LATHA VISWANATHAN vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 70 1 DELHI & ANR.

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W.P.(C)/2474/2025HC DelhiDLHC01009860202527 February 2025Bench: HON'BLE CHIEF JUSTICE DEVENDRA KUMAR UPADHYAYA,HON'BLE MR. JUSTICE TUSHAR RAO GEDELA3 pages
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What did the High Court hold?

The Delhi High Court held that the demands for AY 2009-10, AY 2011-12, and AY 2012-13, raised as per the notice dated January 21, 2022, are quashed. The Court found that the respondents/Revenue are not entitled in law to adjust the demands raised for these assessment years against any other AY. Consequently, the Court allowed the petition and restrained the Revenue from adjusting any refund due to the petitioner against any demand reflected for AY 2009-10, AY 2011-12, and AY 2012-13. The Court further directed that the amounts of Rs. 35,570/- for AY 2015-16, Rs. 1,43,630/- for AY 2017-18, Rs. 37,320/- for AY 2018-19, and Rs. 48,560/- for AY 2019-20, which had been adjusted, are to be refunded to the petitioner. The reasoning was based on the concession by the Revenue that the issue was covered by a prior High Court judgment. The principle established is that demands arising from an employer's failure to deposit deducted tax, when challenged by the employee, can be quashed if the employer's default is the sole basis for the demand, and refunds adjusted against such demands must be released.

What were the facts?

The petitioner, Latha Viswanathan, filed a writ petition before the Delhi High Court challenging a notice dated January 21, 2022, and demands totaling Rs. 49,12,332/-. The petitioner also challenged demand references for Assessment Years (AY) 2009-10, 2011-12, and 2012-13, and the adjustment of refunds for AY 2015-16, 2017-18, 2018-19, and 2019-20 against the demand for AY 2009-10. The petitioner's case was that the demands arose due to defaults by her employer, Kingfisher Airlines Limited, which failed to deposit deducted tax. The revenue's counsel conceded that the issue was covered by a previous High Court decision.

What were the issues?

1. Whether the demands for AY 2009-10, AY 2011-12, and AY 2012-13, arising from the employer's failure to deposit deducted tax, are illegal and contrary to the provisions of the Income Tax Act, 1961, and thus liable to be quashed. 2. Whether the adjustment of refunds due to the petitioner for AY 2015-16, 2017-18, 2018-19, and 2019-20 against the demand for AY 2009-10 is illegal and bad in law, and whether the petitioner is entitled to receive these refunds with applicable interest. Assessee's Contentions: The petitioner argued that the demands for AY 2009-10, 2011-12, and 2012-13 were due to the employer's failure to deposit tax, despite deduction. The petitioner sought quashing of these demands and the notice, and also sought the quashing of the adjustment of refunds against these demands. The petitioner further prayed for the issuance of refunds for AY 2015-16, 2017-18, 2018-19, and 2019-20 along with interest, and a direction to restrain the respondents from adjusting future refunds against the disputed demands. Revenue's Contentions: The learned counsel for the Revenue fairly submitted that the prayers made by the petitioner be allowed as the issue involved in the present petition is covered by the earlier decision of this Court in Sanjay Sudan v. The Assistant Commissioner of Income Tax & Another.

AI-generated summary — verify with the full judgment below

$~73 * IN THE HIGH COURT OF DELHI AT NEW DELHI + W.P.(C) 2474/2025 & CM APPL. 11662/2025

LATHA VISWANATHAN

.....Petitioner Through: Mr. Nikhil Goyal and Mr. Bankim Garg, Advocates.

versus

ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 70 1 DELHI & ANR.

.....Respondents

Through: Appearance not given.

