2022 (2) TMI 291 - HC - Income Tax

Refund recovered in excess of 20% of the total disputed tax demand - HELD THAT - As admitted that the relief sought in the present writ petition is covered by the judgment of this Court in the case of Skyline Engineering Contracts (India) Pvt. Ltd. 2021 (8) TMI 1051 - DELHI HIGH COURT - Thus this Court is of the opinion that the petitioner is entitled to refund of adjustments made in excess of 20% of the disputed tax demands. Consequently, this Court directs the respondents to verify the facts stated in the writ petition and if it finds them to be true and correct then refund the amount adjusted in excess of 20% of the disputed tax demands for the Assessment Year 2017-18 to the petitioner within four weeks.

Summary

Issues Involved:
1. Refund of excess tax demand recovery exceeding 20% for Assessment Year 2017-18 against refunds due for Assessment Years 2020-21 and 2021-22.

Detailed Analysis:
1. The petitioner filed a writ petition seeking a refund of ?2,87,520/-, which was recovered in excess of 20% of the total disputed tax demand for Assessment Year 2017-18 against refunds due for Assessment Years 2020-21 and 2021-22.

2. The petitioner's counsel referred to Section 220(6) of the Income Tax Act, 1961, stating that the Assessing Officer can grant stay on recovery of tax demand upon fulfillment of conditions. The Central Board of Direct Taxes issued Circulars/Notifications guiding the stay of demand process. The petitioner argued that recovery exceeding 20% of the disputed tax demand through refund adjustments violated these guidelines.

3. The petitioner had paid 20% of the disputed amount for Assessment Year 2017-18 as per a stay order but the respondents adjusted 25% from refunds for subsequent years. The respondents' actions were contested as being in contravention of the Circulars/Notifications.

4. The respondent's counsel accepted notice and acknowledged a previous judgment where it was held that recovery exceeding 20% without specific reasons was not permissible during the pendency of an appeal. The court emphasized that the Assessing Officer can seek pre-deposit of only 20% of the disputed demand unless specific reasons are provided justifying a higher amount.

5. The court directed the respondents to refund the excess amount adjusted from the petitioner and restrained further adjustments or recoveries until the appeal's disposal. The respondents were instructed to verify the facts and refund the excess amount within four weeks.

6. In conclusion, the court granted the petitioner's refund request for adjustments made in excess of 20% of the disputed tax demands, emphasizing adherence to the legal provisions and Circulars/Notifications governing the stay of demand process.