Madras HC Directs IT Dept to Address Taxpayer’s Claim for Unpaid Interest on Sanctioned Refund

In the case of an income tax refund that was sanctioned with interest but paid without it, the Madras High Court directed the Income Tax Department to acknowledge and dispose of the taxpayer’s representation regarding the unpaid interest.

Vinplex India Private Limited, the applicant, submitted the writ petition asking for the interest to be filed with the refund, as the income tax department is not able to consider the representation. It was claimed that the income tax refund, along with the interest till October 2024, was duly sanctioned and communicated via the department via an email on 10.10.2024.

According to this, the court asked the respondents previously, through its order on 10.02.2025, to release the refund, including the sanctioned interest. The principal refund amount was credited, but the interest was skipped without elaboration.

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The Junior Standing Counsel, representing the department, does not contradict the arrangement of events and left the case to the discretion of the Court.

The Justice Krishnan Ramasamy Court discovered merit in the issues of applicant. It was marked by the court that the sanctioned refund, along with the interest, and no justification was there for keeping it after the applicant brought the issue to the attention of the department via a formal representation.

The court held that “In the present case, the refund of a sum of Rs. 3,71,04,013/-, which includes the interest amount for the period till October 2024, was sanctioned by the respondents to the petitioner vide e-mail dated 10.10.2024. Hence, this Court, vide order dated 10.02.2025, has directed the respondents to refund the amount along with interest as stated in the aforesaid e-mail.”

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As per that, the HC asked the income tax department to regard and dispose of the representation of the applicant on 11.03.2025 on its own merits and in compliance with the law within 4 weeks from the receipt date of the order of the court.