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The petitioner is entitled to refund of adjustments made in excess of 20% of the disputed tax demands and Rs.30,000/- set off of refunds against tax payable was upheld by the High Court Of Delhi through the learned bench led by HON’BLE MR. JUSTICE MANMOHAN HON’BLE MR. JUSTICE DINESH KUMAR SHARMA in the case of GOEL ROAD CARRIERS PRIVATE LIMITED.  Vs ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-10(2),DELHI & ANR. (W.P.(C) 6885/2022 & CM Appl. 20970-20971/2022) on 02nd May, 2022.

Writ petition has been filed seeking refund of Rs.57,65,410/-, which was recovered in excess of 20% of the total disputed tax demand, for the Assessment Year 2012-13 against the refund due for the Assessment Year 2020-21. Petitioner also seeks a direction to the respondents to expeditiously decide the appeal filed against the order dated 27th November, 2019 under Section 144 of the Income Tax Act, 1961.

Learned counsel for the petitioner stated that under Section 220(6) of the Act, the Assessing Officer has been conferred with the power to grant stay on recovery of outstanding tax demand subject to fulfilment of appropriate conditions. He stated that in order to provide guidance and lay down principles regarding stay of demand, the Central Board of Direct Taxes has issued various Circulars/ Notification from time to time including Office Memorandums dated 29th February, 2016 and 31st July, 2017, prescribing therein that in such cases where an assessee challenges the additions/ disallowances made in the assessment order by way of an appeal before the first appellate authority, i.e., CIT(A), and during pendency thereof deposits 20% of the total disputed outstanding tax demand, the Assessing Officer is empowered to grant stay of recovery of the balance outstanding demand. He states that the respondents in violation of the provisions of the Office Memorandums recovered the disputed outstanding tax demand in excess of 20% by way of adjustment of refunds due for subsequent assessment years.

Mr. Ajit Sharma, learned counsel accepted notice on behalf of the respondents. He pointed out that in the writ petition it has been admitted that petitioner has been issued an intimation dated 29th November, 2021 under Section 245 of the Act.

In rejoinder, learned counsel for the petitioner clarified that the intimation under Section 245 of the Act is only for adjustment of Rs.30,000/- which was raised against the penalty under Section 271B of the Act.

The Court observed that “the petitioner is entitled to refund of adjustments made in excess of 20% of the disputed tax demands and Rs.30,000/- set off of refunds against tax payable. 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 2012-13 as well as Rs.30,000/- as mentioned in the intimation under Section 245 of the Act to the petitioner within four weeks.”

Click here to read the Judgement

Written by- Riya Singh, Legal Intern, Prime Legal