court, on Tuesday acquitted a tax officer from bribery charges after a compliant was lodged for allegedly demanding a bribe of Rs. 8,000 for processing the refund claim of the income tax assessee. Acquitting the appellant, the Court held that “there is force in the submission of the learned counsel for the appellant that P.W.3 is not the competent authority to accord sanction for launching prosecution against the appellant, which is very much essential under section 19 of the P.C. Act and that the sanction order (Ext.8) is a defective one which was mechanically prepared without any application of mind.”
The Delhi High Court in the case of Nokia Corporation directed to issue an income tax refund based on an indemnity bond. The principal sum claimed by Nokia Corporation, the petitioner was Rs. 29,06,95,383/-. Out of the said principal amount, the respondents/revenue has verified an amount equivalent to Rs. 22,46,83,682/-.“Since respondents/revenue have already verified a part of the refund claim, amounting to Rs. 38,58,05,020/- (inclusive of interest), the respondents/revenue will ensure that remittance qua this amount is made to the petitioner/assessee within the next four (4) weeks. “, the bench concluded.
The Calcutta High Court held that the Assessing Officer cannot withhold Income Tax Refund though the statute mandates without assigning any reason. “The action on the part of the respondents in withholding the refund for the assessment year 2018-19 is not sustainable in law and is set aside and quashed. The petitioner is therefore entitled to a mandatory order of refund. The respondents are directed to refund the amount of Rs.20,14,56,936/- within a period of four weeks from a date with further interest on the principal sum of Rs.18,31,42,676/- from the date upto which interest has been added to the principal sum in arriving at the figure of Rs.20,14,56,936/- till actual refund as per the provisions of the Income Tax Act, 1961. The respondents shall act on the basis of a server copy of this order without insisting on a certified copy thereof while processing the refund,” the court said.
The Central Board of Direct Taxes (CBDT) has allowed processing of income tax refund claims in non-scrutiny cases for assessment years up to 2017-18 till October 31, 2020, instead of the earlier date of December 2019, allowing clearing up of old refunds cases. The earlier window was opened from the end of the financial year to be filed until December 2019. Experts said that the move will help provide required liquidity during ongoing tough times.
In pursuance to the Government’s decision vide Press Note on 8th April 2020 to issue pending income tax refunds up to Rs 5 lakh in order to help taxpayers in a COVID-19 pandemic situation, the Central Board of Direct Taxes (CBDT) today said that it has already issued over 10.2 lakh refunds totaling to around Rs. 4,250 crore as on 14th April 2020. In this regard, it is clarified that these are the necessary routine process-related communications to the taxpayers to seek a response on defective ITRs, prima facie adjustments and where confirmation is sought about certain claims made by them. In all such cases, a quick response from the taxpayer would enable the I-T Department to process their refunds expeditiously.
The Delhi High Court directed the Central Board of Direct Taxes (CBDT) to decide on three alternatives for an Income tax refund after considering the revised return filed by the assessee. “Since the issue has been hanging fire for nearly one year, the CBDT is requested to decide this matter as expeditiously as possible though not later than ten (10) weeks from the date of receipt of a copy of the order.”, the bench concluded.
The deadline for filing the income tax return (ITR) for individual taxpayers for the assessment year 2022-23 was 31st July 2022. The taxpayers are eligible for a refund in case of excess payment of tax. It may include instances where employers deduct more income tax for salaried employees at times due to wrong calculations or lack of proof of savings under various sections of the Income Tax Act. You may also notice ‘Defective’ and ‘Expired’ as the status. Defective means that the department found a fault in the ITR filed. Whereas Expired means that the refund was claimed within the 90-day validity period.
As the deadline for submitting Income Tax Returns (ITR) draws near, it is vital to ensure that you submit your returns in a timely manner. Whether you have already completed the filing or are yet to do so, it is of utmost importance to finalize the process before July 31st to prevent any penalties or interest fees. Once you’ve done with the filing, the next step is to wait for the refund status. According to the income tax act’s requirements, the taxpayer is entitled to interest on the amount of advance tax and TDS/TCS that exceeds their net tax liability. The taxpayer is not entitled to interest if there is a delay in submitting a claim for a refund that is their fault. The interest on the income tax refund that was received is taxable to the taxpayer.
