2021 (6) TMI 821 - HC - Income Tax

Adjustment of demand against refund - HELD THAT - We are informed that insofar as AY 2003-2004 is concerned, the applicant/petitioner is entitled to refund of ₹ 4,92,69,031 and likewise in respect of AY 2004-2005, the petitioner is entitled to refund of ₹ 7,94,89,178. As against this, we are told, that the demand for AY 2005-2006 is approximately ₹ 2.02 crores. The assessing officer should have made the adjustment, and passed an appropriate order, in that behalf. Since this suggestion has not been accepted, the captioned application is disposed of, with the following directions (i) The concerned officer will ensure that the amount payable on account of refund to the applicant/petitioner for AY 2003-2004 and AY 2004-2005 is remitted to it within 10 days of receipt of a copy of the order, after making adjustment to the demand outstanding against AY 2005-2006. (ii) That being said, we may note that Ms. Vibhooti Malhotra has not able to tell us as to whether, apart from AY 2005-2006, any other demand is outstanding qua the petitioner. Therefore, in case it is discovered that a recoverable demand is outstanding vis-a-vis the petitioner, the same will be adjusted before releasing any amount as indicated in paragraph 3(i) above, albeit, only after serving a prior notice and giving due opportunity to the petitioner to contest the same.

Summary

Issues:
Adjustment of demand against refunds for Assessment Year (AY) 2005-2006.

Analysis:
The judgment by the Delhi High Court, delivered by Hon'ble Mr. Justice Rajiv Shakdher and Hon'ble Mr. Justice Talwant Singh, revolves around the issue of adjusting a demand against refunds for Assessment Year (AY) 2005-2006. The petitioner, represented by Mr. Sachit Jolly, proposed the adjustment of the demand against available refunds due to the urgent need for working capital and the requirement to deposit the disputed tax under the Direct Tax Vivad se Vishwas Act, 2020. The court noted that the petitioner was entitled to refunds of significant amounts for AY 2003-2004 and AY 2004-2005, while facing a demand of approximately ?2.02 crores for AY 2005-2006.

The court highlighted that the assessing officer should have made the adjustment and passed an appropriate order in that regard. Since the suggestion was not accepted, the court disposed of the application with specific directions. Firstly, the concerned officer was directed to ensure that the amount payable as a refund for AY 2003-2004 and AY 2004-2005 is remitted to the petitioner within 10 days of receiving the order, after adjusting it against the outstanding demand for AY 2005-2006. Secondly, the court noted that apart from AY 2005-2006, it was unclear if any other demand was outstanding against the petitioner. Therefore, any discoverable demand would be adjusted before releasing the refund, following a prior notice and an opportunity for the petitioner to contest it.

In conclusion, the court disposed of the application with the aforementioned directions, emphasizing the need for the assessing officer to make the necessary adjustments and ensure timely remittance of refunds to the petitioner while addressing any outstanding demands diligently and fairly.