In a recent case, the Delhi High Court directed the Income Tax Department to release a refund amounting to Rs. 87,89,440/- for the Assessment Year (AY) 2018-19, which had been adjusted against outstanding demand for AY 2011-12.
Petitioner Tirupati Buildings And Offices Private Limited filed the writ petition seeking a direction for the release of the refund amounting to Rs. 87,89,440/- for the Assessment Year (AY) 2018-19, which had been adjusted against outstanding demand for AY 2011-12. The facts leading to the petition were that the total demand raised against the petitioner for AY 2008-09, 2009-10, and 2011-12 is Rs. 14.90 crores.
As per the Office Memorandum (OM) dated 31.07.2017 issued by the CBDT, where the outstanding demand is disputed before the Commissioner of Income Tax [CIT(A)], the petitioner is entitled to seek a stay of the demand on payment of 20% of the disputed demand. In the petitioner’s/assessee’s case, 20% of the disputed demand [20% of Rs. 14.90 crores] would be Rs. 2.98 crores.
However, there is no question that the petitioner was entitled to a reimbursement of Rs. 2,42,07,990 for the academic years 2012–13, 2013–14, and 2017–18. This sum was used to cover the petitioner’s 20% needed deposit of the contested amount to secure a stay of proceedings. However, to get a stay of demand in its favor, the petitioner had to deposit the necessary funds to cover 20% of the contested claim due to a deficiency of Rs. 56 lakhs.
Sanjeev Menon, standing counsel, who appears on behalf of the respondents/revenue, stated that on 05.07.2019, a refund amounting to Rs. 87,89,440/-, payable to the petitioner for AY 2018-19, was adjusted towards outstanding demand for AY 2011-12.
Ramesh Singh, senior counsel, who appears on behalf of the petitioner, sought to correct Mr. Menon and pointed out that a refund amounting to Rs. 2.50 lakhs was available for AY 2010-11. Therefore, Mr. Singh contends that when an adjustment was made qua refund due vis-à-vis AY 2018-19 on 05.07.2019, there was no deficit.
During the proceedings, the court observed that when the petitioner filed an appeal before CIT(A) in respect of the assessment order dated 28.03.2013, the CIT(A) deleted the entire addition. Subsequently, three appeals were filed by the respondents/revenue against the order of the CIT(A) pertaining to AYs 2008-09, 2009-10, and 2011-12 before the Tribunal. In that issue, the Tribunal remanded the issue concerning the addition made under Section 68 of the Act to the AO while sustaining the order of the CIT(A) on the issue of deduction claimed under Section 40A of the Act.
Accordingly, the AO added a certain amount to each assessment year AY 2008-09, AY 2009-10, AY 2011-12. Thus, the petitioner further lodged an appeal before the CIT(A) against the order of the AO. The matter of the stay of outstanding demand comes up in this particular scenario.
After reviewing the facts and records, the division bench of Justice Rajiv Shakdher and Justice Girish Kathpalia allowed the writ petition filed by the petitioner and directed the Income Tax Department to release a refund amounting to Rs. 87,89,440/- for the Assessment Year (AY) 2018-19, which had been adjusted against outstanding demand for AY 2011-12.
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