Landmark Cases on Interest and Recovery

An assessee is entitled to the adjustment of seized cash against their advance tax liability, and consequently, no interest under sections 234A and 234B can be charged if the department fails to respond to the assessee's request for such adjustment.

The case is cited for the proposition that a court cannot assume jurisdiction to grant an injunction against the recovery of tax unless there is a strong case for granting such relief, indicating a cautious approach to interfering with tax recovery processes.

When a refund is granted to an assessee, it must first be adjusted against the correct amount of interest due. Any remaining portion of the refund should then be adjusted against the balance tax liability. This ensures proper calculation of further interest payable to the assessee under Section 244A.

A coordinate bench has held that interest under section 234B of the Income Tax Act, 1961, can be levied if amendments are considered and judicial decisions are relied upon by the learned CIT (Appeals) when allowing a ground of appeal.

For the applicability of Section 234D interest, the date of assessment is relevant, not the year of assessment. An assessee is liable for interest on a refunded amount if the regular assessment is completed after the amended proviso of law (June 1, 2003) came into operation.

Payment of tax under section 172(3)/(4) of the Income-tax Act is treated as advance tax, entitling non-residents to refunds and interest on such refunds in case of regular assessment under section 172(7).

If interest on a tax refund is wrongfully retained by the revenue, interest on that retained interest is payable. This is true even if there is no specific provision in the Income Tax Act for payment of interest on interest.

Interest under section 234 cannot be levied if the employer fails to deduct tax at source, as the employee should not be faulted for the employer's default.

An assessee is entitled to interest under Section 244A(1)(b) when a refund arises on account of payment of self-assessment tax.

Interest under section 244A of the Income-tax Act is allowable for the period from the first day of the assessment year up to the date of refund, even if TDS certificates were filed during assessment proceedings, provided the tax was deducted and deposited on time.

Tax paid on self-assessment falls under the residuary clause of Section 244A(1)(b) for refund interest, payable from the date of self-assessment tax payment until the refund date.

For the purpose of calculating interest under section 234C of the Income Tax Act, the date of presentation of a cheque to the bank is considered the date of payment, not the date of clearing.

An assessee is not entitled to interest under Section 244A on the refund of self-assessment tax voluntarily paid under Section 140A.

When an original assessment is set aside in appellate proceedings for a fresh assessment, the period for reckoning interest under sections 234A and 234B is determined by whether the subsequent assessment is considered the first or a regular assessment.

Interest is payable on refund even if the claim for refund is belatedly made during assessment proceedings, provided the delay in refund is not attributable to the assessee. Section 244A(2) of the Act does not disentitle an assessee to interest in such circumstances.

The levy of interest under Section 234-A of the Income Tax Act is statutory, mandatory, and automatic, meaning it cannot be a question of law that can be raised in appeal. The High Court's jurisdiction under Section 260A is limited to questions of law, and thus, observations on the levy of interest are generally outside its scope.

Interest under section 234B is not leviable if the entire income is subject to deduction of tax at source, especially when the assessee has not earned income requiring advance tax payment.

Interest under Section 234A and 234B is chargeable even if a specific notice for it was not issued by the Assessing Officer. This ruling has overruled prior decisions that held otherwise.