2021 (5) TMI 452 - HC - Income Tax

Court directs stay on outstanding tax demands & refunds release under Income Tax Act

Vapi Green Enviro Limited Versus Deputy Commissioner Of Income Tax, Vapi Circle, Vapi

Vapi Green Enviro Limited Versus Deputy Commissioner Of Income Tax, Vapi Circle, Vapi - TMI Issues Involved:1. Issuance of refunds due to the petitioner for various assessment years.2. Response to stay applications filed by the petitioner.3. Adjustment or recovery against demands for specific assessment years.4. Granting of stay of outstanding demands during the pendency of appeals.5. Release of refunds due to the petitioner.Issue-wise Detailed Analysis:1. Issuance of Refunds Due to the Petitioner:The petitioner, a non-profit mutual concern exempt from taxation, has been regularly filing income returns since 2002-2003. Despite succeeding in appeals before the CIT(Appeals), Tribunal, and High Court, the refunds due have not been paid by the respondents. The petitioner provided a detailed summary of litigation and refund status from 2002-2003 to 2019-2020, indicating the amounts due and the status of departmental appeals. The court observed that the respondents have been adjusting refunds for certain years against demands raised for other years, thereby not issuing refunds to the petitioner.2. Response to Stay Applications Filed by the Petitioner:The petitioner filed applications for stay of outstanding demands for the assessment years 2017-2018, 2018-2019, and 2019-2020, which were not decided by the respondents despite repeated reminders. The court noted that the respondents did not comply with the directions to decide the stay applications within a reasonable time. The court emphasized that the rejection of stay applications was contrary to the fact that the appellate authority had decided in favor of the petitioner for earlier years.3. Adjustment or Recovery Against Demands for Specific Assessment Years:The respondents continued to assess the petitioner’s income without granting the benefit of exemption and adjusted refunds against demands for other years. The petitioner argued that such adjustments were made without legal basis, especially when the appellate authorities had ruled in favor of the petitioner. The court found that the respondents were required to use their discretion for granting stay, especially when the Tribunal had held in favor of the petitioner in earlier years.4. Granting of Stay of Outstanding Demands During the Pendency of Appeals:The court directed the respondents to grant stay against outstanding demands for the assessment years 2017-2018, 2018-2019, and 2019-2020 during the pendency of appeals before the CIT(Appeals). The court cited Section 220(6) of the Income Tax Act, which allows the Assessing Officer to treat the assessee as not being in default in respect of the amount in dispute in the appeal. The court also referred to CBDT instructions which provide guidelines for staying demand, emphasizing that stay should be granted when the issue in dispute has been decided in favor of the assessee by an appellate authority in earlier years.5. Release of Refunds Due to the Petitioner:The court observed that the petitioner was entitled to refunds for earlier years as per the orders of the appellate authorities. It directed the respondents to process and issue the refunds due to the petitioner within six weeks from the date of receipt of the court order. The court referenced the decision in Jugal Kishore Mahendra Biyani v. Income Tax Officer, which held that refunds should be granted promptly when the assessee is entitled to them, and any outstanding demands should not be used as a basis to withhold refunds.Conclusion:The court disposed of the petition by directing the respondents to grant stay against outstanding demands for the assessment years 2017-2018 to 2019-2020 during the pendency of appeals before the CIT(Appeals). Additionally, the court ordered the release of refunds due to the petitioner for earlier years in accordance with Section 244A(1) of the Income Tax Act within six weeks. The rule was made absolute to the extent of these directions, and no order as to costs was issued.