DELHI FURNITURE COMPANY PRIVATE LIMITED vs. INCOME TAX OFFICER WARD 7(1) & ORS.

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W.P.(C)/747/2025HC DelhiDLHC01001725202523 April 2026Bench: HON'BLE MR. JUSTICE DINESH MEHTA,HON'BLE MR. JUSTICE VINOD KUMAR3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the respondents cannot issue recovery notices for an outstanding demand and accrued interest when the assessment order and relevant records are not traceable and have not been served upon the petitioner. The Court reasoned that in the absence of an assessment order and demand notice, no enforceable demand can exist. The petitioner cannot be informed of the particulars of such a demand, nor can recovery action be initiated without service of the assessment order. Consequently, the Court set aside all notices seeking to recover the amount of Rs. 9,60,08,190/- and interest. The Court directed the respondents to forthwith delete the demand from the petitioner's Income Tax Portal. It was clarified that if the respondents later trace the assessment order, they must provide a copy to the petitioner, who can then pursue legal remedies. However, the petitioner will not be liable for interest up to the date of service of the assessment order, as liability for interest and being treated as an assessee in default cannot be fastened without service of the assessment order and demand notice.

What were the facts?

The petitioner, Delhi Furniture Company Private Limited, received multiple notices under Section 221 of the Income Tax Act, 1961, between August 2014 and December 2021, demanding payment of Rs. 9,60,08,190/- for Assessment Year 2008-09, plus accrued interest. The petitioner repeatedly requested details of the demand, the assessment order, and supporting documents, but these were not provided. The Income Tax Officer, Ward-7(1), Delhi, acknowledged in a letter dated June 27, 2024, that the assessment order was not traceable. The respondents, in their reply to the writ petition, admitted that the assessment order and related records were unavailable. The petitioner argued that the lack of an assessment order and demand notice prevented them from obtaining loans and caused mental distress due to the threat of coercive recovery action.

What were the issues?

1. Whether the respondents can issue recovery notices for an outstanding demand and accrued interest when the assessment order and relevant records are not traceable and have not been served upon the petitioner, as per Section 221 of the Income Tax Act, 1961? Assessee's Contention: The petitioner argued that without a valid assessment order and demand notice, no enforceable demand exists. They contended that the respondents' inability to provide these documents renders the recovery notices invalid and that the continuous issuance of notices without substantiation is causing them significant hardship, including the inability to secure bank loans and mental distress. Revenue's Contention: The respondents, in their reply, accepted that the assessment order and corresponding records are not available. The judgment does not record any further specific arguments from the revenue regarding the validity of the demand in the absence of these documents.

Which sections of the Income-tax Act were involved?

Section 221

AI-generated summary — verify with the full judgment below

Page 1 of 3 $~155 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 747/2025 CM APPL. 3738/2025 DELHI FURNITURE COMPANY PRIVATE LIMITED.....Petitioner Through: Mr. Nischay Kantoor, Ms. Vandana Kothari and Mr. Sparsh Kapoor, Advs. versus INCOME TAX OFFICER WARD 7(1) & ORS. .....Respondents Through: Mr. Siddhartha Sinha, SSC CORAM: HON'BLE MR. JUSTICE DINESH MEHTA HON'BLE MR. JUSTICE VINOD KUMAR O R D E R %

23.04.2026 1. The petitioner has approached this Court with rather unusual facts and unique grievances. 2. The petitioner received a series of notices under Section 221 of the Income Tax Act, 1961 (hereinafter referred to as “The Act of 1961”) asking the petitioner to pay the outstanding demand. These notices were issued on various dates (i.e.,12.08.2014; 29.01.2020; 06.12.2021 & 30.12.2021) requiring the petitioner to deposit a sum of Rs.9,60,08,190/- being tax for Assessment Year (AY) 2008-09 and interest accruing thereupon. 3. The petitioner has asserted that on receipt of above referred notices, it had repeatedly asked the respondent-Income Tax Department to give the details of the outstanding demand or copy of the assessment order and relevant documents, but nothing has been provided to it. 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 25/04/2026 at 13:14:22

Page 2 of 3 4. Learned counsel submitted that on account of receiving notice after notice issued by the respondents, mental peace of the petitioner’s Director is disturbed as they are facing a threat of coercive action for the recovery. The petitioner also expresses that on account of the alleged outstanding demand, the petitioner is not able to obtain loan from the banks or financial institutions. 5. The petitioner has placed on record a copy of the letter dated 27.06.2024, written by the Income Tax Officer, Ward-7(1), (Delhi) in which it has clearly been mentioned that the assessment order is not traceable. 6. A reply to the writ petition has been filed in which the respondents have accepted the fact that the assessment order and corresponding records are not available. 7. Such being the position, we are of the view that respondents cannot issue notice of recovery of outstanding demand and additional accruing interest thereupon to the petitioner. Because, neither the petitioner has been served with the order nor are the respondents in a position to show any such order. In absence of an assessment order and demand notice, no enforceable demand can exist. Unless the petitioner is informed of particulars of such demand and a copy of the assessment order is served upon the petitioner, no action for recovery of demand can be initiated. 8. We therefore set aside all the notices seeking to recover amount of Rs.9,60,08,190/- and interest thereupon from the petitioner. 9. The petition is therefore, allowed. 10. We hereby make it clear that in case the respondents are in a position to trace the assessment order and the documents on basis of which the amount is sought to be recovered, they shall provide a copy of the same to 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 25/04/2026 at 13:14:22

Page 3 of 3 the petitioner. 11. Upon receipt of copy of the assessment order etc., petitioner shall be free to take legal remedies against such order. However, insofar as the interest part is concerned, the petitioner shall not be liable for the interest upto the date of service of the assessment order (if any). In the absence of service of assessment order along with notice of demand, liability to pay interest can neither be fastened, nor can the assessee be treated as an assessee in default. 12. The respondents are directed to forthwith delete the demand of Rs.9,60,08,190/- from the Income Tax Portal of the petitioner. 13. Pending application(s) stand disposed of. DINESH MEHTA, J VINOD KUMAR, J APRIL 23, 2026/cd 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 25/04/2026 at 13:14:22

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