Delhi HC directs to Refund Amount Adjusted towards Disputed Tax Demand prior to issuance of Setoff of Refund order u/s 245 [Read Order]

The Delhi High Court has directed to refund amount adjusted towards disputed tax demand prior to issuance of setoff of refund order u/s 245.

The appellant, Kshipra Jatana filed Writ petition seeking refund of Rs.1,52,240/-, which was recovered in excess of 10% of the total disputed tax demand for the Assessment Year 2017-18 against the refunds due for the Assessment Year 2020-21.

The counsel for the petitioner submitted that the refund amount was recovered despite a stay order in favour of the petitioner whereby PCIT had granted stay of the demand till the disposal of the first appeal or 30th September, 2020 whichever was earlier. The application for extension of stay of demand and not to take any coercive measures for recovery of demand till the disposal of the appeal is pending disposal till date.

The petitioner further submitted that no notice under Section 245 of the Act has been issued to the Petitioner, which is a mandatory requirement before adjusting any refund due to the Petitioner. The adjustment has been made in violation of the principle of natural justice, as no opportunity of being heard had been granted to the petitioner prior to such adjustment.

The High Court observed that the stay order issued by the respondents granting stay to the petitioner only till 30th September, 2020 is in violation of the directions of the CBDT as well as previous orders of jurisdictional High Court, wherein it has been held that the Assessing Officer must grant stay till the disposal of the first appeal.

The division bench presided by Mr. Justice Manmohan and Ms. Justice Manmeet Pritam Singh Arora has held that “keeping in view the fact that the adjustments have been made on 7^th September, 2021 i.e. prior to issuance of a set off of refund order dated 28th January, 2022 under Section 245, this Court is of the opinion that the petitioner is entitled to refund of adjustment made in excess of 10% of the total disputed tax demand”.

Advocate Mr. Vikram Kakar, appeared on behalf of the petitioner and Advocates Mr. Kunal Sharma with Ms. Zehra Khan and Mr. Shray Nargotra, appeared for the respondents.

To Read the full text of the Order CLICK HERE

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