Gaurav Enterprises Vs Union of India And Ors (Calcutta High Court)
The Calcutta High Court considered a writ petition challenging the Income Tax Department’s recovery and adjustment of amounts exceeding 20% of the disputed tax demand from refunds due to the petitioner for Assessment Years (AYs) 2020-21 to 2023-24, in relation to a disputed demand for AY 2018-19. The petitioner had received a notice of demand under Section 156 pursuant to an assessment order passed under Sections 143(3) read with 144B of the Income Tax Act, 1961, raising a demand of Rs. 9,19,33,664. The petitioner filed an appeal before the Commissioner of Income Tax (Appeals) under Section 246A and, during the pendency of the appeal, also sought a stay of the demand. While the stay application remained pending, the Income Tax authorities adjusted refundable amounts relating to subsequent assessment years and recovered Rs. 5,01,16,180, which exceeded 20% of the disputed demand.
The petitioner relied upon the Calcutta High Court’s earlier decisions in Danieli India Limited and Graphite India Limited, contending that the Revenue authorities could not recover more than 20% of the disputed demand while the appeal before the CIT (Appeals) remained pending. The Revenue argued that recovery had been made in accordance with law and submitted that unless the assessee deposited 20% of the disputed demand, recovery of the entire outstanding demand was permissible. The Revenue also relied on the Delhi High Court’s decision in Chemester Food Industry (P.) Ltd. in support of its contention.
