Bothra Shipping Services Pvt. Ltd. Vs Union of India And Ors. (Calcutta High Court)
The Calcutta High Court considered a writ petition challenging the adjustment of the refund due for Assessment Year (AY) 2021-22 against the outstanding tax demand for AY 2023-24. The petitioner contended that the adjustment was made despite a stay application being pending before the Assessing Officer under Section 220(6) and an appeal pending before the Commissioner of Income Tax (Appeals) (CIT(A)). The issues before the Court included whether the Department could adjust a refund against a disputed demand during the pendency of a stay application and appeal, and whether such adjustment violated the principles of natural justice and the statutory safeguards under the Income Tax Act. The petitioner submitted that the refund had already become due and that it was adjusted without issuing any notice or affording an opportunity of hearing. It was further argued that, since the demand for AY 2023-24 was under challenge and the stay application had not yet been decided, the demand had not attained finality and should not have been enforced.
The petitioner relied upon the CBDT Instruction No. 1914 dated March 21, 1996 and subsequent circulars, contending that no adjustment should be made where a stay application is pending or the demand has not become final. Reliance was also placed on the Calcutta High Court’s earlier decisions in Danieli India Limited and Gaurav Enterprises, wherein the Court had held that recovery in excess of the permissible limit from refunds during the pendency of appeals was not sustainable in law.
