Rajasthan HC Directs Refund of Income Tax Collected Under Coercion With Interest

Prince Khunteta Vs Additional Commissioner (Rajasthan High Court)

In a case between Prince Khunteta and the Additional Commissioner, the Rajasthan High Court addressed the issue of an amount collected from the petitioner during a search proceeding. The petitioner, Prince Khunteta, alleged that a sum of Rs. 24,06,375 was collected under coercion during a search. The court had previously issued an order on July 5, 2024, asking the respondent to confirm whether there was a standing demand for which this amount was being withheld1.

The Additional Advocate General, on instructions from the Assistant Commissioner, admitted that no order creating a demand had been passed to date2. Based on this admission, the court granted the petitioner’s request for a refund3. The High Court directed the respondents to refund the entire amount of Rs. 24,06,375, along with an annual interest rate of 12%4. This payment was ordered to be made on or before September 30, 20255. The court also imposed a cost of Rs. 25,000 on the respondents and stated that the department could recover this amount from the officer responsible for the non-compliance and delay in refunding the money.

FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT

1. On 30^thMay 2025, following order was passed:

“1. On 05.07.2024, following order was passed:-

“Learned counsel for the respondent seeks time to have instructions as to whether as on date there is an order creating a demand for which an amount of Rs.24,06,375/- collected from the petitioner during the search is being withheld.

Put up on 18.07.2024.”

2. The order has not been complied with till date, even today an adjournment has been sought.

3. Put up on 04.07.2025.

4. Let the Assistant Commissioner, State Tax Rajasthan, Jaipur with relevant record shall remain present before this Court on the next date of hearing.”

2. From the quotation of the said order which is an order passed on 05^thJuly 2024, respondents were to answer whether as on 05^th July 2024, there is an order creating a demand for which an amount of Rs.24,06,375/- was collected from petitioner during the search.