Civitech Housing India Private Limited Vs DCIT (Delhi High Court)
Summary: The Delhi High Court held that where a refund is admittedly due to an assessee and the Revenue proposes adjustment under section 245 of the Income-tax Act, 1961, the entire refund cannot be withheld merely because an outstanding demand is pending. An order dated 21.07.2026 had determined a refund of ₹71,71,049 payable to the petitioner, but it was not released because of demands relating to AY 2010-11. An intimation proposing adjustment under section 245 was issued on 06.08.2026. The CPC’s email dated 10.08.2026 showed two demands of ₹49,439 under section 250 and ₹75,950 under section 154, aggregating to ₹1,25,389. The Court questioned withholding the entire refund of ₹71.71 lakh against this comparatively small demand. Without deciding whether the Revenue was legally entitled to adjust ₹1,25,389 or whether the underlying demand was valid, the Court held that only the amount proposed to be withheld or adjusted could be retained and the balance refund had to be released forthwith. Accordingly, the respondents were directed to credit ₹70,45,660 within seven days, failing which, if the amount was not credited on or before 05.09.2026, it would carry interest at 1% per month. The Court preserved the parties’ respective rights regarding the proposed adjustment and also permitted the petitioner to approach the Assessing Authority regarding any grievance concerning computation of the refund or applicable interest.
