Delhi HC| Refund cannot be adjusted while appeal to earlier challenge to assessment is pending

Delhi High Court: A Division  Bench of Manmohan and Manmeet Pritam Singh Arora JJ. disposed the petition and directed the respondents to refund to the petitioner the amount adjusted in excess of 10% of the disputed tax demands for the Assessment Year 2017-18. 

FACTUAL BACKGROUND 

The petitioners herein were seeking refund of Rs. 1,52,240/- which was recovered in excess of 10% of the total disputed tax demand for the Assessment Year 2017-18 against the refunds due for the Assessment Year 2020-21. 

An appeal was pending against the first case and a stay order was granted in favor of the petitioner and. It was alleged that the amount was recovered despite the stay order. However, the stay order had expired and the application for renewal was pending.  

Arguments were also made on the notice under Section 245 of the Income Tax Act, 1961 being issued to the petitioner, which is a mandatory requirement before adjusting any refund due.  

DECISION AND OBSERVATION 

The Bench of Manmohan Singh, J. and Manmeet Pritam Singh Arora, J.  took the view that the restrictive stay order issued by the Respondents granting stay to the petitioner only till a specific date was in violation of the directions of the Central Board of Direct Taxes as well as previous orders of this Court, categorically holding that the Assessing Officer must grant stay till the disposal of the first appeal.[Kshiprajatana v. Asst. Commissioner of Income Tax Circle 61(3),  2022 SCC OnLine Del 1528, decided on 20-5-2022] 

Appearances: 

For petitioners: Mr Vikram Kakkar 

For respondent: Mr Kunal Sharma with Ms Zehra Khan and Mr Shray Nargotra