Gujarat High Court
Samarpan Foundation vs Commissioner Of Income Tax (Exemption) on 2 May, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 3655 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
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Approved for Reporting Yes No
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SAMARPAN FOUNDATION
Versus
COMMISSIONER OF INCOME TAX (EXEMPTION)
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Appearance:
MR SUDHIR M MEHTA(2058) for the Petitioner (s) No. 1
MS SHAILEE S MEHTA(5873) for the Petitioner (s) No. 1
MS MAITHILI D MEHTA(3206) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 02/05/2025
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE D.N.RAY)
1. Heard learned advocate Mr.Sudhir M. Mehta for the Petitioner
and learned Senior Standing Counsel Ms.Maithili D. Mehta for the
Respondent.
2. Rule returnable forthwith. Learned Senior Standing Counsel
Ms.Maithili D. Mehta waives service of notice of rule for the
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Respondent. With the consent of learned advocates for the
respective parties, the matter is taken up for hearing, as the issue
involved is quite brief.
3. The brief facts of the case are as follows:
3.1 The Respondent has passed the order with reference to letter
dated 28.12.2023, not entertaining the request for payment of
interest Rs. 4,39,010/- on delayed payment of refund amount of Rs.
36,51,389/- under Section 244A of the Income Tax Act, 1961 which
is arising from the provisions of Direct Tax Vivad Se Vishwas Act,
2020.
3.2 The Petitioner is a trust and duly filed its return of income
under Section 139 of the Income-tax Act, 1961, declaring a total
income of 'NIL' for the relevant assessment year on 29.10.2010.
3.3 It is the case of the Petitioner that although refund amounts
were disbursed by the Respondent on various dates, no interest was
paid on account of delayed refunds. In this regard, the Petitioner
made representations to the Respondent on 05.01.2023, 21.08.2023,
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and 28.12.2023, seeking interest of ₹4,39,010/- on the delayed4,39,010/- on the delayed
refund of ₹4,39,010/- on the delayed36,51,398/-.
3.4 Alleging undue delay in the grant of refund, the Petitioner
approached this Court by filing Special Civil Application No. 4023
of 2022. During the pendency of the said petition, the Respondent
remitted refund amounts aggregating ₹4,39,010/- on the delayed33,26,389/- in two tranches
₹4,39,010/- on the delayed20,70,347/- on 18.08.2022 and ₹4,39,010/- on the delayed12,56,042/- on 23.12.2022.
Additionally, penalty amounts imposed under Section 271(1)(c) of
the Act were also refunded, viz., ₹4,39,010/- on the delayed2,20,000/- and ₹4,39,010/- on the delayed1,05,000/- on
23.12.2022. In view of the said payments, the Petitioner was
momentarily satisfied and accordingly, the writ petition was
withdrawn pursuant to the order dated 20.03.2023.
3.5 For the Assessment Year 2010-11, the assessment was
completed under Section 144 of the Act, determining the total
income at ₹4,39,010/- on the delayed3,16,01,300/-. The assessing authority disallowed
various claims including corpus donations, unsecured loans,
unexplained liabilities, and depreciation on the ground that the
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Petitioner lacked registration under Section 12A(a) of the Act.
3.6 Aggrieved thereby, the Petitioner preferred an appeal before
the Commissioner of Income Tax (Appeals) [CIT(A)] via Form No.
35 dated 18.04.2013, which came to be dismissed. Thereafter, an
appeal was filed before the Income Tax Appellate Tribunal (ITAT),
Surat Bench. Meanwhile, the Petitioner also challenged the
imposition of penalty under Section 271(1)(c) before the CIT(A), but
subsequently withdrew the said appeal on 10.12.2020 upon opting
for resolution under the Direct Tax Vivad Se Vishwas Act, 2020
(DTVSVA). In furtherance thereof, the Petitioner submitted a
declaration in Form No. 1 dated 10.06.2020 and an undertaking in
Form No. 2, indicating that the appeal was pending before ITAT
Surat in ITA No. 1652/Ahd/2015.
