M/S AFFLATUS INTERNATIONAL vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 28(1) & ORS.

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W.P.(C)-13453/2021HC Delhi2021:DHC:386829 November 20212 pages
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What did the High Court hold?

The Delhi High Court accepted the statement and undertaking given by the learned counsel for the respondents. The Court noted that the respondents agreed to refund the amount adjusted in excess of 20% of the demand, as per the CBDT Office Memorandum dated July 31, 2017, within eight weeks. Based on this undertaking, the Court held that the respondents were bound by their statement. Consequently, the writ petition, along with pending applications, was disposed of as satisfied. The Court did not explicitly decide on the legality of the initial 100% recovery or the procedural lapse of not issuing a notice under Section 245, but rather resolved the matter based on the Revenue's commitment to refund the excess amount. The operative direction was for the refund of the excess amount within eight weeks.

What were the facts?

The Petitioner, M/s Afflatus International, filed a writ petition before the Delhi High Court seeking a direction for the refund of excess tax collected amounting to Rs. 1,43,23,653/- for Assessment Year 2020-21 and Rs. 53,85,886/- for Assessment Year 2018-19. The Petitioner contended that the Revenue had arbitrarily recovered 100% of a high-pitched disputed tax demand for Assessment Year 2017-18 by adjusting it against refunds due in subsequent years. This was done despite a pending appeal before the CIT(A) and without issuing a mandatory notice as required under Section 245 of the Income Tax Act, 1961. The Petitioner also argued that this recovery was contrary to a CBDT office memorandum dated July 31, 2017, which mandates a stay on recovery upon deposit of 20% of the demand when an appeal is pending.

What were the issues?

1. Whether the Revenue arbitrarily recovered 100% of the disputed tax demand for Assessment Year 2017-18 from the refunds of Assessment Years 2020-21 and 2018-19, contrary to the Petitioner's pending appeal before the CIT(A)? (Question of fact and law, concerning principles of recovery and appeal proceedings). 2. Whether the adjustment of refunds was initiated without adhering to the mandatory requirement of issuing notice to the Petitioner under Section 245 of the Income Tax Act, 1961? (Question of law, concerning procedural fairness). Assessee's Contentions: The Petitioner argued that the full recovery of the demand was arbitrary and contrary to the CBDT office memorandum dated July 31, 2017, which allows for a stay on recovery upon payment of 20% of the demand when an appeal is pending before the CIT(A). They also contended that the adjustment was made without the mandatory notice under Section 245 of the Act. Revenue's Contentions: The Revenue, through its counsel, stated that the amount adjusted in excess of 20% of the demand, in accordance with the CBDT Office Memorandum dated July 31, 2017, would be refunded to the petitioner within eight weeks.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 143(1),Section 245

AI-generated summary — verify with the full judgment below

W.P.(C) 13453/2021 Page 1 of 2 $~S-55 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 13453/2021 & CM APPLs. 42385-386/2021 M/S AFFLATUS INTERNATIONAL ..... Petitioner Through: Mr.Rajesh Mahana, Advocate with Mr.Vikram Kakkar, Mr.Mayank Kouts and Mr.Akshay Bhatia, Advocates. versus ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 28(1) & ORS. ..... Respondents Through: Mr.S.C.Pratyaksh Gupta, Advocate for R-1to3. % Date of Decision: 29th November, 2021 CORAM: HON'BLE MR. JUSTICE MANMOHAN HON'BLE MR. JUSTICE NAVIN CHAWLA O R D E R % 29.11.2021 MANMOHAN, J. (Oral) 1. Present writ petition has been filed by the Petitioner seeking a direction to the Respondents to refund the excess tax collected amounting to Rs.1,43,23,653/- for the Assessment Year 2020-21 and Rs. 53,85,886/- for the Assessment Year 2018-19 forthwith 2. Learned counsel for the Petitioner states that the Respondents have arbitrarily recovered 100% of the high-pitched disputed tax demand raised against the Petitioner for Assessment Year 2017-18 in an assessment framed under Section 143(3) of the Act from the Refund(s) under Section 143(1) in 2021:DHC:3868-DB

W.P.(C) 13453/2021 Page 2 of 2 subsequent years i.e. Rs.1,43,23,653/- for Assessment Year 2020-21 and Rs.53,85,886/- for Assessment Year 2018-19. He states that this was done despite an application seeking stay of recovery of demand being made by the Petitioner in the pending appeal before the CIT(A). He also states that the adjustment was initiated without adhering to the mandatory requirement of issuance of notice to the Petitioner before an adjustment of refund under Section 245 of the Income Tax Act, 1961. 3. Learned counsel for the Petitioner points out that the recovery of the entire additional demand for Assessment Year 2017-18 against refunds of years 2020-2021 and 2018-19 is contrary to CBDT office memorandum dated 31st July 2017 which directs stay on recovery of demand upon deposit of 20% of the outstanding demand where an appeal is pending before the CIT(A). 4. Issue notice. Mr.SC Praty, learned counsel for respondents accepts notice. He, on instructions, states that the amount adjusted in excess of 20% demand in accordance with the CBDT Office Memorandum dated 31st July, 2017 shall be refunded to the petitioner within eight weeks. 5. The statement/undertaking given by learned counsel for respondents is accepted by this Court and the respondents are held bound by the same. In view thereof, the present writ petition along with pending applications stands disposed of as satisfied. MANMOHAN, J NAVIN CHAWLA, J NOVEMBER 29, 2021/TS 2021:DHC:3868-DB

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