TMI Blog2005 (8) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the previous years, relevant to the assessment years 1977-78, the assessment was completed originally under section 143(1) of the Acton 12-2-1980. Later on, assessment was made under section 143(3) on 23-9-1986. Consequent to the change in the assessed income of the firm, M/s. Swastik Oil Industries, assessment was modified under section 155 of the Act on 31-5-1993. 4. In respect of the previous year relevant to the assessment year 1978-79, assessment was originally completed on 31-3-1981. It appears to have been revised under section 143(3) of the Act. Consequent to the modification in the order passed in the case of M/s. Swastik Oil Industries, an order under section 155 of the Act was passed in the case of the assessee on 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In other words, the assessee did not receive the amount receivable on 31-5-1993, till the date of consequential order dated 24-5-2002. According to the assessee, the interest payable on the refund under section 214 of the Act accrued to the assessee on 31-5-1993 itself. For example, in respect of the assessment year 1977-78, interest accrued to the assessee is Rs. 16,940 on the refund of Rs. 7,745, bringing the total amount refundable to Rs. 24,685. Since there is delay in refunding the amount, interest has to be computed under section 243 of the Act. Since the Assessing Officer has not granted interest under section 243/244 of the Act, in the order passed on 24-5-2002, assessee contended before the first appellate authority that the inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 155 (dated 31-5-1993) and the date of issue of refund (dated 24-5-2002), was rejected on the ground that in the order dated 31-5-1993 interest was not correctly worked out, and thus, the quantification was done and the refund got crystallized only upon the passing of the order dated 24-5-2002, and, thus, there was no delay in the issue of the refund. 9. Further aggrieved, assessee is in appeal before the Tribunal. 10. The learned counsel appearing on behalf of the assessee submitted that there is substantial delay in passing the consequential orders, and if the interpretation placed upon the provisions of the Act by the CIT(A) is accepted, the provisions of sections 243 and 244 cannot be applied uniformly to all the assessees, and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various Courts go to show, that if an assessee is deprived of the use of the funds which are refundable in law, the Assessing Officer is duty bound to compensate for such loss by granting interest under section 243/244 of the Act. 13. On the other hand, the learned Departmental Representative strongly relied upon the orders of the tax authorities. He submitted that the interest under section 214 of the Act was determined only in the order dated 24-5-2002. Therefore, there was no delay in granting refund, so as to enable the assessee to claim for any interest on such refund. 14. I have carefully considered the rival submissions and perused the record. In the case of A.K. Jain Bros. (HUF), the Special Bench of the Tribunal observed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeding under this Act, if refund becomes due to the assessee, the Assessing Officer has to refund the amount, without expecting the assessee to make a claim in that behalf, and in the absence of refunding such amount, a liability is fastened on the Central Government under section 244 of the Act. Thus, a combined reading of both the provisions makes the position crystal clear that it is the amount which becomes due to the assessee, and not necessarily the tax component, which earns interest. In other words, interest under section 244 has to be worked out not only on the tax component, but also on the interest payable under section 214 of the Act. The facts of that case were as follows- 18. In respect of the assessment year 1967-68, advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 240 of the Income-tax Act casts an obligation on the Assessing Officer to grant refund even though the assessee has not asked for it. The refund includes the interest payable under section 214 of the Act. The refund became payable in the instant case when the first appellate authority directed the Assessing Officer to grant interest under section 214 of the Act. Since the Assessing Officer has not passed the consequential order within a reasonable time, assessee cannot be deprived of the legitimate amount refundable for an unreasonably long period, and thus reckoned from the DCIT (Appeal)'s order dated 17-10-1995, interest under section 244 has to be granted to the assessee till the date of actual refund of the amount. The Legislatu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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