Delhi High Court
Religare Finvest Limited vs Deputy Commissioner Of Income Tax on 14 September, 2021
$~57 & 61
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 10145/2021 & CM APPL. 31296/2021
RELIGARE FINVEST LIMITED ..... Petitioner
Through Mr. Rohit Jain with
Mr. Aniket D Agrawal,
Advocates.
versus
DEPUTY COMMISSIONER OF INCOME TAX
..... Respondent
Through Mr.Sunil Agarwal, Sr. Standing
Counsel with Mr. Tushar
Gupta, Jr. Standing Counsel and
Mr. Samarth Chaudhari,
Advocate.
61
+ W.P.(C) 10149/2021 & CM APPL. 31302/2021
RELIGARE FINVEST LIMITED ..... Petitioner
Through Mr. Rohit Jain with
Mr. Aniket D Agrawal,
Advocates.
versus
DEPUTY COMMISSIONER OF INCOME TAX
..... Respondent
Through Mr.Sunil Agarwal, Sr. Standing
Counsel with Mr. Tushar
Gupta, Jr. Standing Counsel and
Mr. Samarth Chaudhari,
Advocate.
Signature Not Verified
Digitally Signed
By:KRISHNA BHOJ WPC 10145/2021 & WPC 10149/2021 Page 1 of 6
Signing Date:15.09.2021
19:54:38
% Date of Decision: 14th September, 2021
CORAM:
HON'BLE MR. JUSTICE MANMOHAN
HON'BLE MR. JUSTICE NAVIN CHAWLA
MANMOHAN, J. (Oral)
The hearing has been done by way of video conferencing.
1. Present writ petitions have been filed seeking refund of the
Income Tax (including interest) adjusted in excess of 20% of the
disputed tax demand arising in the case of the Petitioner for the
assessment years 2016-17 and 2017-18 against the refunds due for the
Assessments Years 2018-19 and 2019-20 along with the applicable
interest. Petitioner also seeks direction to the respondent to dispose of
the application dated 10th July, 2020 filed by the Petitioner under
Section 154 of the Income Tax Act, 1961 [for short 'the Act'] seeking
rectification of the assessment order dated 17th June, 2020 for the
Assessment Year 2016-17.
2. Learned counsel for the petitioner states that under Section
220(6) of the Act, the Assessing Officer has been conferred with the
power to grant stay on recovery of outstanding tax demand subject to
fulfillment of appropriate conditions. He states that in order to provide
guidance and lay down principles regarding stay of demand, the
Central Board of Direct Taxes has issued various Circulars/
Notification from time to time including Office Memorandums dated
29th February, 2016 and 31st July, 2017, prescribing that in cases
Signature Not Verified
Digitally Signed
Signing Date:15.09.2021
19:54:38
where an assessee challenges the additions/ disallowances made in the
assessment order by way of an appeal before the first appellate
authority, i.e., CIT(A), and during pendency thereof deposits 20% of
the total disputed outstanding tax demand, the assessing officer is
empowered to grant stay of recovery of the balance outstanding
demand.
3. Learned counsel for the petitioner submits that upon payment/
recovery of the standard rate of 20% of the disputed outstanding tax
demand, the assessing officer is mandated to grant stay on recovery of
the balance disputed outstanding tax demand till disposal of first
appeal of the assessee, unless the case of the assessee falls in the
category discussed in paragraph (B) of the Office Memorandum dated
29th February, 2016.
4. He states that the Income Tax Department in violation of the
Office Memorandums dated 29th February, 2016 and 31st July, 2017,
recovered the disputed outstanding tax demand in excess of 20% by
way of adjustment of refunds due for assessment years 2018-19 and
2019-20. He states that the while 20% of the disputed amount for the
Assessment Year 2016-17 was Rs. 10,50,36,036/- the respondent
adjusted the entire tax demand of Rs. 54,20,04,981/- excluding the
interest under Section 220(2) of the Act. He also states that while 20%
of the disputed amount for the Assessment Year 2017-18 was
Rs. 48,54,63,006/- the respondent recovered Rs. 54,99,73,789/-.
