Bombay HC Directs Income Tax Department to Pass 13 Vodafone Idea Appeal-Effect Orders Within Six Weeks

Vodafone Idea Limited Vs DCIT (Bombay High Court)

Summary: The Bombay High Court considered Vodafone Idea Limited’s petition seeking implementation of orders passed by the Commissioner of Income Tax (Appeals), the Income Tax Appellate Tribunal and the High Court. During the proceedings, the petitioner also challenged steps to recover an income-tax refund already credited to its bank account. According to the Revenue, the Assessing Officer had recorded satisfaction on 7 September 2026 and obtained approval on 8 September 2026 for withholding the refund under Section 245(2) of the Income Tax Act, 1961. Although the Central Processing Center was informed on 9 September 2026, it released ₹699.54 crore on 15 September 2026. The Court’s earlier order of 22 September 2026 restrained recovery and required the amount to remain in a fixed deposit with the State Bank of India, without utilisation unless permitted by the Court.

On the pending appeal-effect matters, the Revenue submitted a chart dividing them into three groups. Group A comprised 13 matters aggregating ₹113.77 crore for which the prescribed period had expired. The Court directed that the appeal-effect orders be passed within six weeks, expressly preserving the petitioner’s contention that the orders were already time-barred and that a refund should follow on the basis of returned income, relying on Commissioner of Income Tax Vs Shelly Products. Group B comprised 10 matters, aggregating ₹1,423.81 crore in the annexure, with limitation ending on 31 March 2027. The Court directed completion as expeditiously as possible, preferably by 31 December 2026. Any extension required an application supported by adequate reasons and could not extend beyond 31 January 2027. For Group C, comprising four matters aggregating ₹2,782.13 crore in the annexure, with limitation ending on 31 March 2028, the Court directed expedited completion and early commencement of verification.

The petition remained pending and was listed for 2 November 2026. The petitioner was permitted to file and serve a rejoinder by 26 October 2026. The ad-interim relief granted on 22 September 2026 continued until further orders. The Court did not finally determine the validity of withholding or recovering the refund, nor did it decide the petitioner’s limitation-based refund claim.

Cases Discussed

• Commissioner of Income Tax Vs Bharti Hexacom Ltd., [2023] 155 taxmann.com 322; 458 ITR 593 (Supreme Court) — The annexed Revenue chart refers to application of this decision when giving effect to the Section 35ABB deduction in Idea Cellular Ltd.’s AY 2010–11 proceedings. The present order does not independently adjudicate that deduction.
• Commissioner of Income Tax Vs Shelly Products, (2003) 129 Taxman 271 (Supreme Court) — Referred to in connection with the petitioner’s contention that expiry of the period for passing appeal-effect orders entitled it to a refund based on returned income. The Court expressly preserved that contention while directing completion of the Group A orders.

FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT

1. The Petition, as originally filed, seeks directions to the Respondents to pass orders giving effect to the orders passed by the Commissioner of Income Tax (Appeals), the Income Tax Appellate Tribunal as well as the High Court, as more particularly set out in the prayer clauses of the Petition.

2. One day prior to the filing of this Petition, the Petitioner received a communication dated 17th September 2026 (page 1097 of the paper-book), informing the Petitioner that the refund processed and paid to the Petitioner was now being claimed by the Income Tax Department, as the same had been erroneously released to the Petitioner. Since the Petitioner was unaware as to the basis on which the refund already credited to the Petitioner’s account was being asked for by the Income Tax Department, no challenge in that regard was laid when the Petition was originally filed. Thereafter, during the pendency of the Petition, it was brought to the attention of the Petitioner that the aforesaid claim was made by the Income Tax Department on the basis that the Assessing Officer had recorded his satisfaction and thereafter obtained the approval of the higher authority that the said refund credited to the Petitioner (Rs.699.55 Crores) ought not to be released to the Petitioner. This power was exercised by the Assessing Officer under Section 245(2) of the Income Tax Act, 1961 (“IT Act”). This intimation was also forwarded by the Assessing Officer to the Central Processing Center (“CPC”) vide an email dated 9th September 2026 despite which, the CPC released the said refund of Rs.699.54 Crores to the Petitioner on 15th September 2026. It is on this basis that the Income Tax Department claims that the refund has been erroneously granted to the Petitioner, and therefore, seeks to recover the aforesaid amount from the bank account of the Petitioner with the State Bank of India.