The Kerala High Court, while considering a writ petition against the delay in processing the income tax refund due to the technical glitches in the online portal, has directed the Centralized Processing Centre (CPC) to initiate the process and allow the refund to the assessee along with interest. Allowing relief to the assessee, the High Court held that “taking into consideration of the submissions, this writ petition will stand disposed of directing that the refund due to the petitioners shall be processed without any further delay and shall be issued at any rate within a period of 2 months from the date of receipt of a certified copy of this judgment. If the petitioners are entitled to any interest on account of the delayed payment of refund, the same shall also be granted to the petitioners.”
The Institute of Chartered Accountants of India (ICAI) recently issued a press release clarifying that the accused indulged in an income tax refund scam is not a member of ICAI. Last week, a news-item titled ‘I-T busts B’luru CA’s tax refund racket with clients from top tech cos’ published in media dated January 26, 2018. The ICAI takes a strong exception to the contents of the news item published in the newspaper which is incorrect and misleading in so far as the reference to a `Chartered Accountant’ was made. In such sensitive cases, the concerned Department and Publications ought to have verified the facts with the Institute before issuing any statement wherein the involvement of a Chartered Accountant is suspected.
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has directed re-adjudication upholding the demand against MUFG Bank on taxability of interest on income tax refund under Indo-Japan DTAA. “Assessing Officer, in fact, he has followed the directions of the Tribunal as well as learned DRP and has charged tax on the interest income on Income Tax refund at 10% by applying the provisions of Article 11 of India – Japan tax treaty. In case, the Assessing Officer has made any computational error while computing the tax rate, that can be a subject matter of rectification and not an issue to be decided by us in the present appeal. Since, the Assessing Officer has held that the interest income on Income Tax refund is to be taxed at 10%.”
The Income Tax Appellate Tribunal (ITAT), Jaipur bench has held that an intimation under section 143(1) of the Income Tax Act, 1961 does not amount to grant of refund and therefore, the assessee is eligible to receive simple interest till the date of actual refund. Analysing the provisions of section 244A, the Tribunal concluded that “the above facts and rules narrated above, we direct the AO to allow interest to the assessee upto the actual date of refund i.e. upto 11.06.2020. The matter is restored to the file of the AO.”
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench held that Interest on income tax refund not connected with Permanent Establishment (PE), taxable under India Malaysia Double Taxation Avoidance Agreement (DTAA). “In light of the decision of the Jurisdictional High Court and the decision rendered by the Special Bench we find merit in the appeal by the assessee. Accordingly, the Assessing Officer is directed to tax interest on income tax refund under Article 11(2) of India- Malaysia DTAA” the Tribunal noted.
The Delhi High Court suspended the reassessment proceedings in the matter of remission of income tax refund of Rupees 95.26 crores. The petitioner in the present matter is Bid Services Division (Mauritius) Limited. Ruchir Bhatia, senior standing counsel, who appeared on behalf of the respondents/revenue, informed the High Court that pursuant to the High Court order dated 30.05.2023 read with the order dated 25.07.2023, refund due to the petitioner/assessee has been remitted. Kamal Sawhney, who appeared on behalf of the petitioner/assessee, affirmed this position. A Division Bench of Justices Rajiv Shakdher and Girish Kathpalia observed that “We are of the view that at present, the best way forward would be to keep the reassessment proceeding at abeyance, to await the decision of the AAR upon remand order by the Bombay High Court. As and when the decision is rendered by the AAR, parties can then approach the court for appropriate directions, which may include the direction to reignite the reassessment proceeding.”
The Bombay High Court has quashed the CBDT’s order rejecting the assessee’s application for condonation of the 43-day delay in filing the return of in delay in filing the return of income (ITR). The bench comprising Justice K.R. Shriram and Justice Firdosh P. Pooniwalla quashed and set aside the order dated 24th December 2020 impugned in this petition and remitted the matter back to the Board for denovo consideration.
In a major relief to MUFG Bank, a division bench of the Delhi High Court has directed the income tax department to process the refund of Rs. 93,42,03,834/-to the MUFG Bank along with interest in accordance with the Income Tax Appellate Tribunal order. Allowing the petition, the Court ordered that “Keeping in view the limited relief sought in the present writ petitions, the same are disposed of along with pending applications with directions to the Respondents to pass the appeal effect order and make payment of refunds pursuant to ITAT orders dated 21st May, 2020 and 06th December, 2018, the Assessment order dated 18th March, 2021 as well as the order of the ITAT dated 13th September, 2019 and the order of the Calcutta HighCourt dated 07th August, 2019 within six weeks in accordance with law. However, the rights and contentions of all the parties are left open.”
