T vs. UPASANA LIMITED,CHENNAIVS.ITO, CORPORATE WARD-6(1), CHENNAI

Aforesaid appeal by assessee for Assessment Year (AY) 2020-21 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 24-07- 2024 in the matter of an intimation issued by CPC u/s 154 of the Act. The sole grievance of the assessee is computation of interest on refund. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.

The assessee filed return of income on 15-02-2021 wherein it claimed refund of excess tax paid for Rs.40.09 Lacs. Subsequently, the assessee raised two grievances on 11-01-2023 and again on 07-08- 2023 for non-receipt of refund and non-receipt of intimation u/s 143(1). The CPC passed an order u/s 154 on 30-01-2024 wherein refund was determined at Rs.41.03 Lacs along with interest u/s 244A. The refund has been credited to assessee’s account on 31-01-2024. The grievance of the assessee is that the refund has been granted only for 21 months from the period 01-04-2020 to 29-12-2021 as against the claim that the refund was to be granted for 46 months i.e., from April, 2020 to January, 2024. However Ld. CIT(A) denied the same on the ground that refund is granted the moment the concerned officer has signed the order regarding the payment of interest u/s 244A of the act. Reliance was placed on the decision of Hon’ble Rajasthan High Court in the case of Rajasthan State Electricity Board vs. CIT (281 ITR 274) to arrive at such a conclusion. Accordingly, the additional interest was denied to the assessee. Aggrieved, the assessee is in further appeal before us.

Upon careful consideration of factual matrix, it could be seen that the additional interest has been denied to the assessee on account of the fact that an intimation appear to have been issued to the assessee u/s 143(1) on 29-12-2021 vide DRN / SRN 2021202037031557992C. However, no refund has been granted to the assessee pursuant to the same. The said intimation is sought to be rectified by CPC and the intimation has accordingly been rectified u/s 154 on 30-01-2024. The reason for the rectification is stated to be ‘suo-moto for refund failure’. It also emerges that the assessee has filed grievance petition on 11-01- 2023 for non-receipt of intimation u/s 143(1) and refund. The same was resolved on 23-05-2023 by stating that intimation would be sent to the email ID once the processing gets completed. Since the same was still not forthcoming, the assessee raised another grievance on 07-08-2023 which was resolved on 10-08-2023 and it was stated that intimation u/s 154 would be sent once the processing gets completed. However, no intimation is shown to have ever been issued to the assessee u/s 143(1). No such intimation has been shown to us also. Finally, an order u/s 154 has been issued on 30-01-2024 wherein the refund has ultimately been granted to the assessee along with interest from 01-04-2020 to 29-12- 2021. The refund amount of Rs.41.03 Lacs has been credited in assessee’s bank account on 31-03-2024 which is quite evident from assessee’ bank statements as placed on record.

Upon perusal of all the above stated facts, it could be concluded that though an intimation appear to have been made u/s 143(1), the same was never issued to the assessee and no refund was granted to the assessee pursuant to the same. The refund has ultimately been granted to the assessee only after an order u/s 154 was passed by CPC on 30-01-2024. The Hon’ble High Court of Delhi in the case of Nokia Solutions and Networks India (P) Ltd. vs. Addl. CIT (169 Taxmann.com 537) has held that interest on refund is to be calculated till the date the funds are released to the assessee and not till the date of order accepting the assessee’s claim for grant of refund. The expression ‘refund is granted’ would necessarily mean refund of payment of the amount. The interest is paid to compensate the payee for time value of money. Therefore, it is difficult to accept that the date on which refund is granted as used in Sec. 244A is to be read as the date on which an order accepting the assessee’s claim of grant of refund is passed and not the date on which the funds are released. Applying the same principle, we direct Ld. AO / CPC to grant the interest to the assessee in accordance with law till 30-01-2024. We order so.

The appeal stand allowed in terms of our above order. Order pronounced on 9th January, 2025