Bothra Shipping Services Pvt. Ltd. Vs Union of India (Calcutta High Court)
The petitioner challenged the adjustment of its income tax refund for Assessment Year (AY) 2021-22 against an outstanding demand relating to AY 2023-24. The principal grievance was that the adjustment had been made even though a Stay Application under Section 220(6) before the Assessing Officer and an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] for AY 2023-24 were still pending.
The petitioner contended that the refund due for AY 2021-22 had already been determined and had become payable. However, the respondents adjusted the refund against the demand for AY 2023-24 without issuing notice or granting an opportunity of hearing. It was argued that since the stay application and appeal regarding AY 2023-24 had not been decided, the demand had not attained finality and could not be enforced. The petitioner relied on CBDT Instruction No. 1914 dated 21 March 1996 and subsequent circulars, submitting that adjustment should not be made when a stay application is pending or where the demand is disputed. Reliance was also placed on earlier decisions of the Calcutta High Court in Danieli India Limited and Gaurav Enterprises, where recovery exceeding permissible limits through adjustment of refunds during the pendency of appeals was held to be unsustainable.