The Jharkhand High Court quashed the criminal proceedings under the Income Tax Act, 1961 as the income tax refund was adjusted against outstanding demands. Gunwant Singh Saluja, the petitioner filed the petition to quash the entire criminal proceedings including the order taking cognizance passed by the Special Judge, Economic Offences, Ranchi, whereby, cognizance under Section 276CC of the Income Tax Act, 1961 has been taken against the petitioner, pending in the Court. The Court of Justice Sanjay Kumar Dwivedi held that “the entire criminal proceedings arising out of Complaint Case No.09 of 2012 including the order taking cognizance dated 04.06.2012 passed by the learned Special Judge, Economic Offences, Ranchi, pending in the Court of the learned Special Judge VII, Economic Offences, Ranchi is quashed.”
The Delhi High Court in a recent case directed the Income Tax department to refund the amount which was not given to the assessee even after a delay of 2 months. The court was also directed to do as needed after an inquiry by the CBDT (Central Board of Direct Tax ). “If this position is correct, certainly CBDT needs to inquire, as the determination qua AY 2021-22 was made as far back as 27.12.2022, whereas the determination about the refund qua AY 2020-21 was made on 08.02.2023, as the interest that has accrued in the meanwhile is a drain on the public exchequer.”, the division bench comprising Justice Rajiv Shakdher and Justice Tara Vitasta Ganju observed. The Court directed the respondents/revenue to ensure that the refund amount is remitted to the petitioner within two (2) weeks.
The Jaipur bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the deduction under Section 80IE of the Income Tax Act would not be available to interest on income tax refund. The Tribunal bench noticed the decision in Atria Power Corporation Ltd.v. DCIT wherein the co-ordinate bench of the Tribunal held that the interest earned on income-tax refunds was not assessable as part of the profits and gains of the power generation business eligible for deduction under section 80-IA(4)(iv) and the interest was assessable under the head “Income from other sources”. In light of above decision, the bench held that the interest on income tax refund is held not eligible for deduction under section 80IE of the Act.
The Income Tax Refunds will be credited to Foreign Bank Account also for Non-Residents who is not having bank account in India, said Finance Ministry in a press release. The Finance Ministry has provided Optional reporting of details of one foreign bank account by the non-residents in refund cases. In view of this, a facility has been provided in return utility for reporting of details of bank account by non-residents, who do not have bank account in India and who are claiming income-tax refund. Therefore, the non-residents who are not claiming refund or non-residents who are claiming refund but having a bank account in India are not required to furnish details of their foreign bank account in the return of income. However, the non-residents, who are claiming income-tax refund and not having bank account in India may, at their option, furnish the details of one foreign bank account in the return of income for issuance of refund.
The Andhra Pradesh High Court directed the adjustment of Income Tax refundable to the assessee towards tax arrears instead of a penalty. The division bench of Justice U.Durga Prasad Rao and Justice J.Uma Devi directed the respondent authorities to adjust the tax refundable to the petitioner for the year 1996-97 of Rs.4,86,970/- to the tax arrears instead of a penalty and accordingly, re-determine the amount payable by the petitioner under Section 90(1) of the Finance (No.2) Act, 1998 and grant certificate expeditiously, but not later than four weeks.
The Delhi High Court, in a major relief to LG, has directed the Central Processing Center to determine and process the Income Tax Refund due to LG Electronics in accordance with the law after the later filed a rectification application under Section 154 of the Income Tax Act, 1961. A two-judge bench consisting of Justice Manmohan and Justice Navin Chawlahas held that “due to some technical reasons the accounting of order under Section 154 could not be completed on 24th February, 2022 and the same may get completed by 25th February, 2022. The demand raised in intimation under Section 143(1) for Assessment Year 2020-21 has been cancelled and once the accounting of rectification order is completed at CPC, refund due will be determined.In view of the aforesaid development, the CPC is directed to determine and process the refund in accordance with law.”
In a recent ruling, the Delhi High Court held that the withholding of income tax refund is legally impermissible and there is no further obligation on the assessee to file a separate claim for filing of income tax refund. Allowing the petition, the Court directed the income tax department to refund the excess amount paid as tax by the petitioner along with the interest within four weeks of receipt of this order.
