Delay in Processing Income Tax Refund: Bombay HC slams Income Tax Dept for causing Unnecessary Hardships to Taxpayers [Read Order]

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.

A bench of Justice K.R. Shriram and Justice N.R. Borkar was considering an appeal filed by the petitioner, Tata Services Limited who was entitled to a refund of Rs.64,92,16,450/-, and the same has not received the refund to date. The Petitioner’s reminders with the department were unsuccessful. The petitioner further relied on the “Citizen’s Charter 2014, a declaration of our commitment to the taxpayers” by the Income Tax Department where it says issue of refund along with interest under Section 143(1) of the Act will be made within six months from the date of the return and contended that the returns were filed on 15th February 2021.

Allowing the petition, the bench observed that “within two weeks from today, respondent no.4 and respondent no.5 (not below the rank of Assistant Director of Income Tax) shall file an affidavit in reply and serve a copy thereof explaining why the refund is not being issued. Respondents nos.4 and 5 shall also explain why the concerned officer, who is delaying the refund, should not be penalized as much as why he should not be directed to pay the interest from his pocket on the refund. We note this because though petitioner will be getting a refund with 6% interest, it is public money that is being used to pay the interest.”

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.”

To Read the full text of the Order CLICK HERE

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