Four-Year Income Tax Refund Delay: Delhi High Court Directs AO To Appear If Campus Activewear Not Paid With Interest

The Delhi High Court has directed the Assessing Officer (AO) to remain present before it and explain the “inordinate delay” in refunding Campus Activewear if the due payment along with applicable interest is not made by the next date. The refund has remained unpaid for last four years.

The Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta was informed by the Income Tax Department counsel that the requisite exercise for processing the Petitioner-company's refund was underway and the needful would be done within four weeks.

The Court accordingly directed,

“In case, due payment is not made to the petitioner alongwith applicable interest by the next date, the Assessing Officer (AO) shall remain present in the Court, in order to explain the reasons for the inordinate delay caused in making the due compliance of the order and not making refund to the petitioner for last four years.”

The matter arises from Campus Activewear's writ petition concerning Assessment Year 2021-22.

In its order passed in May this year, the Court had recorded the company's grievance that although no assessment order or intimation had been served upon it, a demand of Rs. 10.49 crore was reflected on the Income Tax Business Application (ITBA) portal.

The Income Tax Department had then informed the Court that the petitioner's refund had been processed but could not be completed due to a technical issue.

The Court observed that there appeared to be a “technical glitch or misconception” on the Department's part regarding the demand for AY 2021-22.

The Court had directed the AO to provide Campus Activewear with a copy of the intimation or order finalising its assessment. It further directed that if the demand reflected on the ITBA portal did not exist, the AO should delete it; and if the company was entitled to a refund, the amount should be remitted along with applicable interest or reasons for the inability to do so should be communicated.

The litigation dates back to May 2024, when Campus Activewear had contended that while it had received an intimation dated December 28, 2023, no final assessment order had been made available to it. The Court had then asked the Department to obtain instructions.

Thereafter, the matter was repeatedly adjourned for the Department to seek instructions. On May 8 last year, the Court had granted final opportunity to the Revenue to file a reply in the matter.

Despite this, the Department failed to file a reply and as a consequence, ₹5,000 costs were imposed.

On August 12, the Department again assured the Court that the refund would be processed within four weeks. The matter is now listed on September 14.

For Petitioner: Advocate Kamal Sawhney; Advocate Arun Bhadauria; Advocate Puru Medhira.

For Respondents: Senior Standing Counsel Vipul Agrawal; Junior Standing Counsel Sakshi Shairwal; Junior Standing Counsel Akshat Singh; Advocate Harshita Kotru; Advocate Gaoraang Ranjan.