Case Law Details
Litle More Engineering Private Limited Vs Union of India & Ors (Calcutta High Court)
The Calcutta High Court examined a writ petition challenging the action of the revenue authorities in adjusting refund amounts due to the petitioner for the assessment year 2024–25 against an outstanding tax demand relating to the assessment year 2013–14. The earlier demand arose from an assessment order dated March 11, 2016 passed under Section 143(3) of the Income Tax Act, 1961. The petitioner had filed an appeal against that order before the Commissioner of Income Tax (Appeals) and, during the pendency of the appeal, sought a stay of demand under Section 220(6) of the Act. Upon depositing more than 20% of the disputed tax, the Assessing Officer granted a stay and treated the petitioner as not being in default.
Despite the subsisting stay of demand, the revenue authorities adjusted the refund payable for assessment year 2024–25 against the stayed demand for assessment year 2013–14 by invoking Section 245 of the Act. The petitioner contended that such adjustment was contrary to law, as the demand had already been stayed under Section 220(6). The revenue, while not disputing the factual position regarding the stay and deposit, suggested expeditious disposal of the pending appeal instead of directing a refund.
The Court held that once the Assessing Officer had granted a stay and treated the petitioner as not in default, it was not open to the revenue authorities to adjust refunds against the stayed demand. Consequently, the Court directed the revenue authorities to refund the amounts adjusted from the refund for assessment year 2024–25, excluding the amount deposited by the petitioner while seeking the stay. Specific timelines were prescribed for effecting the refund and for expeditious disposal of the pending appeal by the Commissioner of Income Tax (Appeals). The writ petition was disposed of with these directions by the Calcutta High Court.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
1. This writ petition assails the action of the respondent/revenue authorities in adjusting the amounts refundable to the petitioner in respect of the assessment year 2024-25 with outstanding demand pertaining to the assessment year 2013-14.
2. An assessment order dated March 11, 2016 under Section 143(3) of the Income Tax Act, 1961 for the assessment year 2013-14 had been passed against the petitioner. The petitioner carried the said assessment order in appeal before the Commissioner of Income Tax (Appeals). During pendency of the appeal, the petitioner made an application under Section 220(6) of the Income Tax Act, 1961, before the Assessing Officer and deposited a sum in excess of 20% of the tax in dispute. The Assessing Officer, upon considering the petitioner’s application under Section 220(6) of the said Act of 2016 stayed the demand.
3. Despite the Assessing Officer having passed an order treating the assesse/petitioner to be not in default in terms of Section 220(6) of the said Act of 1961, the respondents/revenue authorities proceeded to adjust sums refundable to the petitioner in respect of assessment year 2024-25 against the outstanding demand pertaining to the assessment year 2013-2014 which had been stayed by the Assessing Officer under Section 220(6) of the said Act of 1961 by an order dated August 16, 2024 (annexure ‘P5’ at page 33 to the writ petition).
4. Mr. Mazumder, learned advocate appearing for the petitioner submits that such action of the respondents/revenue authorities is absolutely de-hors law. He submits that the petitioner is therefore entitled to refund of the entire sum that has been adjusted from the petitioner’s refundable amounts in respect of assessment year 2024-25 against the stayed demand in respect of assessment year 201314.
5. Mr. Bhattacharjee, learned advocate appearing for the respondents/revenue authorities submits that the petitioner’s appeal may be directed to be disposed of expeditiously instead of directing refund of the sums adjusted by the order impugned dated April 14, 2025 passed under Section 245 of the said Act of 1961.
6. Instructions forwarded by the Revenue authorities which have been handed up to Court by Mr. Bhattacharjee are taken on record.
7. Heard learned advocates appearing for the respective parties and considered the material on record.
8. Once the petitioner’s application under Section 220(6) of the said Act of 1961 was considered and answered favorably by the Assessing Officer and the petitioner was treated to be not in default (i.e. the demand arising out of assessment order dated March 11, 2016 in respect of assessment year 2013-14 was stayed), it was no longer open to the respondents/revenue authorities to make any adjustment against the said stayed demand.
9. It is the petitioner’s case, which is not disputed by the respondents/revenue authorities that the petitioner has deposited a sum in excess of 20% of tax in dispute for the purpose of being treated as an assesse not in default.
10. In such view of the matter, the respondents/revenue authorities shall refund to the petitioner the amounts that have been adjusted from the amounts refundable to the petitioner in respect of assessment year 202425 against the outstanding demand in respect of assessment year 2013-14, excepting the sum that has been deposited by the petitioner while seeking stay of demand by way of the petitioner’s application under Section 220(6) of the said Act of 1961, within a period of six weeks from the date of communication of this order.
11. It is clarified that the amount that will be refunded to the petitioner will be the amount that has been adjusted in terms of the intimation dated April 14, 2025 (annexure ‘P-11’ at pages 58 & 59 to the writ petition) and not the amount in excess of 20% voluntarily deposited by the petitioner as aforesaid, as early as possible, preferably within a period of four weeks from the date of communication of this order.
12. Since the petitioner’s appeal before the Commissioner of Income Tax (Appeals) has been pending since 2016, the Commissioner of Income Tax (Appeals) shall dispose of the petitioner’s appeal as expeditiously as possible preferably within a period of four weeks from the date of communication of this order.
13. WPA 10211 of 2025 stands disposed with the aforesaid observations.
14. Urgent photostat certified copy of this order, if applied for, be supplied to the parties on urgent basis after completion of necessary formalities
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