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2021 (12) TMI 1262 - HC - Income TaxRefund claim - Adjustment of amount against outstanding demand - stay on recovery of outstanding tax demand subject to fulfillment of appropriate conditions - HELD THAT - Refunds have been adjusted against the outstanding tax demand by the Authority without following the procedure prescribed under Section 245 of the Act, inasmuch as no notice or opportunity of pre-decisional hearing had been provided to the Petitioner prior to such adjustment of refund in excess of 20%, 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. (See Glaxo Smith Kline Asia Pvt. Ltd. vs. The Commissioner of Income Tax Ors., 2007 (1) TMI 113 - DELHI HIGH COURT and The Oriental Insurance Co. Ltd. vs. Deputy Commissioner of Income Tax Anr. 2014 (10) TMI 746 - DELHI HIGH COURT This Court directs the Respondents to verify the facts stated in the writ petition and if they find them to be true and correct then refund the amount adjusted in excess of 20% of the disputed tax demands for the Assessment Year 2016-17 to the Petitioner within six weeks.
Issues involved:
Seeking refund of excess tax demand recovery, directions for pending appeal disposal, violation of stay application principles, non-compliance with office memorandums, entitlement to refund of adjusted amount in excess of 20% of disputed tax demands. Analysis: 1. Refund of Excess Tax Demand Recovery: The petitioner filed a writ petition seeking a refund of an amount recovered in excess of 20% of the total disputed tax demand for the Assessment Year 2016-17. The petitioner also requested directions for the disposal of the appeal filed against the order dated 07th December, 2019, under Section 143(3) of the Income Tax Act, 1961. The petitioner argued that the assessing officer should grant a stay on recovery of outstanding tax demand upon fulfilling appropriate conditions under Section 220(6) of the Act. The respondents had adjusted an amount significantly higher than 20% without deciding on the petitioner's application for stay, leading to the petitioner's claim for refund. 2. Violation of Stay Application Principles: The petitioner highlighted that the respondents violated the provisions of the Office Memorandums dated 29th February, 2016, and 31st July, 2017, by recovering the disputed outstanding tax demand in excess of 20% through adjustments of refunds due for subsequent assessment years. The petitioner emphasized that the assessing officer must grant a stay on the recovery of the balance disputed outstanding tax demand upon payment of 20% of the disputed amount until the disposal of the first appeal, unless falling under specific categories mentioned in the Office Memorandums. 3. Non-Compliance with Office Memorandums: The court referred to a previous judgment where it was held that the assessing officer should grant a stay of demand till the disposal of the first appeal on payment of 20% of the disputed demand unless specific reasons are provided for a higher amount. The court noted that the respondents failed to provide any special reason for recovering an amount exceeding 20% of the outstanding demand. Consequently, the court directed 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 the relevant office memorandums. 4. Entitlement to Refund of Adjusted Amount in Excess of 20%: Based on the legal principles and non-compliance with the order dated 07th February, 2020, the court held that the petitioner is entitled to a refund of adjustments made in excess of 20% of the disputed tax demands. The court directed the respondents to verify the facts and refund the amount adjusted in excess of 20% of the disputed tax demands for the Assessment Year 2016-17 to the petitioner within a specified timeline, thereby disposing of the writ petition and application. This detailed analysis of the judgment addresses the issues raised by the petitioner and the court's decision based on legal principles and precedents cited during the proceedings.
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