In a significant ruling the Delhi High Court observed that a non- resident Indian having source of income in India from interest on bank accounts and income tax refund not obliged to maintain books of account in India. “In the impugned order, the Tribunal meticulously examined and elaborately discussed the documentary record in support of the said explanation of money ingress in the bank account of the respondent/assessee. In the absence of a stand taken by the appellant/revenue alleging perversity, this court while acting under Section 260A of the Income Tax Act cannot enter into the arena of appreciation of facts and documents” the Court noted.
The Income Tax Refunds will only be credited to bank accounts that are pre-validated in the e-filing portal. Only pre-validated accounts can be used in the income-tax return while e-filing. If your bank is integrated with the e-filing portal, pre-validation can be done directly through Electronic Verification Code (EVC) and net-banking route. There are various benefits of f Pre-validating the Bank Account namely e-verification of your returns, it streamlines the ECS credit of your income tax refund, and provides you higher security. In addition, it is easily done on the e-Filing Portal.
The Dehradun Bench of ITAT has held that interest on income tax refund received by a foreign enterprise is not effectively connected to its Permanent Establishment in India and therefore it cannot be taxed as its business income under Income Tax Act, 1961. The ITAT also held that receipts from Service Tax and VAT could not be included in the gross taxable receipts of an assessee under the Act. “Also, the ITAT observed that the interest earned by Hughes Baker on its income tax refund was not effectively connected with the business of its PE in India under Article 7 of the DTAA. Therefore, it could not be taxed as its business income under Income Tax Act and was taxable at 15 per cent as per the provisions of Article 11 (2) of the India-US DTAA. “On going through the above, it can be concluded that interest on income tax refund is not effectively connected with the PE either on the basis of asset-test or activity-test. Hence, it is taxable as per the provisions in the Para No. 2 of Article 11 of Indo-US DTAA,” the Tribunal said.
The income tax department on wednesday has exhumed Rs 40 crore tax refund scanner. The scanner was found in the investigation conducted by the I-T investigation wing at various locations in Hyderabad and Vijayawada. Employees of railways , police officials, several companies and eight tax consultants are now under the scanner of the Income Tax Investigation wing, Hyderabad. Income Tax officials said that notices of prosecution will be served on government officials and tech professionals who were involved in the scanner. In 2017 such a crime happened and 200 software employees were involved in that crime. The Hyderabad central crime station conducted the investigation and filed a charge sheet against the consultants and employees who were involved in the scam. As per section 420, cheating and 406 , criminal breach of trust against two tax consultants charges were filed.
Are you delighted to have received an unexpected income tax refund message? However, please exercise caution as it might be a scam. The government is issuing a warning to taxpayers, advising them not to disclose passwords, bank details, or OTPs in response to any fake refund messages. Furthermore, taxpayers can seek assistance from their respective tax professionals to verify the authenticity of the message. Always confirm the refunds or status of your ITR filing through the income tax website only.
The Income Tax Appellate Tribunal (ITAT) Mumbai bench while deleting the penalty imposed under Section 270A Income Tax Act, 1961 observed that no information received was by assessee in respect of interest on income tax refund to tax available at time of filing return of income. Kavita Jasjit Singh, the taxpayer filed the return of income by declaring a total income of Rs.1,88,68,990. Thereafter the assessee’s case was elected for scrutiny. Therefore, the bench held that non-declaration of interest on income tax refund cannot be said to be under reporting of income by the assessee within the meaning of Section 270A of the Income Tax Act.
A significant majority of individuals and 45% of businesses experienced a prompt issuance of income tax refunds, as revealed by a CII survey. This swift refund process emerged as a pivotal factor for over 80% of the respondents, signifying an elevated level of trust in the tax department. However, recently, the CBDT Chairperson Nitin Gupta disclosed that the Income-Tax Department is presently facing delays in around 35 lakh refund cases due to inconsistencies in bank account information. He affirmed that the department is proactively engaging with these taxpayers through a specialised call centre to accelerate the resolution of these matters and ensure prompt refunds to the appropriate bank accounts.
The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the income from mutual fund and interest received from the income tax refund shall be taxable as “income from other sources” for the purpose of Income Tax Act, 1961. “That being the case, it has to be set off against the revenue expenses. However, this is only to the extent of interest incomeearned on fixed deposits. As far as income earned from mutual fund and interest from income tax refund, they have to be taxed under the head income from other sources. Thus I allow assessee’s claim of assessment of interest income under the head business to the extent of Rs. 11,74,070/-. Whereas, the balance amount of Rs. 20,325/- is to be taxed under the head income from other sources. In so far as the issue of set off of income from other sources against the revenue expenses in terms of section 71 of the Income Tax Act, I admit the additional grounds as they do not require fresh investigation into facts,” the Tribunal said.
