opposite parties in adjusting the refund due amounting to
Rs.14,80,270/- for the Assessment Year 2025-26 on 27th
January, 2026 against the disputed tax demand of
Rs.84,46,855/- for the Assessment year 2018-19 during
subsistence of order of stay of recovery under Section 220(6) of
the Income Tax Act, 1961, the petitioner has approached this
Court by way of filing this writ petition invoking provisions of
Articles 226 & 227 of the Constitution of India with the
following prayer(s):
other appropriate writ, directing the Opposite Party No.3
to release refund due to the petitioner vide Intimation u/s.
143(1) of the Income Tax Act, 1961 dated 12.12.2025
under Annexure-8 along with interest u/s 244A of the Act
from the date the same is due till the date of actual
payment in the ends of justice;
c) Issue a writ in the nature of certiorari or any other
appropriate writ, quashing the adjustment of refund for
A.Y. 2025-26 amounting to Rs.14,80,270/- against the
demand for A.Y. 2018-19 in the ends of justice;
d) Pass such further or other order/direction as this
Hon'ble Court may deem fit and proper.
And for this act of kindness, the petitioner as in duty bound
shall ever pray."
2. The petitioner, was assessed under Section 147 of the Income
Tax Act, 1961 (for short, "the IT Act") for the Assessment Year
2018-19 by the Assistant Commissioner of Income Tax, Central
Circle, Sambalpur-opposite party No.2 vide order dated 29th
March, 2023, against which the petitioner filed an appeal under
Section 246A of the IT Act before the National Faceless Appeal
Centre (NFAC)-opposite party No.4. While the matter was
pending, the petitioner filed an application dated 23rd
December, 2024 before the opposite party No.2 for stay of
recovery of the outstanding demand amounting to
Rs.84,46,855/- till the disposal of the said appeal.
2.1. The Opposite party No.2 vide order dated 26th December, 2024
passed under Section 220(6) of the IT Act directing the
petitioner to deposit 20% of the outstanding tax demand as a
condition for grant of stay, which could not deposited by the
petitioner. Therefore, the petitioner filed an application for
waiver, which was considered and vide order dated 12th
January, 2026 under Section 220(6), the opposite party No.2
passed an interim order directing stay of recovery of the
demand in connection with the assessment under Section 147 of
the IT Act till the disposal of first appeal.
2.2. While the matter stood thus and the appeal is still pending
before the Appellate Authority, the Assessing Authority issued
intimation order dated 12th December, 2025 under Section
143(1) of the IT Act for the Assessment Year 2025-26, wherein
the refund to the tune of Rs.14,80,270/- was directed to be paid.
3. Learned counsel appearing for the petitioner submitted that the
authority concerned overreached the order restraining to
proceed with coercive measure for the balance tax demand
pertaining to Assessment Year 2018-19 and adjusted the refund
flowed with respect to the Assessment Year 2025-26 against the
disputed demand for the assessment year 2018-19. It is
contended that such action of the authority is not only
reproachable, but also is in blatant violation of the principles of
natural justice.
4. At this stage, learned Senior Standing Counsel appearing for
the opposite parties did not dispute the factual position as
narrated in the writ petition. He conceded that the refund to the
tune of Rs.14,80,270/- flown for the assessment year 2025-26
has been adjusted against the demand for the assessment year
2018-19, notwithstanding the fact that the Assessing Authority
invoked under Section 220(6) of the IT Act granting stay of
recovery of demand pertaining to the assessment year 2018-19.
5. Heard learned counsel appearing for the petitioner and learned
Senior Standing Counsel appearing for the opposite parties-
Department.
6. On perusal of record, it is revealed that upon deposit of
Rs.14,80,270/-, the authority at Central Circle, Sambalpur vide
order dated 12th January, 2026 invoked power under Section
127(6) of the IT Act and passed the following order:
"In view of the above facts, stay is hereby granted to the
assesse for disputed demand for AY 2018-19 on the following
conditions:
i) The assesse will cooperate in the early disposal of appeal
failing which the stay order will be cancelled.
ii) This stay order will be reviewed after expiry of six
months or if the assesse did not cooperate in the early
disposal of appeal.
Accordingly, the petition filed u/s 220(6) of the Act dated
18/12/2025 in respect of the demand raised u/s 147 of the Act is
disposed hereby granting stay of demand in dispute till disposal
of the First Appeal on the aforementioned conditions."
6.1. An intimation order dated 12th December, 2025 under Section
143 was issued indicating refund of Rs.14,80,270/- pertaining
to Assessment Year 2025-26. It is the submissions contained in
the instant writ petition that the said amount of refund has been
adjusted vide Challan Receipt No.11045, dated 27th January,
2026 against the balance demand pertaining to the Assessment
Year 2018-19 notwithstanding the fact that the authority
concerned granted stay of recovery during the pendency of
finalization of the appeal invoking power under Section 220(6)
of the IT Act.
7. This Court finds force in the submission of Sri Chitrasen
Parida, learned Advocate that such an action of the authorities
is illegal and arbitrary and such recourse of the authorities are
held to be perfunctory. In view of such, this Court is in exercise
of power under Article 226 of the Constitution of India, directs
the opposite parties to release the refund dues to the petitioner
as computed vide intimation order dated 12th December, 2025
under Section 143 (Annexure-8) along with interest under
Section 244A of the IT Act within a period of four weeks from
date.
8. With the aforesaid observation and direction, the writ petition
along with pending Interlocutory Application(s), if any, stands
disposed of.
(Harish Tandon)
Chief Justice
(M.S. Raman)
Judge
MRS/Laxmikant
Signed by: LAXMIKANT MOHAPATRA
Designation: SENIOR STENOGRAPHER
Reason: Authentication
Location: High Court of Orissa, Cuttack
Date: 17-Apr-2026 18:03:05
