ITAT rules filing mistake does not forfeit refund interest

The Mumbai bench of the Income-tax Appellate Tribunal (ITAT) has ruled that an error in an income tax return does not cancel a taxpayer's statutory right to interest on refunds under Section 244A. The decision stemmed from a case for Assessment Year 2012-13, where a taxpayer initially reported gains from an apartment sale as short-term but later revised the claim to long-term capital gains, generating a refund. The ITAT validated the revised claim and ordered the department to release interest on a ₹5.39 crore refund after standard verification.

The tribunal rejected the tax department's argument that the original filing error justified withholding interest. It noted the taxpayer did not cause any procedural delays and that Section 244A(2) only allows interest to be withheld for delays directly caused by the taxpayer. The tribunal also ruled the department liable for interest on a separate ₹90.94 lakh refund that was paid late, applying an extra 3 per cent annual interest under Section 244A(1A) for refunds stemming from appellate orders. Section 244A further states no interest is due if the refund is below 10 per cent of the final tax determined.