The Delhi High Court has held that Assessing Officer cannot withhold the Income Tax Refund by citing the reason that the scrutiny notice has been issued. The Petitioner Maple Logistics Private Limited has approached the High Court to refund the income tax amount on account of excess deduction of tax at source in respect of Assessment Years 2017-18 and 2018-19, and other consequential directions to adjust the outstanding amount of TDS and GST payable by Petitioner Company against the pending refund amount without charging of any interest for the delayed payments. While allowing the Writ Petition, the Court also said that “merely because notice has been issued under section 143(2), it is not a sufficient ground to withhold refund under section 241A and the order denying refund on this ground alone would be laconic. Additionally, the reasons which are to be recorded in writing have to also be approved by the Principal Commissioner, or Commissioner, as the case may be and this should be done objectively”.
The Bombay High Court has recently criticized the income tax department and the Central Board of Direct Taxes (CBDT) for not processing the income tax refund claims within the prescribed time frame causing unnecessary hardships to the taxpayers. Considering the relevance of the issue, the Court further added that “In our view, CBDT should be informed about this order because a similar order has been passed yesterday, i.e., 23rd March 2022, in another matter. This Court fails to understand why when refund is admittedly due, the Department is reluctant to issue the refund orders and pushing the assessee to rush to the Court.”
The Telangana High Court directed the Income Tax Authority to refund seized cash of Rs. 5 crores with 12% interest and release the employee of the petitioner. The petitioner has been a proprietary concern carrying on the business of the purchase of agricultural lands and agricultural products throughout the country and claims that it has 46 branches at different places all over the country having an employee strength of about 300. It also deals as a wholesale trader of agricultural products, vegetables, fruits, and post-harvest crop activities. The court further directed the respondents to forbear from conducting any further enquiry pursuant to the panchanama and they shall refund within 4 weeks from the date of receipt of a copy of this order the said cash of Rs.5 crores to the petitioner with interest at 12% per annum from August 28, 2019, till the date of payment to the petitioner.
The High Court of Hyderabad upheld the claim of the State Bank of India (SBI) over the income tax refund credited in the defaulters’ bank account with them and held that bank credits have priority over the government dues including the service tax dues as per section 31-B of the Recovery of Debts and Bankruptcy Act, 1993. Referring to the decision in Bank of Baroda vs. State of Gujarat and Ors, the bench held that “We respectfully agree with the said view and hold that having regard to the clear language contained in Sec.31-B of the Recovery of Debts and Bankruptcy Act, 1993 giving priority to rights of secured creditors (to realize secured debts due and payable to them by the sale of assets over which security interest is created) over all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or local authority, the law has undergone a sea change; and in view of Sec.31-B of the Recovery of Debts and Bankruptcy Act, 1993 and sec.26E of the SARFAESI Act,2002 w.e.f.1.9.2016 the claims of secured creditors such as the petitioner Bank have priority over the claims of the respondents 1-3 for service tax dues.”
In a bid to prevent the bogus refund claims and evasion, the Income tax department is all set to launch some additional checks against persons who claimed a bogus refund based on fraudulent investments shown in tax return forms, CBDT Chairman Sushil Chandra has said. If the committee decides that the assessment is “high-pitched”, it would stay the demand and steps would be initiated against the assessing officer. “Last year, we have transferred more than 12 assessing officers who were found indulging in high pitched assessments,” Chandra said.
In pursuance to the Government’s decision vide Press Note dated April 8th, 2020 to issue pending income tax refunds in order to help taxpayers in a COVID-19 pandemic situation, the Income Tax Department has issued tax refunds at a speed of 76 cases per minute from 8th April to 30th June 2020. During this period of just 56 weekdays, the Central Board of Direct Taxes (CBDT) has issued refunds in more than 20.44 lakh cases amounting to more than Rs. 62,361 crore. CBDT reiterated that taxpayers should provide an immediate response to emails of the Department so that refunds in their cases too could be processed and issued right away. Such emails of the I-T Department seek taxpayers to confirm their outstanding demand, their bank account number, and reconciliation of defect/mismatch prior to the issue of refund. In all such cases, quick responses from the taxpayers would enable the I-T Department to process their refunds expeditiously.