CORAM:

HON’BLE THE CHIEF JUSTICE

HON’BLE MR. JUSTICE TUSHAR RAO GEDELA

O R D E R %

27.02.2025

CM APPL. 11663/2025 1. Exemption allowed subject to all just exceptions. 2. The application stands disposed of. W.P.(C) 2474/2025 & CM APPL. 11662/2025 3. The petitioner has filed the present petition, inter alia, praying as under: “(i) Issuance a writ in the nature of Certiorari for quashing and setting aside the impugned notice dated 21.01.2022 (Annexure P-14) and the impugned demand of Rs. 49,12,332/- being illegal and contrary to the provisions of the Act;

(ii) Issue a writ in the nature of Certiorari for quashing demand reference 2010200910022931264T in AY 2009-10, 2012201110000343441T in AY 2011-12 and 2013201237047401702T in AY 2012-13 (Annexure P-13) 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 01/07/2025 at 21:26:13

created by the Respondents being illegal and contrary to the provisions of the Act and consequentially give effect to the Income Tax Returns of the respective Assessment Years filed by the Petitioner in accordance with the law;

(iii) Issue a writ in the nature of Certiorari for quashing following adjustment of refunds due to the Petitioner against the demand of AY 2009-10, being illegal, and bad in law: a) the adjustment of refund of AY 2015-16 on 28.10.2020 (Annexure P-6), adjustment of refund of AY 2017- 18 informed to the Petitioner vide intimation dated 17.01.2018 (Annexure P-8), adjustment of refund of AY 2018- 19 on 04.10.2018 (Annexure P-6) and adjustment of refund of 2019-20 on 10.10.2019 (Annexure P- 6);

(iv) Issue a writ in the nature of Mandamus to direct Respondents to issue refund of Rs. 35,570/- arising out of AY 2015-16, refund of Rs. 1,43,630/- arising out of AY 2017-18, refund of Rs. 37,320/- arising out of AY 2018- 19 and refund of Rs. 48,560/- arising out of AY 2019-20 along with applicable interest;

(v) Issue a writ in the nature of Mandamus to restrain the Respondents from adjusting any refund due to the Petitioner against any demand reflected for the AY's 2009-10, AY 2011-12 and 2012-13;

(vi) Issue of any other appropriate writ or direction which this Hon'ble Court may deem fit and proper in the circumstances of the case.”

4.

It is the petitioner’s case that demands in respect of AY 2009-10, AY 2011-12 and AY 2012-13 are reflected as due from the petitioner on account of defaults committed by its employer (Kingfisher Airlines Limited). The petitioner submits that although the tax was deducted by the employer, it had failed and neglected in depositing the same at the material time. 5. The learned counsel appearing for the Revenue fairly submits that the prayers made by the petitioner be allowed as the issue involved in the present petition is covered by the earlier decision of this Court in Sanjay Sudan v. The Assistant Commissioner of Income Tax & Another reported in [2023] 148 taxmann.com 329 (Delhi); Neutral Citation: 2023: DHC:1342. 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 01/07/2025 at 21:26:13

6.

Thus, for the foregoing reasons, we also hold that the demands for AY 2009-10, AY 2011-12 and AY 2012-13 raised as per notice dated 21.01.2022 are quashed. Respondents/Revenue are not entitled in law to adjust the demand raised for AY 2009-10, AY 2011-12 and AY 2012-13 against any other AY. It is ordered accordingly. 7. In view of the above, the present petition is allowed and the Revenue is restrained from adjusting any refund due to the petitioner against any demand reflected for the AY 2009-10, AY 2011-12 and AY 2012-13. 8. The petitioner has adverted to the fact that an amount of Rs.35,570/- for AY 2015-16, Rs.1,43,630/- for AY 2017-18, Rs.37,320/- for AY 2018- 19 and Rs.48,560/- for AY 2019-20 is liable to be refunded because of adjustment of demands. 9. As the amounts of Rs.35,570/- for AY 2015-16, Rs.1,43,630/- for AY 2017-18, Rs.37,320/- for AY 2018-19 and Rs.48,560/- for AY 2019-20, irrespectively have been adjusted, the said amounts are directed to be refunded to the petitioner. 10. The petition is disposed of in the aforesaid terms.

DEVENDRA KUMAR UPADHYAYA, CJ

TUSHAR RAO GEDELA, J FEBRUARY 27, 2025 yrj 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 01/07/2025 at 21:26:13

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