Whether the assessee is entitled to interest on refund after 30 days of issue of form 5 in VSVS 2020

Описание: [2025] 479 ITR 493 (Ker)
[In the Kerala High Court]

Satwashil Vasant Mane
v.
Assistant Commissioner of Income-Tax And Another

Bechu Kurian Thomas J.

January 7, 2025

Playlist: 244A, VSVS

Sec 244A: Interest on refunds

A.Y.: 2016-17/Assessee

Question: Whether the assessee is entitled to interest on refund after 30 days of issue of form 5 in VSVS 2020 ?

1) Cash and gold bars were seized by police from the assessee, non-filer of return of income and handed over to the Magistrate after registering a crime.

2) The Department treated these assets as the assessee's income and took custody of the cash under section 132A.

3) An assessment order followed, fixing the assessee's total income for the assessment year 2016-17 and imposing a penalty under section 271AAB.

4) The assessee filed a declaration under the Direct Tax Vivad se Vishwas Act, 2020 which was accepted.

5) Since out of the cash seized, an amount was retained by the Department and an order was issued, giving effect to form 5 certificate and directed refund confirming that the assessee was eligible for a refund from the seized cash.

6) The Department delayed issuing the consequential refund order by twenty-three months, beyond the thirty-days limit set by the Central Board of Direct Taxes.

7) Held by allowing the petition, that since form 5 certificate was issued to the assessee under the 2020 Act, the consequential order granting a refund ought to have been issued within the prescribed thirty days timeline.

8) Section 7 of the 2020 Act and its Explanation indicated that if the declarant had paid any amount in excess of tax found payable under section 3, he would be entitled only to refund of the excess amount paid, but without interest.

9) Such provision could not enable the Department to deny interest due to the assessee since the situation was different.

10) The provisions of section 7 interdicted the grant of interest on payments made prior to the submission of the declaration by the declarant.

11) After the declaration was made by the Department in form 5, identifying the amount of arrears due from the declarant, the delay there-after, in refunding any excess amount paid earlier, could not be protected by the Explanation to section 7 of the 2020 Act.

12) Though the assessee was not entitled to interest for any excess amounts paid earlier until the declaration was issued, the delay caused in issuing the consequential order and payment of refund was not immune from the interest component, by taking recourse to section 7 of the 2020 Act.

13) Once form 5 certificate was issued, the Department was bound to pass consequential orders within thirty days.

14) Failure to issue the consequential order and grant refund was a default on the part of the Department.

15) After determining that refund was due to an assessee, it remained a debt payable by the Department.

16) Retention of the said debt without authority rendered the person in possession of the amount liable to compensate the other.

17) The contention of the Department that the assessee was a non-filer of returns and had not paid any tax and instead the amount was seized from him was not acceptable.

18) The requirement of imposing interest on delayed refunds was a matter of accountability of the Department and a measure of recompense for the assessee who was deprived of the money.

19) Therefore, the Department was directed to issue orders granting interest on the amount of refund at the rate of six per cent. from expiry of thirty days from the date of issue of form 5 till the date of refund order.

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2) WHETHER ASSESSEE HAS ALSO TO CHALLENGE THE FINDINGS OF THE A.O THAT NOTICE HAS BEEN SERVED?- https://www.youtube.com/watch?v=XbZWh...

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4) WHETHER NOTICE SENT TO SECONDARY EMAIL IS VALID IF NOT SENT TO PRIMARY E-MAIL U/S 148?- https://www.youtube.com/watch?v=aAzHE...

5) WHETHER ENTRIES IN BOOKS OF ACCOUNTS CONCLUSIVE TO DETERMINE TAXABLE INCOME OF ASSESSEE?- https://www.youtube.com/watch?v=Rx8JQ...