In a setback to GE Capital, the Delhi High Court has dismissed the Petition since Writ Jurisdiction can’t be invoked to challenge Order withholding Income Tax Refund. The Delhi High Court held that the High Court is not empowered to assess tax liability in the first instance. The court held that the AO and Principal Commissioner also, in exercise of powers under Section 241A, are concerned largely with the question of grant of refund likely to adversely affect revenue i.e that the tax, if ultimately found due, being not recoverable, though the AO and Principal Commissioner have in the impugned order given detailed reasons, but in our view were not required to, as the same is likely to prejudice the assessment underway.
The Central Board of Direct Taxes (CBDT) has updated the income tax portal with a new feature of ‘Know your Refund Status’. Now the taxpayer can view their status of the refund through this feature. Recently, the Central Board of Indirect Taxes and Customs (CBIC) enabled the Online facility for Taxpayers to track the status of refund applications in real time. The following colours indicate various stages in the process to track the status of the refund application.
No TDS on Interest on Income Tax Refund under section 244A of the Income Tax Act,1961 is a ‘debt claim’ payable by revenue as per Article 12(3)(a) of India Italy DTAA the Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has held as above. In light of precedents, “interest on an income tax refund is a ‘debt claim’ payable by revenue and in terms of Article 12(3)(a) of the India Italy DTAA such interest is not taxable and no TDS ought to be done by the AO”, observed the Tribunal while partly allowing the appeals.
A division bench of the Delhi High Court comprising Mr. Justice Manmohan and Mr. Justice Dinesh Kumar Sharma, while allowing a petition by M/s American Express India has directed the income tax department to allow a refund of Rs.45.60 Crore along with applicable interest. Allowing the petition, the division bench held that “Keeping in view the limited prayer sought in the present writ petition, respondent No.1 is directed to decide the rectification applications for Assessment Years 2005-06, 2006-07, 2008-09, 2009-10, 2012-13, 2014-15, 2017-18, 2006-07 (FBT) and 2007-08 (FBT) in accordance with law within twelve weeks. Refund, if any, along with applicable interest under Section 244A of the Act shall be issued within the said period.”
In a recent ruling, the Delhi High Court held that interest can be allowed on Refund of interest Waived by the Department under section 220(2A) of the Income Tax Act. The bench was hearing a bunch of writ petitions wherein the petitioners raised a question that whether the expression ‘in any other case’ occurring in Section 244A (1) (b) of the Income Tax Act would include the amount of refund which constitutes the interest that has been waived by the Income Tax Department under Section 220 (2A) of the Act? It was therefore, held that the sum found refundable to the Petitioners as a result of the waiver of interest order passed by the CCIT is a definite sum that was wrongly deducted from the Petitioners as interest. Payment of interest on that sum by the Revenue cannot be characterised as payment of ‘interest on interest’.
The Ahmadabad bench of the National Company Law Tribunal (NCLT) directed the Income Tax Department to refund Rs, 28.92 lakhs tax deducted at source (TDS), under Section 194IA of the Income Tax Act from e-Auction Purchasers to Corporate Debtor (CD). The application was allowed. The Income Tax Department was thus directed to return the amount of Rs.28, 92,101/- into the account of Corporate Debtor within one month from the date of the order.
The Delhi High Court held that the Assessing Officer cannot adjust Refund Due to Taxpayer against outstanding Demand in excess to the limit of 20%. Mr.Bhuwan Dhoopar, the counsel for the petitioner, Eko India Financial Services Private Ltd. contended that as per the binding directions issued by the CBDT, the respondent authority was obliged to grant a stay on recovery of outstanding demand for the Assessment Year 2017-18 to the petitioner upon recovery of 20%, as an appeal challenging the assessment order is pending adjudication before the Commissioner of Income Tax (Appeals). The court directed the respondent authority to refund the amount adjusted in excess of 20% of the disputed demand for the Assessment Year 2017-18, within four weeks.
The Kerala High Court directed to refund Tax Deducted at Source (TDS) which was deducted and deposited by the Insurance Company from the compensation paid to the petitioners as no Income Tax liability arose on compensation awarded by the Motor Accidents Claims Tribunal (MACT). A single-judge bench comprising Justice Dinesh Kumar Singh granted liberty to the petitioners to apply to the 1st respondent within ten days from today and the 1st respondent Commissioner of Income Tax (TDS), Kerala shall process the said application and refund the TDS amount deducted and deposited by the Insurance Company from the compensation paid to the petitioners. Such refund should be processed within one month after applying by the petitioners.
