Anshu Hospitals Limited Vs Chairman (Punjab and Haryana High Court)
The Punjab and Haryana High Court considered a petition challenging the adjustment of a ₹19.10 crore income tax refund determined for assessment year 2024-25 against an earlier tax demand of ₹20.39 crore for assessment year 2022-23.
For AY 2022-23, an assessment order dated 30.03.2024 raised an additional income tax demand of ₹20.39 crore against the petitioner. The petitioner filed a statutory appeal against the assessment order on 29.04.2024 and voluntarily deposited ₹1 crore on 22.05.2024. On 30.09.2024, the petitioner sought a stay of recovery of the demand beyond the ₹1 crore already deposited.
Meanwhile, an assessment order dated 08.10.2024 under Section 143(1) of the Income Tax Act, 1961, for AY 2024-25 determined a refund of ₹19.10 crore in favour of the petitioner. On 14.10.2024, the petitioner received a notice under Section 245 of the Act proposing adjustment of this refund against the earlier ₹20.39 crore demand for AY 2022-23.
On 24.10.2024, the petitioner’s stay application concerning the AY 2022-23 demand was allowed, subject to a further deposit of ₹2.05 crore in five instalments of ₹41 lakh each. The entire demand was thereby stayed subject to the specified deposits. The stay order was not challenged by the respondents and attained finality. On 25.10.2024, the petitioner’s Jurisdictional Assessing Officer uploaded the stay order on the Income Tax Business Application Portal (ITBA Portal).
Despite the stay, the respondent-revenue passed an order dated 04.11.2024 under Section 245 of the Act adjusting the ₹19.10 crore refund for AY 2024-25 against the ₹20.39 crore demand for AY 2022-23.
The High Court examined whether such adjustment could be made in view of the stay order dated 24.10.2024. The Court noted that the demand for AY 2022-23 had already been stayed, subject to the further deposit of ₹2.05 crore, and that the stay order had attained finality. The stay order had also been uploaded on the ITBA Portal by the Jurisdictional Assessing Officer on 25.10.2024.
In these circumstances, the Court held that the ₹19.10 crore refund determined for AY 2024-25 could not have been adjusted against the earlier ₹20.39 crore demand for AY 2022-23 through the order dated 04.11.2024. The adjustment was contrary to the interim stay order dated 24.10.2024.
Consequently, the High Court held that the adjustment could not be sustained and directed that the amount be refunded forthwith to the petitioner along with applicable interest, in accordance with law. All pending miscellaneous applications, if any, were also disposed of.
Five Alternative SEO Titles
1. HC Sets Aside ₹19.10 Crore Refund Adjustment Against Stayed Tax Demand
2. HC Directs Refund of ₹19.10 Crore Adjusted Against Stayed Demand
3. HC Rejects Section 245 Refund Adjustment Made Despite Tax Demand Stay
4. HC Quashes Section 245 Adjustment of Refund Against Stayed ₹20.39 Crore Demand
5. HC Orders Refund of ₹19.10 Crore After Invalid Adjustment Against Stayed Demand
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
1. Through the instant petition, challenge is made to the adjustment of the refund determined by the respondent-revenue for the assessment year 2024-25 against the income tax dues of the petitioner for the assessment year 2022-23.
