Refund cannot be adjusted against demand on disputed issues covered by earlier orders of ITAT or CIT (Appeals)

Maruti Suzuki India Limited vs. DCIT (Delhi High Court)-

Adjustment of refunds against tax demand invalid, where issues covered by favourable decisions of appellate authorities; IT department directed to refund the taxes; Power to AO u/s 220(6) applicable for CIT (A) and not for ITAT appeal

HC held that reliance on the negative order passed by the Dispute Resolution Panel (DRP) by the tax department is not a valid ground for not staying the demand where issues are covered by the order of the Commissioner of Income-tax (Appeals) [CIT(A)] or the Income-tax Appellate Tribunal (the Tribunal). Further the same cannot be a ground for making adjustment of refund of earlier years under Section 245 of the Act.

The petitioner has filed calculations and has drawn our attention to a chart summarising the issues on which additions/ dis-allowances have been made by the Assessing Officer and has high-lighted that  several additions or dis-allowances have already been decided or adjudicated in favour of the petitioner by the CIT (Appeals) or by the ITAT.

As noticed above, this is a relevant factor, while deciding the stay application. We do not agree with the stand of the Revenue that in the present year, assessment order has been passed under Section 144C, i.e. after reference to the Dispute Resolution Panel, therefore the orders passed by the CIT(Appeals) and ITAT in favour of the petitioner have lost significance and do not justify stay of demand in matters covered in favour of the assessee. Decisions of the CIT (Appeals) or the ITAT in favour of the assessee should not be ignored and have not become inconsequential. This is not a valid or good ground to ignore the decisions of the appellate authorities and is also not a good ground to not to stay demand or to allow adjustment under Section 245 of the Act. Revenue has not made out a good cause or reason why adjustment should allowed to recover demand on issues that have been decided in favour of the petitioner in other years.