2021 (8) TMI 1051 - HC - Income Tax

Refund of amount adjustment towards pre-deposit in excess of 20% - recovery proceedings while appeal is pending - HELD THAT - This Court finds that in the present matters no order has been passed by the AO under Section 245 of the Act for adjustments of refunds. Moreover, there is no order by the Assessing Officer giving any special/particular reason as to why any amount in excess of 20% of the outstanding demand should be recovered from the petitioner-assessee at this stage in accordance with paragraph 4(B) of the office memorandum dated 29th February, 2016. Consequently, this Court is of the view that the respondents are entitled to seek pre-deposit of only 20% of the disputed demand during the pendency of the appeals in accordance with paragraph 4(A) of the office memorandum dated 29th February, 2016, as amended by the office memorandum dated 25th August, 2017. Accordingly, the respondent no.1 is directed to refund the amount adjusted in excess of 20% of the disputed demand for the Assessment Years 2015-16 and 2016-2017 within four weeks.

Summary

Issues:
1. Recovery of excess amount by the respondent.
2. Interpretation of office memorandums dated 29th February, 2016 and 25th August, 2017.
3. Discretion of the Assessing Officer in demanding pre-deposit.
4. Compliance with rules and standards set by the government.

Analysis:

1. The petitioner filed writ petitions seeking the return/refund of an amount recovered in excess of 20% of the total disputed demand for the assessment year 2015-16. The petitioner argued that recovery of 86.43% of the demand was contrary to the CBDT's Office Memorandum, which prescribed a 20% payment for disputed demands contested before CIT(A). The court issued notice to the respondents and directed maintenance of status quo on further recoveries.

2. The petitioner relied on the office memorandums dated 29th February, 2016 and 25th August, 2017, which stated that the Assessing Officer should grant stay of demand on payment of 20% of the disputed demand during the pendency of appeals. The respondent contended that the Assessing Officer had the discretion to set off a higher sum under Section 245 of the Act. The court noted that no special reasons were given for recovering amounts exceeding 20% and directed the refund of excess amounts adjusted.

3. The court emphasized that the government must adhere to the rules and standards set by them, citing legal precedents. It held that the Assessing Officer should provide reasons if demanding a lump sum higher than 20%, as per the office memorandum. Since no such reasons were given in this case, the court ruled in favor of the petitioner, directing the respondent to refund the excess amount within four weeks.

4. In conclusion, the court directed the respondent to refund the amount adjusted in excess of 20% of the disputed demand for the relevant assessment years. The writ petitions were disposed of with these directions, emphasizing compliance with the prescribed guidelines. The order was to be uploaded on the website and forwarded to the counsel via email for further action.