Delhi HC Raps Income Tax Dept for 3-Year Delay in tax refund, Orders Refund with Interest [Read Order]
The Court observed that the concerned officials ought to have taken up the matter with "alacrity," which they failed to do.
![Delhi HC Raps Income Tax Dept for 3-Year Delay in tax refund, Orders Refund with Interest [Read Order]](https://images.taxscan.in/h-upload/2025/11/08/2103456-delhi-hc-income-tax-dept-for-3-year-in-tax-refund-orders-refund-interest-taxscan.webp "Delhi HC Raps Income Tax Dept for 3-Year Delay in tax refund, Orders Refund with Interest [Read Order]")
The Delhi High Court has criticised the Income Tax Department for a three-year delay in implementing an order of the Income Tax Appellate Tribunal (ITAT) and directed the department to refund a tax amount of over Rs. 36 lakh to the assessee, along with statutory interest.
The petition was filed by Santosh Kumar Suri, challenging the inaction of the Income Tax Department following an ITAT order dated 20th January 2023. The case related to the Assessment Year 2016-17, where the petitioner's appeal concerning the computation of capital gains on an inherited property was partially allowed by the Commissioner of Income Tax (Appeals).
The matter was further appealed to the ITAT, which directed the Assessing Officer to allow the cost of indexation to the petitioner in accordance with judgments of the Bombay and Delhi High Courts, which held that for inherited property, indexation must be computed from the year the previous owner first held the asset.
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According to the petitioner's counsel, despite the clear and explicit directions from the ITAT, the Assessing Authority failed to conduct the fresh assessment within the statutory period of nine months as mandated under Section 153(3) of the Income Tax Act, 1961. The petitioner submitted that several reminders were sent to the department, but no action was taken, compelling him to file the present writ petition.
Per contra, the counsel for the Deputy Commissioner of Income Tax, appearing on advance notice, submitted that he had no instructions in the matter and was unaware of a subsequent order passed by the Assessing Authority.
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A division bench comprising Justice Prathiba M. Singh and Justice Shail Jain expressed consternation that the Income Tax Department only "got activated" after the writ petition was filed. The Court noted that for the entire period following the ITAT order in January 2023, no action was taken by the department, despite reminders from the petitioner. The Court observed that the concerned officials ought to have taken up the matter with "alacrity," which they failed to do.
Finding that the department's inaction caused an unjust delay, the bench directed that the amount of Rs. 36,85,243, as determined by the Assessing Authority in its order dated 14th October 2025, be credited to the petitioner. The refund was to be made within one week, along with interest at the rate of 3% as per Section 244(1A) of the Income Tax Act, 1961.
The Court further warned that if the amount was not credited, the concerned official of the Income Tax Department would have to remain present in court on the next date of hearing.
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