SANDHU CONTRACTORS PVT LTD vs. DCIT, CIR-23(2), DELHI & ANR.

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W.P.(C)/12358/2025HC DelhiDLHC01057848202518 August 2025Bench: HON'BLE MR. JUSTICE V. KAMESWAR RAO,HON'BLE MR. JUSTICE VINOD KUMAR3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court noted that the Assessing Officer (AO) had granted an interim stay of demand for AY 2017-18 till the disposal of the first appeal. The petitioner's grievances pertained to the adjustment of refunds for other assessment years against this disputed demand and the recovery of amounts exceeding 20% of the disputed demand. The Court also noted the issue of Rs. 29,00,000/- debited from the petitioner's bank account. The respondents submitted that the petitioner should file appropriate applications on both aspects to enable the AO to pass an order. The Court directed the petitioner to file an application within two weeks, and the AO to pass an order on it within two weeks thereafter. Further action would be taken in accordance with law, and the AO would communicate the decision. If any order was adverse to the petitioner, their remedy would lie in accordance with law. The petition was disposed of in view of these directions. The Court did not decide the merits of the refund adjustment or the Rs. 29,00,000/- credit, leaving these to be decided by the AO upon application.

What were the facts?

The petitioner, Sandhu Contractors Pvt Ltd, filed a writ petition challenging a notice under Section 221 and an order adjusting refunds for AY 2019-20, 2020-21, 2021-22, and 2023-24 against a disputed demand for AY 2017-18. The petitioner also sought a mandamus to refund amounts adjusted in excess of 20% of the disputed demand for AY 2017-18 and to credit Rs. 29,00,000/- adjusted through bank attachment. The Assessing Officer (AO) had granted an interim stay of demand for AY 2017-18 till the disposal of the first appeal before the CIT(A). The petitioner's grievances were that Rs. 29,00,000/- debited from their bank account had not been credited despite de-freezing, and that recovery beyond the permissible 20% for stay needed refund.

What were the issues?

1. Whether the adjustment of refunds for AY 2019-20, 2020-21, 2021-22, and 2023-24 against the disputed demand for AY 2017-18, despite an interim stay on the latter, is legally tenable, turning on the interpretation of Section 221 and the principles of stay of demand. 2. Whether the petitioner is entitled to a refund of amounts recovered in excess of 20% of the disputed demand for AY 2017-18, which is the permissible limit for a stay, as per the provisions governing stay of demand. 3. Whether the amount of Rs. 29,00,000/- debited from the petitioner's bank account, pursuant to communication from the respondents, should be credited to the petitioner's account, considering the circumstances of its adjustment and subsequent de-freezing of the account. Assessee's Contention: The petitioner argued that refunds for other assessment years should not be adjusted against a disputed demand for AY 2017-18, especially when an interim stay is in place. They also contended that recovery beyond 20% of the disputed demand is impermissible and should be refunded. Furthermore, they sought credit for Rs. 29,00,000/- adjusted from their bank account. Revenue's Contention: The respondents submitted that an appropriate application should be filed by the petitioner on both aspects (refund of excess recovery and credit of Rs. 29,00,000/-) to enable the AO to pass an order.

Which sections of the Income-tax Act were involved?

Section 221,Section 143(3),Section 220(6)

AI-generated summary — verify with the full judgment below

$~49 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 12358/2025 SANDHU CONTRACTORS PVT LTD .....Petitioner Through: Ms. Rano Jain and Mr. Venketesh Chaurasia, Advs. versus DCIT, CIR-23(2), DELHI & ANR. .....Respondents Through: Mr. Siddhartha Sinha, SSC. CORAM: HON'BLE MR. JUSTICE V. KAMESWAR RAO HON'BLE MR. JUSTICE VINOD KUMAR O R D E R % 18.08.2025 CM APPL. 50433/2025 (Exemption) 1. Exemption is allowed, subject to all just exceptions. 2. The application stands disposed of. W.P.(C) 12358/2025 & CM APPL. 50432/2025 (Stay) 3. This petition has been filed with the following prayers: “a) issuance of a writ of certiorari quashing notice u/s 221 dated 06.09.2024 and order passed by Respondents No 1 adjusting the entire refund for AY 2019-20, 2020-21, 2021-22 and 2023-24 against the disputed demand for AY 2017-18; and b) issuance of a writ of mandamus directing the Respondents No 1 to refund the amount adjusted in excess of 20% of the disputed demand for AY 2017-18; and issuance a writ of mandamus directing the Respondent to give credit of the amount of Rs. 29,00,000/- adjusted through bank attachment. c) Issuance a writ of mandamus to Respondent no. 2 to dispose of the appeal as soon as possible.” This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 28/08/2025 at 13:18:42

4.

At the outset, learned counsel for the petitioner states that on an application filed under Section 220(6) of the Income Tax Act, 1961 (the Act), the Assessing Officer (AO) vide his order dated 04.08.2025, has granted an interim order to the extent of stay of demand raised in the assessment order passed under Section 143(3) of the Act dated 27.12.2019 for the Assessment Year (AY) 2017-18 till the disposal of the first appeal. 5. Suffice to state that the assessment order dated 27.12.2019 is subject matter of an appeal before the Commissioner of Income Tax Appeals [CIT(A)]. She submits that the grievance of the petitioner is two folds: 1. in as much as Rs.29,00,000/- which has been debited from the bank account of the petitioner, pursuant to the communication sent by the respondents to the bank has not been credited in the bank account of the petitioner despite de-freezing; 2. that any excess of recovery beyond twenty percent which is permissible limit for grant of stay needs to be refunded to the petitioner which shall be subject to the outcome of the appeal. 6. On the other hand, learned counsel for the respondents submits that appropriate application be filed by the petitioner on both the aspects to enable the AO pass an order. Noting the submission, we deem it appropriate to direct that an application be filed within two weeks from today to enable the AO pass an order on the application within two weeks thereafter. 7. It goes without saying that further action shall be taken in accordance with law. The AO shall communicate the decision to the petitioner. 8. If any order is passed adverse to the petitioner, remedy shall lie with the petitioner in accordance with law. This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 28/08/2025 at 13:18:42

9.

In view of the above, the petition stands disposed of. The pending application is disposed of, having become infructuous. V. KAMESWAR RAO, J VINOD KUMAR, J AUGUST 18, 2025 rt This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 28/08/2025 at 13:18:42

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