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

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W.P.(C)/13453/2021HC DelhiDLHC01036639202129 November 2021Bench: HON'BLE MR. JUSTICE MANMOHAN,HON'BLE MR. JUSTICE NAVIN CHAWLA2 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 acknowledged that the respondents would refund the amount adjusted in excess of the 20% demand, as per the CBDT Office Memorandum dated July 31, 2017, within eight weeks. The Court considered this undertaking as satisfaction of the Petitioner's grievance. Consequently, the writ petition and pending applications were disposed of as satisfied. The Court did not expressly leave any issue undecided, as the matter was resolved through the respondent's undertaking and acceptance by the Petitioner.

What were the facts?

The Petitioner, M/s Afflatus International, filed a writ petition before the Delhi High Court challenging the arbitrary recovery of 100% of a high-pitched disputed tax demand for Assessment Year (AY) 2017-18. This recovery was made by adjusting refunds due for AY 2020-21 (Rs. 1,43,23,653/-) and AY 2018-19 (Rs. 53,85,886/-). The Petitioner argued that this adjustment was made despite a pending appeal before the CIT(A) and an application for stay of recovery, and without issuing the mandatory notice required under Section 245 of the Income Tax Act, 1961. The Petitioner also contended that the 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 adjustment of refunds for AY 2020-21 and AY 2018-19 to recover 100% of the disputed demand for AY 2017-18, while an appeal was pending before the CIT(A) and a stay application was filed, was arbitrary and contrary to law, particularly the CBDT office memorandum dated July 31, 2017? (Question of law and fact, concerning Section 245 of the Income Tax Act, 1961 and administrative instructions). Assessee's Contentions: - The recovery of 100% of the disputed tax demand was arbitrary and made without adhering to the mandatory requirement of issuing notice under Section 245 of the Act. - The adjustment was contrary to the CBDT office memorandum dated July 31, 2017, which directs a stay on recovery upon deposit of 20% of the outstanding demand when an appeal is pending before the CIT(A). 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 245,Section 143(3),Section 143(1)

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 Digitally Signed By:JASWANT SINGH RAWAT Signing Date:01.12.2021 16:11:50 Signature Not Verified

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 Digitally Signed By:JASWANT SINGH RAWAT Signing Date:01.12.2021 16:11:50 Signature Not Verified

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