Fork Media Group Private Limited Vs Centralized Processing Centre (Bombay High Court)
The writ petition challenged an order dated 19 December 2024 passed by the Centralized Processing Centre (CPC) adjusting tax refunds against a disputed penalty without granting refund of the excess amount. The petitioner contended that refunds of ₹37,00,594 for AY 2022–23 and ₹43,17,534 for AY 2023–24 were adjusted against a penalty demand of ₹1,16,85,263 levied under section 270A for AY 2021–22, even though the penalty was under appeal before the First Appellate Authority. As a result, the department recovered more than 20% of the disputed demand, contrary to CBDT Instruction No. 1914 dated 21 March 1996, as modified by Office Memoranda dated 29 February 2016 and 31 July 2017. The petitioner repeatedly requested refund of the excess recovery, but the Assessing Officer acknowledged the excess adjustment without granting a refund.
The respondents did not dispute that recovery should ordinarily be restricted to 20% of the disputed demand when an appeal is pending. They submitted that the excess adjustment occurred due to CPC processing and miscommunication, without mala fides, and sought appropriate directions from the Court.
The Court noted that the assessment for AY 2021–22 resulted in no tax demand, though a penalty order dated 21 June 2023 imposed a penalty of ₹1,16,85,263, which was appealed on 7 November 2023. Despite the pending appeal, refunds for subsequent years were adjusted against the penalty demand beyond the 20% threshold. The Court examined the CBDT Office Memorandum dated 31 July 2017, which standardizes recovery at 20% of the disputed demand as a condition for stay, subject to variation only with approval of the administrative Principal Commissioner/Commissioner.
