M/s DRS Logistics Private Limited vs. The Assistant / Deputy Commissioner of Tax
What did the High Court hold?
The High Court disposed of the writ petition. Regarding the prayer for refund of the amount due for AY 2008-09, the Court held that such a claim should be raised after the disposal of the pending appeal before the appellate authority. The Court found it improper for the petitioner to raise a claim for refund of excess adjustment while simultaneously treating it as payment or adjustment against the outstanding tax liability for AY 2012-13 to obtain a stay in the present proceedings. The Court directed the appellate authority to dispose of the pending appeal for AY 2012-13 within a reasonable time, preferably within four months from the date of receipt of the order. The Court expressly stated it was not inclined to allow the prayer for refund at this stage.
What were the facts?
M/s DRS Logistics Private Limited (the petitioner) filed a writ petition before the High Court for the State of Telangana. The petitioner challenged the action of the Income Tax Department (respondents) in adjusting a refund due for Assessment Year (AY) 2008-09 against an alleged demand for AY 2012-13. The petitioner contended this adjustment was made without intimation under Section 245 of the Income Tax Act, 1961, and was arbitrary and violative of natural justice. The petitioner sought a refund of the excess amount adjusted, retaining 20% of the alleged demand for AY 2012-13 as per CBDT Office Memoranda, pending their appeal before the first appellate authority for AY 2012-13. The petitioner also sought a direction for the speedy disposal of their pending appeal.
What were the issues?
1. Whether the action of the respondents in adjusting the refund due to the petitioner for AY 2008-09 against the alleged demand for AY 2012-13, without any intimation under Section 245 of the Income Tax Act, 1961, is arbitrary, illegal, and violative of principles of natural justice? Assessee's Contention: The adjustment was made without proper intimation, violating Section 245 and principles of natural justice. The petitioner relied on CBDT Office Memoranda dated 29.02.2016 and 31.07.2017 regarding adjustment of refunds against demands, arguing that more than 20% of the disputed demand for AY 2012-13 had already been adjusted, and they were entitled to a refund of the excess. Revenue's Contention: The revenue did not object to the prayer for directing the disposal of the pending appeal. The judgment does not record specific arguments from the revenue regarding the adjustment of the refund or the applicability of Section 245.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORDER: Mr. A.V.A. Siva Karthikeya, leamed counsel for the petitioner- Ms. J. Sunitha, learned Senior Standing Counsel appears for Income Tax Department.
The petitioner has preferred an appeal against the order dated 3t.L2.2llg passed in scrutiny assessment by Deputy Commissioner of Income Tax, Circle-17(l), Hyderabad, uftder Section 143(3) read with Section 147 of the Income Tax Act, 196l (for short, "the Act") in respect of Assessment Year 2012-L3 and also sought stay of the impugned dernand on the basis of the statement made at para 8 of the stay application, which reads as under: \
2 r\. "{i. As per the above referred office memorandum the 20%io of the disputed demand of Rs.2,06,73,9g4/- (Rs.2,22,32,265 (_) TDa Rs-15,58,381) after considering TDS for the said year comes to R;-41,34,7771- and in view of the surme an amount of R;.1,72,69,890/- has already been paid/adjusted from refund of A.y. 2008-09 vide chaltan No.38503 BSR: 0004329 dt. 26.07.2018. c,py of challan marked as Annexure-A2 is enclosed for your ready refierence. Breakup is as follows: Disputed demand 20/o of the above i.e., (a) Less: Adjusted by you as per para 8 Rs. 1,72,69,890.00 Hence, it is evident that more tban2}%of the disputeo demand has 4-t""ay been adjusted and we are not required to pay any arnount to fiL: petition for grant of stay of demand.,, 3- Stay was granted by the appellate authority. Now the petitioner has raised a ,:laim that such refund due for the assessment year 200g-09 was adjusted ;lgainst the alleged demand for Assessment Year Z0t2-13 without any intimrtion under Section 245 of the Act. The appeal is still pending, 4' [n the aforesaid circumstances, after hearing leamed counsel for the parties, we are of the view that though at para I I of the application for stay dated 04.(t7.2024. the petitioner claims to have reserved its right to apply for refund along with interest under Section 244Lof the Act on the amount being excessively adjusted beyond 20Yo, when the matter is subjudice before the appellate eLuthority, raising such a claim for refund even after treating it as the amount paid or adjusted against outstanding tax tiability for the Assessment Year 2012-13 for obtaining a stay in the present proceedings is not proper. The petitioner may raise'such a claim after disposal of the pending appeal. a. b. c. Rs. 2,06,73,884.00 Rs. 41,34,777.00 ( (
3 .t. .1' 'I2
Learned counsel for the petitioner then submits that the appeal is pending since 2020 before the faceless authority. A direction may be issued to the said authority to dispose of the appeal in a time frame.
Learned counsel for the respondent Revenue does not object to the said prayer. 7. tn that view of the matter, the instant writ petition is disposed of with a direction to the appellate authority to dispose of the pending appeal relatable to Assessment Year 2Ot2-13 arising out of order dated 3t't2'2017 passed under Section 143(3) read with section 147 of the Act within a reasonable time, preferably within four months from the date of receipt of a copy of this order. However, in view of the facts and circumstances stated above, we are not inclined to allow the prayer for refund of the amount due for Assessment Year 2008-09 at this stage- Miscellaneous apptications, if any pending, shall stand closed- K.BHAVANI SWAMY ,/TRUE SECTION OFFICER To,
The Assistant / Commissioner of Hyderabad of 500 1 1), No.. 2. rhe Assistant commissioner of.lncorne Tax' Circle t[lJ:.11;]i'o'l#;o"our, z tii:K:1,3 :li?''S::,lliflS;f,fiifuil;iliiiili,{ol.i:bd5'0e4, Ringa RediIY District, Telangana' .I:is8:ffi :'3,8ffilil?Siial%tff 8",:"ilid(Eii?"?ffiui,1i5i.-i" 37(p) of fotnagiia, S.iifingampa-riy il.,rihOal, Hyilerabad - 500 084' Ranga Rebciy District, Telangana'
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The Principal Commissioner of lncome Tax - 2, HydeqQad, Sigpature . Towers, Opposite Botanical Gardens, Sy. No., 6(P) of Kondgpul,_Sy. No-. 37(P) of Kothaguda, Serilingampally Mandal, Hyderabad - 500 084, Ranga Reddy District, Telangana.
One CC to SRI A.V.A.SIVA KARTTKEYA, Advocate. TOPUCI
One CC to Ms.J.SUNITHA, (SR SC FOR INCOM TAX). TOPUCJ
Tuo CD Copies. BSK - TKS / d '::
IGH GICURT :, ,DATED:17!0312026 WP.No.7940 of 2026 UT *t, OF THE WRIT PETITION ,''.', lYt .1",,t1,' 't1:. '' '.: \ ,t .J AP llEl T.-] uil 20 B o_^\- \ \
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