2025 (2) TMI 1086 - HC - Income Tax

Recovery of more than 20% of the tax demand from the Petitioner - HELD THAT - Respondents cannot take the advantage of their own delay in disposing the stay application. The effect of adjustment of refund for assessment year 2022-2023 while processing the return on 6 October 2022 would be that the Petitioner has made a payment of Rs.13, 63, 340/- against the demand for assessment year 2015-2016 and the said amount of Rs. 13, 63, 340/- is in excess of 20% of the demand which the Respondents have directed the Petitioner to pay vide order dated 17 April 2024. When this was pointed out even before the stay order was passed by the Petitioner vide letter dated 14 November 2023 the Respondents ought to have refunded the said amount of Rs. 6, 05, 030/- either on the Petitioner making application dated 14 November 2023 or at least while passing the stay order on 17 April 2024. Non consideration of this adjustment while arriving at the 20% outstanding demand for assessment year 2015-2016 is unjustified moreso in the present case when the assessee himself voluntarily made a payment of 20% much before filing of the stay application for assessment year 2015-2016. Provision of Section 250 (6A) of the Act which states that every appeal filed before the first appellate authority where it is possible may be heard and decided within a period of one year from the end of the financial year in which such appeal is filed. This provision was introduced with effect from 1 June 1999 and although it is a directory provision in the absence of any justifiable reason for not disposing the appeal filed before the CIT (A) for a period of more than six years same would run contrary to the objective for which Section 250 (6A) has been introduced. ORDE - Respondent to refund sum of Rs. 6, 05, 030/- being excess adjustment made against the demand for assessment year 2015-2016 within a period of four weeks from the date of uploading of the present order. Petitioner to make an application to the first appellate authority for taking up his appeal for hearing and if such an application is made the Commissioner (Appeal) would hear and decide the appeal keeping in mind the provisions of Section 250 (6A) of the Act. The concerned Commissioner (Appeal) to dispose the Petitioner s appeal as expeditiously as possible preferably by 31 May 2025.

Summary

The issues presented and considered in the judgment are as follows:1. Whether the adjustment of refund for assessment year 2022-2023 against the demand for assessment year 2015-2016, after the Petitioner had already paid 20% of the demand, was in accordance with the law.2. Whether the delay in adjudicating the stay application by the Assessing Officer for assessment year 2015-2016 was justified.Issue-wise detailed analysis:1. The Court considered the relevant legal framework under the Income Tax Act, 1961 and Instruction No. 1914. The Court noted that the Petitioner voluntarily paid 20% of the demand even before filing the stay application. The Respondents defended the adjustment of the refund, citing procedural limitations. The Court criticized the delay in adjudicating the stay application and emphasized that the adjustment of the refund was unjustified given the Petitioner's proactive payment. The Court held that the Respondents could not benefit from their delay and directed the refund of the excess amount adjusted against the demand.2. The Court addressed the delay in disposing of the stay application, highlighting the adverse impact on revenue interests. The Court referred to Section 250(6A) of the Income Tax Act, emphasizing the importance of timely disposal of appeals. The Court expressed concern over the pending appeal before the Commissioner of Income Tax (Appeal) for over six years and instructed the Commissioner to expedite the hearing and decision process. The Court underscored the need for compliance with Section 250(6A) and ordered the concerned authority to investigate the reasons for the delay and take necessary steps to ensure timely disposal of the appeal.Significant holdings:- The Court criticized the Respondents for the delay in adjudicating the stay application and emphasized the Petitioner's proactive payment of 20% of the demand.- The Court held that the adjustment of the refund against the demand, after the Petitioner had already paid 20%, was unjustified and ordered the refund of the excess amount.- The Court directed the Petitioner to apply for the hearing of the appeal before the Commissioner of Income Tax (Appeal) and instructed the Commissioner to expedite the disposal of the appeal in compliance with Section 250(6A) of the Income Tax Act.In conclusion, the Court found in favor of the Petitioner, ordering the refund of the excess amount adjusted against the demand and directing the expedited disposal of the pending appeal before the Commissioner of Income Tax (Appeal) to uphold the principles of timely justice and compliance with statutory provisions.