3. When this matter had come up on the first date, viz., 22nd September 2026, we had allowed the Petitioner to carry out amendments to the Petition to lay a challenge to the letter dated 7th September 2026, issued by the Assessing Officer recording his satisfaction, as well as the approval dated 8th September 2026 issued by the Principal Commissioner of Income Tax (Respondent No.3). We had also granted ad-interim relief by directing that the Income Tax Department shall not recover the amount of Rs.699.54 Crores already deposited into the bank account of the Petitioner with the State Bank of India. To balance the equities, we had also directed that since this amount of Rs.699.54 Crores was lying in a fixed deposit with the State Bank of India, the said fixed deposit shall continue with the said bank and shall not be utilized for any purposes whatsoever without further orders of this Court.

4. After we heard this matter for some time yesterday, we called upon the Revenue to indicate to us as to when they would pass the orders giving effect to the pending orders passed by the higher authorities in the case of the Petitioner. Today, Ms. Nagaraj, learned Counsel appearing on behalf of the Revenue has tendered an Affidavit-in-Reply dated 5th October 2026, which is taken on record. Ms. Nagaraj has also tendered a Chart, which is taken on record and marked ‘X’ for identification. For the sake of convenience, the scanned copy of the said Chart attached to this order as an annexure.

5. As can be seen from the said annexure, the Chart is divided into three groups. Group A deals with passing orders giving effect where the time to pass such orders has already expired. Ms. Nagaraj states that all the matters listed in Group A (a total of 13 matters amounting to Rs.113.77 crores), the orders giving effect shall be passed within a period of six weeks from today. Group B comprises of 10 matters, where the time limit for passing the orders giving effect expires on 31st March 2027. Ms. Nagaraj, on instructions, states that the same shall be done on/before 31st January 2027. Group C relates to the matters where the orders giving effect are required to be passed by 31st March 2028. Though no timeline has been mentioned in the said Chart, Ms. Nagaraj, on instructions, states that the same shall be taken up and completed with expedition and that, the process of verification will also be commenced at the earliest.

6. Having heard Mr. Pardiwala, learned Senior Advocate appearing on behalf of the Petitioner as well as Ms. Nagaraj, learned Counsel appearing on behalf of the Respondent – Revenue, and considering the said Chart tendered to the Court, we are of the view that, insofar as the matters comprising in Group A of the Chart are concerned, the orders giving effect shall be passed within a period of six weeks from today. It is needless to clarify that this direction is given without prejudice to the contention of the Petitioner that, since the time to pass the orders giving effect to the orders of the higher authorities has already expired, the passing of such orders is time-barred and, therefore, the Petitioner would be entitled to a refund as per the returned income of the Petitioner, as held by the Hon’ble Supreme Court in the case of Commissioner of Income Tax vs. Shelly Products [(2003) 129 Taxman 271 (SC)].

7. As far Group B is concerned, we direct that in these matters, orders giving effect shall be passed as expeditiously as possible and preferably on/before 31st December 2026. If, for any reason, in a given case, the order giving effect is not passed by 31st December 2026, the Revenue is free to apply for an extension, providing adequate reasons for such extension, which, in any event, shall not be beyond 31st January 2027.

8. As far as the matters in Group C are concerned, since the time limit to pass the orders giving effect is till 31st March 2028, we direct that the orders giving effect in these matters shall be taken up and completed with expedition and the authorities shall commence the process of verification at the earliest.

9. We now place the above matter on 2nd November 2026.

10. If the Petitioner wants to file any Affidavit-in-Rejoinder to the Reply filed by the Revenue, they are free to do so, on or before 26th October 2026 and serve a copy of the same on Ms. Nagaraj, the learned Counsel appearing on behalf of the Revenue.

11. As far as the ad-interim relief is concerned, the ad-interim relief granted on 22nd September 2026, shall continue until further orders.

12. This order will be digitally signed by the Private Secretary/Personal Assistant of this Court. All concerned will act on production by fax or email of a digitally signed copy of this order.

GROUP A : BEYOND THE PERIOD PRESCRIBED BY SECTION 153 (to be completed within six weeks)

GROUP B : LIMITATION ENDING 31.03.2027 (to be completed on or before 31 January 2027)

GROUP C : LIMITATION ENDING 31.03.2028 (to be taken up and completed with expedition; will commence process of verification at the earliest)