2. After perusing the record the following undisputed facts have emerged:-
(i) Through assessment order dated 30.03.2024, for the assessment year 2022-23, additional income tax @ Rs.20.39 crores was demanded from the petitioner;
(ii) on 29.04.2024, the petitioner challenged the assessment order dated 30.03.2024 through filing of a statutory appeal, during the pendency whereof, on 22.05.2024, the petitioner voluntarily deposited Rs.1 crore;
(iii) on 30.09.2024, the petitioner filed an application in its pending appeal for grant of stay of the recovery of the demand beyond Rs.1 crore deposited by the petitioner on 22.05.2024;
(iv) during pendency of the aforesaid appeal and application for stay with regard to demand made by the respondent authorities for the assessment year 2022-23, assessment order dated 08.10.2024, for the assessment year 2024-25 was passed under Section 143(1) of the Income Tax Act, 1961 (for short – the Act) as per which the petitioner was held entitled to a refund of Rs.19.10 crores;
(v) on 14.10.2024, the petitioner received a notice under Section 245 of the Act as to why the refund of Rs.19.10 crores pertaining to the assessment year 2024-25 be not adjusted against the earlier demand of Rs.20.39 crores for the assessment year 2022-23;
(vi) on 24.10.2024, the petitioner’s application for stay filed in the appeal to challenge therein the demand of Rs.20.39 crores, pertaining to the assessment year 2022-23, was allowed subject to the petitioner making a further deposit of Rs.2.05 crores in five installments of Rs.41 lakhs each, with the first installment due on 24.11.2024;
(vii) on 25.10.2024, respondent No.3 i.e. the petitioner’s Jurisdictional Assessing Officer uploaded on the Income Tax Business Application Portal (for short – ITBA Portal) the factum with regard to the afore-referred interim stay granted in the petitioner’s favour on 24.10.2024 and that
(viii) through the impugned order dated 04.11.2024, passed under Section 245 of the Act, the respondent-revenue adjusted the refund of Rs.19.10 crores, pertaining to the assessment year 2024-25, against the earlier demand of Rs.20.39 crores pertaining to the assessment year 2022-23.
3. The question that arises for the determination of this Court is as to whether in the light of the afore admitted facts, through the order dated 04.11.2024, passed under Section 245 of the Act, the respondent-revenue could have adjusted the refund determined to be paid to the petitioner for the assessment year 2024-25 against an earlier demand pending against the petitioner for the assessment year 2022-23.
4. Learned counsel for the parties have been heard.
5. Through an assessment order dated 30.03.2024, for the assessment year 2022-23, the petitioner was assessed to pay additional income tax @ Rs.20.39 crores against which demand, on 29.04.2024, the petitioner preferred a statutory appeal during the pendency whereof on 22.05.2024, Rs.1 crore was voluntarily deposited by the petitioner and on 24.10.2024, subject to a further deposit of Rs.2.05 crores by the petitioner, in five equal installments of Rs.41 lakhs each, the entire demand was stayed by the Principal Commissioner of Income Tax (Central), Gurugram.
6. The afore-referred order dated 24.10.2024, passed by the Principal Commissioner of Income Tax (Central), Gurugram, was not challenged by the respondents and thus, allowed to attain finality. On 25.10.2024, the petitioner’s Jurisdictional Assessing Officer also uploaded the stay order on the ITBA Portal.
7. Thus, on 24.10.2024, the demand of income tax @ Rs.20.39 crores, against the petitioner, for the assessment year 2022-23, was stayed subject to the petitioner depositing Rs.2.05 crores in installments of Rs.41 lakhs each which fact was also in the notice of all concerned after having been posted on 25.10.2024, on the ITBA Portal by the petitioner’s Jurisdictional Assessing Officer.
8. In the light of the above, through the impugned order dated 04.11.2024, passed under Section 245 of the Act, refund of Rs.19.10 crores, pertaining to the assessment year 2024-25, determined to be paid to the petitioner through assessment order dated 08.10.2024, could not have been ordered to be adjusted against an earlier demand of Rs.20.39 crores, pertaining to the assessment year 2022-23 as such adjustment was against the order of interim stay passed by the Principal Commissioner of Income Tax (Central), Gurugram on 24.10.2024 in the petitioner’s pending appeal filed by it to challenge therein the demand of tax @ Rs.20.39 crores pertaining to the assessment year 2022-23 especially when the order of the Principal Commissioner of Income Tax (Central), Gurugram dated 24.10.2024 was allowed to attain finality by the respondents and that such order had also been uploaded on 25.10.2024, by the petitioner’s Jurisdictional Assessing Officer on the ITBA Portal.
9. In the light of the above discussion, we hold that adjustment made by the respondent-revenue through the impugned order dated 04.11.2024, in contravention of the stay order dated 24.10.2025, passed by the Principal Commissioner of Income Tax (Central), Gurugram, cannot be sustained. Resultantly, such amount be refunded forthwith to the petitioner after adding therein applicable interest, in accordance with law.
10. All pending miscellaneous application(s), if any, also stand disposed of.
