Case Law Details
Infres Methodex Private Limited Vs ACIT (Delhi High Court)
In a precedent-setting verdict, the Delhi High Court permitted a 20% adjustment of refund against Income Tax demand in the case of Infres Methodex Private Limited Vs ACIT. The court upheld that the respondents/revenue could adjust the refund due to the petitioner against a demand raised for the Assessment Year (AY) 2017-18, albeit with limitations.
The judgement is crucial as it explores the nuanced interpretation of Section 245 of the Income Tax Act, 1961. The petitioner contended that the respondents/revenue adjusted the refund due to it against the demand for AY 2017-18 without adhering to the stipulations of Section 245. While the petitioner filed an appeal against the assessment order and an application to stay the demand, both remained unadjudicated. In light of these circumstances, the court queried whether the petitioner would consent to a 20% adjustment of the refund due against the demand raised for AY 2017-18. The petitioner agreed, and the court accordingly issued the directive.
This verdict signifies a vital advancement in the legal discourse surrounding tax refunds and adjustments. The court’s ruling offers an equitable resolution, maintaining a balance between the statutory obligations of taxpayers and the interests of the revenue. The judgement also emphasises the need for authorities to expedite their responses to appeals and stay applications, thereby ensuring timely and efficient resolution of disputes.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. Issue notice.
1.1 Mr Gaurav Gupta, learned senior standing counsel, accepts notice on behalf of the respondents/revenue.
2. In view of the directions that we propose to pass, Mr Gupta says, that he does not wish to file a counter-affidavit in the matter, and that he will argue the matter based on the record presently available to the Court.
3. Therefore, with the consent of learned counsel for the parties, the writ petition is taken up for hearing and final disposal, at this stage itself.
4. Counsel for the petitioner says, that the petitioner’s principal grievance is, that the respondents/revenue, without following the regime set forth in Section 245 of the Income Tax Act, 1961 [in short, “the Act”] proceeded to adjust the refund available to it amounting to Rs.1,72,02,960/-for Assessment Year 2021-22 & 2022-23 against demand raised for AY 2017-18.
5. We are informed, that the demand raised qua the petitioner for AY 2017-18 is Rs.2,52,59,189/-.
6. Furthermore, counsel for the petitioner says, that he has filed an appeal against the assessment order concerning demand with respondent no.2 [i.e., Commissioner of Income Tax (Appeals)], which has not been adjudicated yet.
7. We are told, that this appeal was filed on 20.01.2020.
8. It is also the submission of the counsel for the petitioner, that an application for staying the demand concerning AY 2017-18 has been lodged with respondent no.1, which is also not being dealt with.
9. It is averred, that the said application, which is dated 29.01.2020, was lodged with the respondent no.1 on 03.02.2020.
10. Given this position, we have queried the counsel for the petitioner, whether he would have objection, if, for the moment, against the refund due qua AY 2021-2022 & 2022-23, adjustment is made to the extent of 20% of the demand raised for AY 2017-18.
11. Counsel for the petitioner says, that the petitioner will have no objection if such a direction is issued by the concerned authority.
12. It is ordered accordingly.
12.1 The concerned authority will bear this in mind, and pass an appropriate order.
13. In case the petitioner is aggrieved by the outcome i.e., the decision rendered on the application for stay, it will have liberty to take recourse to an appropriate remedy, albeit, as per law.
14. The concerned authority will dispose of the application for stay of demand at the earliest, though not later than three [3] weeks from the receipt of copy of the instant judgement.
15. The writ petition is disposed of in the aforesaid terms.
16. Consequently, pending application shall stand closed.
17. Parties will act based on the digitally signed copy of the order.
