KCC BUILDCON PRIVATE LIMITED vs. ASSISTANT COMMISSIONER OF INCOME TAX AND ORS

Facts

The petitioner, KCC Buildcon Private Limited, had income tax dues of Rs.43,61,12,791/- for assessment years 2011-12 to 2021-22. After depositing Rs.8,19,44,555/-, the Deputy Commissioner of Income Tax (DCIT) stayed the recovery of the balance Rs.35,41,68,236/- on 28.05.2025. Subsequently, for assessment year 2024-25, the petitioner was assessed to a refund of Rs.55,61,41,560/-. The respondent authorities adjusted Rs.35,41,68,236/- of this refund against the previously stayed demand. The petitioner challenged this adjustment through a writ petition before the High Court.

Held

The High Court held that the adjustment of Rs.35,41,68,236/- made by the respondent authorities on 29.05.2025, against the income tax dues for assessment years 2011-12 to 2021-22, was in contravention of the stay order dated 28.05.2025, passed by the DCIT. The Court reasoned that once a stay on recovery was granted, the revenue could not proceed to collect the same amount by way of adjustment against a refund. Therefore, the adjustment could not be sustained. The Court directed that the sum of Rs.35,41,68,236/- be refunded forthwith to the petitioner, along with applicable interest as per law. The petition was allowed in these terms.

Key Issues

1. Whether the adjustment of the refund of Rs.35,41,68,236/- made by the respondent authorities on 29.05.2025, against the income tax dues for assessment years 2011-12 to 2021-22, was valid, given that recovery of these dues had been stayed by the DCIT on 28.05.2025. Assessee's contention: The assessee argued that the adjustment was invalid as it contravened the stay order granted by the DCIT prior to the adjustment. The assessee relied on the principle that a stay order should be respected and not circumvented. Revenue's contention: The judgment does not record any specific arguments made by the revenue.