Pune bench of Income Tax Appellate Tribunal (ITAT) ruled that interest is allowed to delay in refund in self-assessment tax under section 244A(1) of Income Tax Act, 1961. The appeal was filed by the Revenue assailing the correctness of the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] in relation to the A.Y. 2007-08. The fact is that the Assessing Officer (AO), in computing interest payable to the assessee on refund under section 244A of the Income Tax Act, did not include the amount of self-assessment tax paid by the assessee. Further, no such prohibition has been brought to our notice by the counsel of the department and therefore supported the view canvassed CIT(A).
The Income Tax Appellate Tribunal (ITAT), Chennai directed to re-compute Refund Claim as per India- UK Double Taxation Avoidance Agreement (DTAA). A Division Bench consisting of Mahavir Singh, Vice President and Manoj Kumar Aggarwal, Accountant Member observed that “Upon perusal of UK tax return, it could be seen that the assessee has offered earnings from employment for £24184 on net basis which has been tax grossed up for £6046. This is in view of the fact that OFSSL has paid provisional payment of £9062 to UK revenue authorities since the employer has undertaken to meet the UK income tax liability arising from employee’s earnings in UK. Accordingly, the assessee has claimed refund of £3016. On the basis of the above, it could be seen that separate tax payment has been made by OFSSL to UK revenue authorities to discharge the tax liability of the assessee in that country. Accordingly, we direct AO to re-compute the income of the assessee”
The deadline for linking the Permanent Account Number (PAN) and Aadhaar card was June 30, 2023. As previously announced by the Income Tax Department, the consequence of not linking the two is the inactivation of the PAN. Consequently, a Non-Resident Indian (NRI) is unable to access their refund status and the refund amount due to the inactivation of the PAN resulting from the non-linking of PAN and Aadhaar. The press release announces the extension of the deadline for linking PAN with Aadhaar until June 30, 2023, and provides information about the associated consequences. The Income Tax department clarifies that non-residents who have informed the Department of their NRI status are exempted from the requirement of linking PAN with Aadhaar.
In a recent ruling, a Division Bench of Bombay High Court directed the Income Tax Authorities to issue a fresh Form-3 subsequent refund of the amount paid under the Income Declaration Scheme (IDS) and the balance amount, if any. The bench of Justice Kamala Khata and Justice Dhiraj Singh Thakur observed that the amount deposited by the petitioner under the IDS could not have been forfeited and have neither been refunded nor adjusted. It was also added that this is a simple case where the money which was lying in the corpus of the revenue had simply to be adjusted by way of a mathematical exercise and benefit accorded to the petitioner under the Direct Tax Vivad se Vishwas Act. The Bombay High Court opined that it would be strictly in accordance with the purpose, intent and the spirit of the Direct Tax Vivad se Vishwas Act aimed at eliminating and resolving the disputes between the assessee and revenue.
The Central Board of Direct Taxes (CBDT) has extended the time limit for processing of validly filed Income Tax Returns (ITRs) with refund claims under Section 143(1) of the Income Tax Act for non-scrutiny cases till 31 Jan, 2024. Board, by virtue of its power under section 119 of the Act and in partial modification of its earlier order under section 119 of the Act dated 05.07.2021 and 30.09.2021, supra, hereby further extends the time frame mentioned in the para no. 2 of the order dated 30.09.2021 till 31.01.2024 in respect of returns of income validly filed electronically.” “All other contents of the said order U/S 119 of the Act dated 05.07.2021 will remain unchanged”, the CBDT Order added.
In a major relief to Max Life Insurance Company Limited, the Delhi High Court directed the Income Tax Department to refund excess outstanding demand of Rupees 221 crores. The petitioner prayed before the Court for the issuance of a writ of mandamus directing the Respondents to refund the amount adjusted against the disputed demand for AY 2017-18 in an illegal and arbitrary manner by adjusting the same against the refund for the preceding years i.e. AY 2013-14 and 2014-15. The Court further noted that the CIT(A) will endeavour to dispose of the appeal at the earliest. The amount will be remitted as expeditiously as possible, though, not later than six (6) weeks from the date of receipt of this order, along with applicable interest.
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