A division bench of the Bombay High Court has directed the income tax department to bring some order and discipline to the aspect of granting refunds.
The bench comprising Justices B. P. Colabawalla and S. C. Dharmadhikari clarified that it is the duty of the Revenue to grant refunds generated on account of orders of higher forums and disburse the amount expeditiously, on failure of which, the Courts may impose interest on the quantum of refund at such rates determined by the Court.
The bench also directed that all pending refund applications should be processed in the order in which they are received.
Before the High Court, the petitioners submitted that the Petitioner would accept the amounts as disbursed under protest and without prejudice to their legal rights and contentions, particularly to claim interest on delayed refund.
The bench said that “We hope and trust that all pending refund applications are processed in the order in which they are received by the Respondents. If refunds are generated on account of orders of Higher Forums, Authorities and Courts, then, it is the bounden duty of the Revenue to grant such refund and disburse the amount expeditiously.”
“Needless to clarify that in the absence of a clear policy, the Courts may then impose interest on the quantum of refund generated either by virtue of Court orders or by virtue of substantive proceedings arising out of refund applications. Eitherway, it is the Revenue who would have to pay interest on the delayed refund and as such rates determined by the Court,” the bench added.
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