3.7 The designated Respondent Authority issued a certificate in
Form No. 3 on 07.12.2020, specifying the quantum of tax arrears
and indicating that a refund amounting to ₹4,39,010/- on the delayed33,26,389/- was payable
on or before 31.03.2021. The Petitioner, in compliance thereof
communicated payment details in Form No. 4.
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3.8 On 09.12.2020, the Petitioner moved an application before the
ITAT, Surat for withdrawal of the appeal. Consequent to the same,
Form No. 4 was filed on 10.12.2020 under the DTVSVA. The
Tribunal allowed withdrawal of the appeal vide order dated
16.12.2020.
3.9 Subsequently, a revised Form No. 3 was issued by the
Respondent on 11.01.2021, and the Petitioner responded by filing a
revised Form No. 4 on 12.01.2021. The Respondent thereafter issued
Form No. 5, which is an order evidencing full and final settlement of
tax arrears, confirming refund payable to the Petitioner at
₹4,39,010/- on the delayed33,26,389/-. The refund was accordingly disbursed, thereby
bringing the dispute under DTVSVA to an end.
4. Aggrieved thereby, the Petitioner has instituted the present
writ petition under Article 226 of the Constitution of India, seeking
the directions to the Respondent to grant the interest of Rs.
4,39,010/- on the refund amount of Rs. 36,51,389/- under Section
244A of the Income Tax Act, 1961, along with consequential reliefs:
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"(a) This Hon'ble Court be pleased to issue a Writ of
Mandamus or a Writ in the nature of Mandamus or any
other appropriate Writ, Order or direction, directing the
Respondents, its servants, subordinates, agents and
successors in office; to grant the interest of Rs. 4,39,010/- on
refund amount of Rs. 36,51,389/- u/s 244A of the Income
Tax Act, 1961.
(b) Pending the admission, hearing and final disposal of this
petition, this Hon'ble Court be pleased to direct Respondents
to grant the interest of Rs. 4,39,010/-on refund amount of
Rs. 36,51,389/- u/s 244A of the Income Tax Act, 1961.
(c) This Hon'ble Court may be pleased to grant such order
and further ad-interim relief as may be deemed fit by this
Hon'ble Court, in the interest of justice."
5. Mr.Sudhir M. Mehta, learned Counsel for the Petitioner has
submitted that the Respondent had erred in not granting interest on
the amount of refund which was paid belatedly. According to Mr.
Mehta, learned Counsel for the petitioner once Form No.5 has been
issued on 18.01.2021, the Petitioner became entitled for the amount
of refund. There is no explanation on the part of the Respondent as
to why the refund was granted belatedly on 18.08.2022 and
23.12.2022 and therefore, the delay of almost 18 to 22 months in
refunding the amount must bear interest. In support of his
contentions, Mr. Sudhir Mehta, learned Counsel for the Petitioner
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has relied upon the following decisions:
1. Union of India Vs. Tata Chemicals Ltd. reported in
(2014) 43 taxmann.com 240 (SC).
2. Mrs. Anjul Vs. Office of The Principal
Commissioner of Income Tax reported in (2022) 145
taxmann.com 140(Delhi).
3. UPS Freight Services India (P.) Ltd. Vs. Deputy
Commissioner of Income-tax reported in [2023] 156
taxmann.com 489.
4. Dwejesh Acharya Vs. Income-tax officer reported in
[2023] 157 taxmann.com 332 (Rajasthan).
6. Ms.Maithili Mehta, learned Senior Standing Counsel
appearing on behalf of the Department submits that there is no
provision in the DTVSVA, 2020 which authorizes the payment of
interest. However, Ms.Mehta, learned Senior Standing Counsel is
unable to controvert the applicability of the aforesaid decisions cited
by the learned Counsel for the Petitioner to the facts of the present
case.
