AWFIS SPACE SOLUTIONS PRIVATE LIMITED vs. PRINCIPAL COMMISSIONER OF INCOME-TAX-1 & ORS.

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W.P.(C)/1185/2021HC DelhiDLHC01007708202102 February 2021Bench: HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW,HON'BLE MR. JUSTICE SANJEEV NARULA4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court, instead of directly adjudicating the petitioner's prayer for quashing the adjustment or directing the release of the refund, decided to dispose of the petition by issuing time-bound directions for the disposal of the pending appeal before the CIT(A). The Court directed the concerned CIT(A), Delhi, to decide the pending Appeal No.-1/10701/2019-20 within two months from the date of the order. It was further directed that if the CIT(A) requires a report from the Assessing Officer, it should be furnished within the timeline specified by the CIT(A). Following the decision in the appeal, an appeal effect order would be passed, and if any refund amount becomes due to the petitioner, it shall be processed within two weeks thereafter. The Court explicitly stated that it had not examined the merits of the case, and all rights and contentions of the parties were left open. The ratio decidendi is that in such circumstances, a time-bound disposal of the pending appeal is a more appropriate course of action than deciding the writ petition on merits, preserving the rights of both parties.

What were the facts?

The petitioner, AWFIS SPACE SOLUTIONS PRIVATE LIMITED, filed a writ petition challenging the ex-parte action taken by the respondents on October 29, 2020. This action involved adjusting the refund for Assessment Year (AY) 2019-20 against an outstanding income tax demand for AY 2017-18. The petitioner argued that this was done without an opportunity of hearing. The assessment order for AY 2017-18 is under appeal before the CIT(A), and the petitioner had made deposits towards the demand, with a stay granted on the balance demand subject to a 15% deposit. The petitioner claims that after making further deposits, the total tax paid/recovered for AY 2017-18 aggregates to 70.53% of the total demand. The petitioner contends that the adjustment of the AY 2019-20 refund against the AY 2017-18 demand is contrary to CBDT instructions.

What were the issues?

1. Whether the ex-parte action of adjusting the refund for AY 2019-20 against the disputed income tax demand for AY 2017-18, taken without affording an opportunity of hearing to the petitioner, is justified and within jurisdiction? (Question of law and fact, turning on principles of natural justice and procedural fairness). Assessee's Contention: The action is unjustified and without jurisdiction as it was passed without providing an opportunity of hearing. The adjustment is contrary to binding CBDT instructions (Instruction No. 1914 dated 02.02.1993, modified by OMs dated 29.02.2016 and 31.07.2017). The petitioner has already made substantial payments towards the AY 2017-18 demand, and a stay was granted on the balance demand. Revenue's Contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 245,Section 143(3)

AI-generated summary — verify with the full judgment below

W.P.(C) 1185/2021 Page 1 of 4

$~11 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P. (C) 1185/2021

AWFIS SPACE SOLUTIONS PRIVATE LIMITED ..... Petitioner

Through: Mr. Ajay Vohra, Senior Advocate

with Mr. Neeraj Jain and Mr. Aditya

Vohra, Advocates.

versus

PRINCIPAL COMMISSIONER OF INCOME-TAX-1 & ORS. ..... Respondents

Through: Mr. Zoheb Hossain, Senior Standing

Counsel.

CORAM:

HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

HON'BLE MR. JUSTICE SANJEEV NARULA

O R D E R %

02.02.2021

[VIA VIDEO CONFERENCING] CM APPL. 3334/2021 (for exemption) 1. Allowed, subject to all just exceptions and in terms of extant rules. 2. The application stands disposed of.

W.P. (C) 1185/2021 3. The present petition seeks quashing of the ex-parte action taken by the Respondents on 29th October, 2020, under Section 245 of the Income Tax Act [hereinafter referred to as the ‘Act’] in adjusting the refund of 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 30/06/2026 at 17:58:48

W.P.(C) 1185/2021 Page 2 of 4

assessment year [hereinafter referred to as ‘AY’] 2019-20 with outstanding income tax demand for AY 2017-18. Alternatively, direction is sought for quashing of the said action, to the extent, the same results in recovery in excess of 20% of such total disputed demand.

