Shree Krishna Steel Traders Vs Union of India & Ors. (Delhi High Court)
In a writ petition before the Delhi High Court, the petitioner sought protection against recovery of an outstanding income tax demand during the pendency of a statutory appeal, relying on a stay granted by the Assessing Officer on 19.01.2024. The stay covered the remaining demand for Assessment Year 2021–22 after the petitioner had paid 20% of the disputed amount, consistent with the applicable office memoranda. Despite the subsisting stay, the Centralised Processing Center (CPC) recovered a sum of ₹6,45,010/-. The petitioner requested refund of the recovered amount with interest.
The petitioner contended that the recovery was contrary to the stay order and that settled judicial precedent required refund of amounts recovered in excess of 20% of the demand during pendency of appeal. The respondents acknowledged the recovery but argued that the CPC could not be faulted, asserting that the petitioner failed to inform the CPC about the stay order within the stipulated period after receiving notice.
Upon examining the record, the Court found that the recovery had occurred notwithstanding the operative interim stay. Relying on its earlier decision in Priya Narula v. CIT, the Court held that the petitioner was entitled to a refund of the recovered amount. The Court rejected the contention that the petitioner was at fault for not informing the CPC, observing that in an era of computerized tax administration, it was untenable for the CPC to claim ignorance of a stay granted by the Assessing Officer. The Court characterized the criticism of the petitioner for not communicating the stay as unprofessional.
