Saurav Chachra Vs Central Board of Direct Taxes (Orissa High Court)
The writ petition before the Orissa High Court challenged the action of tax authorities in adjusting a refund of Rs. 14,80,270/- for Assessment Year (AY) 2025–26 against an outstanding disputed demand of Rs. 84,46,855/- for AY 2018–19, despite an existing stay on recovery under Section 220(6) of the Income Tax Act, 1961.
The petitioner had been assessed under Section 147 for AY 2018–19, and subsequently filed an appeal before the National Faceless Appeal Centre. During the pendency of the appeal, the petitioner sought a stay on recovery of the demand. Initially, the authority directed payment of 20% of the demand as a condition for granting stay, which the petitioner could not fulfil. Thereafter, upon consideration of a waiver request, an interim order dated 12 January 2026 granted stay of recovery of the disputed demand until disposal of the appeal.
Separately, an intimation under Section 143(1) dated 12 December 2025 determined that a refund of Rs. 14,80,270/- was due to the petitioner for AY 2025–26. However, on 27 January 2026, the authorities adjusted this refund against the outstanding demand for AY 2018–19, despite the subsisting stay order.
The petitioner contended that such adjustment violated the stay order and principles of natural justice, arguing that the authorities had acted arbitrarily and in disregard of the restraint on recovery proceedings. The Department’s counsel did not dispute the factual position and acknowledged that the refund had indeed been adjusted against the earlier demand despite the stay granted under Section 220(6).
