+W.p.(C) v. Assistant Commissioner Of Incometax Central Circle 2 & Anr

$~3 IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P.(C) 10835/2024HUAWEI TELECOMMUNICATIONS INDIACOMPANY PRIVATE LIMITED .....PetitionerThrough:MrKamalSwahney,MrNikhilAgarwalandMrPuruMedhira,Advocates. versus ASSISTANT COMMISSIONER OF INCOMETAX CENTRAL CIRCLE 2 & ANR. .....RespondentsThrough:MrIndrujSinghRai,SSC,MrSanjeev Menon and Mr Rahul Singh,JSCs and Mr Anmol Jagga, Advocate. CORAM:HON'BLE MR. JUSTICE VIBHU BAKHRUHON'BLE MS. JUSTICE SWARANA KANTA SHARMA O R D E R04.12.2024 % 1.The petitioner has filed the present petition, inter alia, impugning anorder dated 23.01.2024 issued under Section 245 of the Income Tax Act,1961 (hereafter the Act) whereby the refund amount of ₹3,08,19,973/- due to the petitioner in respect of the assessment year (AY) 2022-23 was adjustedagainst an outstanding demand in respect of the AY 2018-19. 2.The petitioner’s case is that the demand for the AY 2018-19 has beenstayed and, therefore, it is not permissible for the Revenue to adjust therefund amount against the stayed demand under Section 245 of the Act. 3.In the present case, the learned Income Tax Appellate Tribunal(hereafter ITAT) had passed an order dated 23.09.2022 staying the demandin respect of the AY 2017-18 and 2018-19 in the following terms: - “6. Considering the aforesaid factual position, wedirect the assessee to pay a sum of Rs.10,00,00,000against the aggregate outstanding demand, as acondition of stay.direct the assessee to pay a sum of Rs.10,00,00,000against the aggregate outstanding demand, as acondition of stay. 7. We further direct, out of the amount ofRs.10,00,00,000 as directed, upfront, the assesseeshall pay an amount of Rs.4,36,11,069 within fourweeks from the date of this order. The balanceamount of Rs.5,63,88,931 shall be paid by assesseeafter disposal of its rectification application, statedto be pending before the Assessing Officer/TPO,either by way of adjustment of refund, in case, itarises or assessee shall pay it within two weeksfromthedateofdisposalofrectificationapplication. Subject to the above, recovery of thebalance outstanding demand shall remain stayedfor a period of 180 days or till disposal of thecorresponding appeal of the assessee, whichever isearlier.”Rs.10,00,00,000 as directed, upfront, the assesseeshall pay an amount of Rs.4,36,11,069 within fourweeks from the date of this order. The balanceamount of Rs.5,63,88,931 shall be paid by assesseeafter disposal of its rectification application, statedto be pending before the Assessing Officer/TPO,either by way of adjustment of refund, in case, itarises or assessee shall pay it within two weeksfromthedateofdisposalofrectificationapplication. Subject to the above, recovery of thebalance outstanding demand shall remain stayedfor a period of 180 days or till disposal of thecorresponding appeal of the assessee, whichever isearlier.” 4.The learned counsel appearing for the Revenue has confirmed thatthe demand for the AY 2018-19 had been stayed by the learned ITAT. 5.Concededly, the issue is covered by the earlier decision of this courtin Lease Plan India & Another v. Deputy Commissioner of Income Tax :Neutral Citation:2012:DHC:5280 -DB wherein the court held as under:-in Lease Plan India & Another v. Deputy Commissioner of Income Tax :Neutral Citation:2012:DHC:5280 -DB wherein the court held as under:- “12. It is thus evident that in this case that theactions of the Revenue were violative of the stayorder of this Court; they were also contrary to theprovisions of Section 245 of the Income Tax Act.The term “recovery” includes adjustment of therefund due to the assessee. Thus, the High Courtactions of the Revenue were violative of the stayorder of this Court; they were also contrary to theprovisions of Section 245 of the Income Tax Act.The term “recovery” includes adjustment of therefund due to the assessee. Thus, the High Court “12. It is thus evident that in this case that theactions of the Revenue were violative of the stayorder of this Court; they were also contrary to theprovisions of Section 245 of the Income Tax Act.The term “recovery” includes adjustment of therefund due to the assessee. Thus, the High Courtactions of the Revenue were violative of the stayorder of this Court; they were also contrary to theprovisions of Section 245 of the Income Tax Act.The term “recovery” includes adjustment of therefund due to the assessee. Thus, the High Court orderwhichdirectedthattheassessmentproceedings “would not be given effect to withoutthe leave of the court” translated to a bar onadjustments as well. Furthermore, Section 245 isclear in its mandate regarding the requirement ofprior intimation in writing to the assessee whoserefundsarebeingadjustedagainstamountspayable to the Revenue; the assessee has to begiven notice, and heard. The revenue clearly didnot follow the provision, and give any notice orhearing before making adjustments, impugned inthis case.” 6.In view of the above, the present petition is allowed and the Revenueis directed to refund the amount along with applicable interest, which hasbeen adjusted contrary to the stay granted by the learned ITAT. 7.The petition is disposed of in the above terms. VIBHU BAKHRU, J DECEMBER 04, 2024M SWARANA KANTA SHARMA, J Click here to check corrigendum, if any