Goel Road Carriers Private Limited v. Assistant Commissioner Of Incometax Circle-10(2), Delhi & Anr

$~113 *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 6885/2022 & CM Appl. 20970-20971/2022 GOEL ROAD CARRIERS PRIVATE LIMITED. ..... PetitionerThrough: Mr. Nitin Gulati, Advocate. versus ASSISTANT COMMISSIONER OF INCOMETAX CIRCLE-10(2), DELHI & ANR...... RespondentsThrough: Mr. Ajit Sharma, Advocate. % Date of Decision: 02[nd]May, 2022 CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MR. JUSTICE DINESH KUMAR SHARMAJ U D G M E N T MANMOHAN, J (Oral): 1.Present writ petition has been filed seeking refund of Rs.57,65,410/-,which was recovered in excess of 20% of the total disputed tax demand, forthe Assessment Year 2012-13 against the refund due for the AssessmentYear 2020-21. Petitioner also seeks a direction to the respondents toexpeditiously decide the appeal filed against the order dated 27[th]November,2019 under Section 144 of the Income Tax Act, 1961 [for short ‘the Act’]. 2.Learned counsel for the petitioner states that under Section 220(6) ofthe Act, the Assessing Officer has been conferred with the power to grantstay on recovery of outstanding tax demand subject to fulfilment of appropriate conditions. He states that in order to provide guidance and laydown principles regarding stay of demand, the Central Board of DirectTaxes has issued various Circulars/ Notification from time to time includingOffice Memorandums dated 29[th]February, 2016 and 31[st]July, 2017,prescribing therein that in such cases where an assessee challenges theadditions/ disallowances made in the assessment order by way of an appealbefore the first appellate authority, i.e., CIT(A), and during pendency thereofdeposits 20% of the total disputed outstanding tax demand, the AssessingOfficer is empowered to grant stay of recovery of the balance outstandingdemand. 3.Learnedcounselforthepetitionersubmitsthatuponpayment/recovery of the standard rate of 20% of the disputed outstandingtax demand, the Assessing Officer is mandated to grant stay on recovery ofthe balance disputed outstanding tax demand till the disposal of first appealof the assessee, unless the case of the assessee falls in the categorymentionedinparagraph(B)oftheOfficeMemorandumsdated29[th]February, 2016 and 31[st]July, 2017. He states that the respondents inviolation of the provisions of the Office Memorandums recovered thedisputed outstanding tax demand in excess of 20% by way of adjustment ofrefunds due for subsequent assessment years. 4.He states that while 20% of the disputed amount for the AssessmentYear2012-13wasRs.37,78,520/-(20%ofRs.1,88,92,600/-),therespondents adjusted Rs.95,43,930/- being 51% of the demand and that toowithout deciding petitioner’s application for stay. 5.Issue notice. Mr. Ajit Sharma, learned counsel accepts notice onbehalf of the respondents. He points out that in the writ petition it has been admitted that petitioner has been issued an intimation dated 29[th]November,2021 under Section 245 of the Act. 6.In rejoinder, learned counsel for the petitioner clarifies that theintimation under Section 245 of the Act is only for adjustment ofRs.30,000/- which was raised against the penalty under Section 271B of theAct. He has handed over a photocopy of the intimation under Section 245Act, which is taken on record. 7.Having heard learned counsel for the parties, this Court is of the viewthat the issue raised in the present writ petition is no longer res integra. ThisCourt in Skyline Engineering Contracts (India) Pvt. Ltd. v. DeputyCommissioner of Income Tax Circle 22(2), W.P.(C) 6172/2021 and otherconnected matters, bearing similar facts, has held as under:- “9. Having heard learned counsel for the parties, this Court is of theview that the Government is bound to follow the rules and standardsthey themselves had set on pain of their action being invalidated.[See: Amarjit Singh Ahluwalia vs. State of Punjab & Ors. 1975 (3)SCR 82 and Ramana Dayaram Shetty vs. International AirportAuthority of India & Ors. 1979 SCR (3) 1014]. 7.Having heard learned counsel for the parties, this Court is of the viewthat the issue raised in the present writ petition is no longer res integra. ThisCourt in Skyline Engineering Contracts (India) Pvt. Ltd. v. DeputyCommissioner of Income Tax Circle 22(2), W.P.(C) 6172/2021 and otherconnected matters, bearing similar facts, has held as under:- “9. Having heard learned counsel for the parties, this Court is of theview that the Government is bound to follow the rules and standardsthey themselves had set on pain of their action being invalidated.[See: Amarjit Singh Ahluwalia vs. State of Punjab & Ors. 1975 (3)SCR 82 and Ramana Dayaram Shetty vs. International AirportAuthority of India & Ors. 1979 SCR (3) 1014]. 10. This Court is also of the view that the office memorandum dated29[th]February, 2016 read with office memorandum dated 25[th]August,2017 stipulate that the Assessing Officer shall normally grant stay ofdemand till disposal of the first appeal on payment of 20% of thedisputed demand.In the event, the Assessing Officer is of the viewthat the payment of a lump sum amount higher than 20% iswarranted, then the Assessing Officer will have to give reasons toshow that the case falls in para 4(B) of the office memorandum dated29[th]February, 2016. 11. This Court finds that the order under Section 245 of the Act foradjustments of refunds as well as the order on stay of demand under Section 220(6) of the Act do not give any special/particular reasonas to why any amount in excess of 20% of the outstanding demandshould be recovered from the petitioner-assessee at this stage inaccordance with paragraph 4(B) of the office memorandum dated29[th]February, 2016. Consequently, this Court is of the view that therespondent is entitled to seek pre-deposit of only 20% of the disputeddemand during the pendency of the appeal in accordance withparagraph 4(A) of the office memorandum dated 29[th]February,2016, as amended by the office memorandum dated 25[th]August,2017. 12. Consequently, this Court is of the view that the respondents areentitled to seek pre-deposit of only 20% of the disputed demandduring the pendency of the appeals in accordance with paragraph4(A) of the office memorandum dated 29[th]February, 2016, asamended by the office memorandum dated 25[th]August, 2017. 13. Accordingly, the respondent no.1 is directed to refund theamount adjusted in excess of 20% of the disputed demand for theAssessment Year 2017-18, within four weeks…..” 8.Keeping in view the aforesaid mandate of law as well as the fact thatrefund has been adjusted against the outstanding tax demand by theAuthority without following the due procedure prescribed under the saidSection inasmuch as no notice or opportunity of pre-decisional hearing hadbeen provided to the petitioner prior to such adjustment of refund, this Courtis of the opinion that the petitioner is entitled to refund of adjustments madein excess of 20% of the disputed tax demands and Rs.30,000/- set off ofrefunds against tax payable. 9.Consequently, this Court directs the respondents to verify the factsstated in the writ petition and if it finds them to be true and correct thenrefund the amount adjusted in excess of 20% of the disputed tax demands Signature Not Verified for the Assessment Year 2012-13 as well as Rs.30,000/- as mentioned in theintimation under Section 245 of the Act to the petitioner within fourweeks. The Appellate Authority is also directed to decide the petitioner’sappeal challenging the order dated 27[th]November, 2019 within a year.10.With the aforesaid direction, present writ petition and applicationsstand disposed of. MANMOHAN, J DINESH KUMAR SHARMA, J MAY 2, 2022js