5. Learned counsel for the petitioner relies on the judgment dated
03rd August, 2021 passed by this Court in Eko India Financial
Services Pvt Ltd vs. ACIT, WP(C) No.5819/2021 wherein under
Signature Not Verified
Digitally Signed
Signing Date:15.09.2021
19:54:38
similar circumstances the Respondents were directed to refund the
amounts collected in excess of 20% of the disputed outstanding taxes
to the Petitioner therein.
6. Issue notice.
7. Mr. Sunil Agarwal, learned counsel for the Revenue accepts
notice. He states that he has not been able to receive instructions.
8. On perusal of the paper book, this Court finds that the issue
raised in the present writ petitions is no longer res integra. This Court
in Eko India Financial Services Pvt Ltd. (supra) has in a similar facts
held as under:-
"....10.Having heard learned counsel for the parties, this
Court is of the view that the Government is bound to follow
the rules and standards they themselves had set on pain of
their action being invalidated. [See: Amarjit Singh
Ahluwalia vs. State of Punjab & Ors. 1975 (3) SCR 82 and
Ramana Dayaram Shetty vs. International Airport
Authority of India & Ors. 1979 SCR (3) 1014].
11.This Court is also of the view that the office memorandum
dated 29th February, 2016 read with office memorandum
dated 25th August, 2017 stipulate that the Assessing Officer
shall normally grant stay of demand till disposal of the first
appeal on payment of 20% of the disputed demand. In the
event, the Assessing Officer is of the view that the payment of
a lump sum amount higher than 20% is warranted, then the
Assessing Officer will have to give reasons to show that the
case falls in para 4(B) of the office memorandum dated 29th
February, 2016.
12.This Court finds that the order under Section 245 of the
Act for adjustments of refunds as well as the order on stay of
demand under Section 220(6) of the Act do not give any
special/particular reason as to why any amount in excess of
20% of the outstanding demand should be recovered from the
Signature Not Verified
Digitally Signed
Signing Date:15.09.2021
19:54:38
petitioner-assessee at this stage in accordance with
paragraph 4(B) of the office memorandum dated 29th
February, 2016. Consequently, this Court is of the view that
the respondent is entitled to seek pre-deposit of only 20% of
the disputed demand during the pendency of the appeal in
accordance with paragraph 4(A) of the office memorandum
dated 29th February, 2016, as amended by the office
memorandum dated 25th August, 2017.
13.Accordingly, the respondent no.1 is directed to refund the
amount adjusted in excess of 20% of the disputed demand for
the Assessment Year 2017-18, within four weeks...."
9. Keeping in view the aforesaid mandate of law as well as the fact
that refunds have been adjusted against outstanding tax demand by
the Authority without following the procedure prescribed under
Section 245 of the Act inasmuch as no notice or opportunity of pre-
decisional hearing had been provided to the petitioner prior to such
adjustment of refund, this Court is of the opinion that the petitioner is
entitled to refund of adjustments made in excess of 20% of the
disputed tax demands.
10. Consequently, this Court directs the respondent to verify the
facts stated in the two writ petitions and if it finds them to be true and
correct then to refund the amount adjusted in excess of 20% of the
disputed tax demands for the Assessment Years 2016-17 and 2017-18
to the Petitioner within eight weeks. The respondent is also directed to
dispose of petitioner's rectification application dated 10th July, 2020
seeking rectification of the assessment order dated 17th June, 2020 for
Assessment Year 2016-17 within eight weeks.
Signature Not Verified
Digitally Signed
Signing Date:15.09.2021
19:54:38
11. Accordingly, in view of the above, the present writ petitions and
application stand disposed of
12. The order be uploaded on the website forthwith. Copy of the
order be also forwarded to the learned counsel through e-mail.
MANMOHAN, J
NAVIN CHAWLA, J
SEPTEMBER 14, 2021
AS
Signature Not Verified
Digitally Signed
Signing Date:15.09.2021
19:54:38