4.

Mr. Ajay Vohra, learned Senior Counsel for the Petitioner submits that, the ex-parte action taken by the Respondents, for adjusting the refund for the AY 2019-20 against the disputed income tax demand for the AY 2017-18 is wholly unjustified and without jurisdiction, as it has been passed without affording an opportunity of hearing to the Petitioner. He further submits that, against the assessment order [hereinafter referred to as ‘AO’] passed under Section 143 (3) of the Act for AY 2017-18, the Petitioner is in appeal before the CIT (A) and the same is still pending. Nevertheless, he submits that, the Petitioner has made deposits towards the outstanding income tax demand and further, amounts have also been recovered by way of bank attachment. He submits that, in the stay application preferred by the Petitioner vide order dated 26.02.2020, Respondent No. 1, has granted stay of balance income tax demand for AY 2017-18 till 30.09.2020 or till the disposal of appeal by CIT (A), whichever is earlier, subject to the Petitioner cumulatively depositing 15% of the total income tax demand by 20.03.2020.

5.

Thereafter, the Petitioner made further deposits and thus 15% of the income tax demand stood paid. He argues that, subsequently on processing of return for AY 2019-20, refund along with interest, was determined in favour of the Petitioner. However, the Respondents have, by way of an ex-parte action, adjusted such refund pertaining to AY 2019-20 against the 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 30/06/2026 at 17:58:48

W.P.(C) 1185/2021 Page 3 of 4

balance outstanding income tax demand of AY 2017-18. Pursuant to such adjustment, income tax paid/ recovered for AY 2017-18, aggregates to 70.53% of total income tax demand for the said AY.

6.

Mr. Vohra argues that the refund has been wrongly adjusted against income tax demand for AY 2017-18 and the same should be directed to be released forthwith as, the action of the Respondents are contrary to the binding Instructions issued by the CBDT viz. Instruction No. 1914 dated 02.02.1993 modified by Office Memorandum [hereinafter referred to as ‘OM’] No. 404/72/93-ITCC dated 29.02.2016, further modified by OM No. 404/72/93-ITCC dated 31.07.2017.

7.

After hearing the arguments for some time, we have enquired from Mr. Vohra, whether the Petitioner would be satisfied incase time-bound directions are issued for disposal of the appeal pending before CIT (A), and that, if the outcome of the decision results in any refund due to the Petitioner, the same can follow. Mr. Vohra, on instructions, states that Petitioner is agreeable to the same. He, however, submits that once the appeal is decided and in case any tax refund becomes due to the Petitioner, the same should be expeditiously dealt with. We have also heard Mr. Zoheb Hossain, Senior Standing Counsel for the Revenue.

8.

Accordingly, having considered the entire conspectus of the case, we feel that instead of issuing the directions as sought for, it would be in fitness of things that, the pending appeal of the Petitioner before CIT (A) is disposed of in a time-bound manner. We accordingly direct the concerned 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 30/06/2026 at 17:58:48

W.P.(C) 1185/2021 Page 4 of 4

CIT (A), Delhi to decide the pending Appeal No.-1/10701/2019-20, within a period of two months from today. It is further directed that, in case the CIT (A) requires a report from the Assessing Officer, the same shall also be furnished within the timeline as specified by CIT (A). Pursuant to the decision in the appeal, the appeal effect order would subsequently passed and in case any refund amount becomes due to the Petitioner, the same shall be processed within a period of two weeks thereafter.

9.

It is made clear that we have not examined the merits of the case and all the rights and contentions of the parties are left open.

10.

With the aforesaid directions, the present petition is disposed of.

RAJIV SAHAI ENDLAW, J

SANJEEV NARULA, J FEBRUARY 2, 2021 nk 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 30/06/2026 at 17:58:48

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