7. DISCUSSION & FINDINGS :-
7.1 In the case of Tata Chemicals Limited (Supra), it has been
held as under : -
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"37. A "tax refund" is a refund of taxes when the tax liability
is less than the tax paid. As per the old section an assessee
was entitled for payment of interest on the amount of taxes
refunded pursuant to an order passed under the Act, including
the order passed in an appeal. In the present fact scenario, the
deductor/assessee had paid taxes pursuant to a special order
passed by the assessing officer/Income Tax Officer. In the
appeal filed against the said order the assessee has succeeded
and a direction is issued by the appellate authority to refund
the tax paid. The amount paid by the resident/ deductor was
retained by the Government till a direction was issued by the
appellate authority to refund the same. When the said amount
is refunded it should carry interest in the matter of course. As
held by the Courts while awarding interest, it is a kind of
compensation of use and retention of the money collected
unauthorizedly by the Department. When the collection is
illegal, there is corresponding obligation on the revenue to
refund such amount with interest in as much as they have
retained and enjoyed the money deposited. Even the
Department has understood the object behind insertion of
Section 244A, as that, an assessee is entitled to payment of
interest for money remaining with the Government which
would be refunded. There is no reason to restrict the same to
an assessee only without extending the similar benefit to a
resident/ deductor who has deducted tax at source and
deposited the same before remitting the amount payable to a
non-resident/ foreign company.
38. Providing for payment of interest in case of refund of
amounts paid as tax or deemed tax or advance tax is a method
now statutorily adopted by fiscal legislation to ensure that the
aforesaid amount of tax which has been duly paid in
prescribed time and provisions in that behalf form part of the
recovery machinery provided in a taxing Statute. Refund due
and payable to the assessee is debt-owed and payable by the
Revenue. The Government, therebeing no express statutory
provision for payment of interest on the refund of excess
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amount/tax collected by the Revenue, cannot shrug off its
apparent obligation to reimburse the deductors lawful monies
with the accrued interest for the period of undue retention of
such monies. The State having received the money without
right, and having retained and used it, is bound to make the
party good, just as an individual would be under like
circumstances. The obligation to refund money received and
retained without right implies and carries with it the right to
interest. Whenever money has been received by a party which
ex ae quo et bono ought to be refunded, the right to interest
follows, as a matter of course."
7.2 The aforesaid decision in the case of Tata Chemicals Limited
(Supra) has been followed in several decisions cited by the learned
Counsel for the Petitioner . Further, in a recent decision of this Court
in the case of M/s. Sahil Total Infratech Pvt. Ltd. Vs. Assistant
Commissioner of Income Tax Circle 2(1)(2), Surat & Ors.
reported in 2025:GUJHC:13085-DB, after placing the reliance upon
Paragraph No. 37 of Tata Chemicals Limited(Supra), this Court
had proceeded to hold as under :-
"12. It is true that the Petitioner is not entitled to interest under
Section 244A of the Income Tax Act, 1961, however, when the
Petitioner has opted for direct tax for Vivad se Visvas Scheme
2020 and filed the application which was approved by the
designated authority and refund order is also passed as per the
said scheme on 12/05/2022 by the Jurisdictional Assessing Officer,
the Petitioner was entitled to the interest on the amount of refund
till the same was paid to the Petitioner . The Respondents are
therefore liable to pay the interest on the amount of refund which
is withheld in view of the decision of the Hon'ble Supreme Court
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as reproduced herein above."
7.3 The aforesaid decision of this Court in the case of M/s. Sahil
Total Infratech Pvt. Ltd. (Supra) is squarely applicable to the facts
of the Petitioner 's case. Consequently, the present petition succeeds
and the Respondent is directed to pay a sum of Rs.4,39,010/- to the
Petitioner within a period of Twelve (12) weeks from the date of
receipt of a copy of this judgment. If the same is not paid within the
time prescribed in this judgment, the said sum shall bear an interest
of 12% from the date of this judgment till the date of actual payment
of the sum. Rule is made absolute to the aforesaid extent. No order
as to costs.
(BHARGAV D. KARIA, J)
(D.N.RAY,J)
BINA SHAH
