Refund of recovered tax and vacation of bank attachment follow once the underlying assessment demand no longer survives.

When an assessment was set aside in appeal and the appeal effect order restored the returned income, the demand raised on the earlier assessment ceased to survive. Amounts already recovered against that extinguished demand were therefore required to be processed for refund with applicable interest, and the authorities were directed to decide the claim within eight weeks or state reasons for refusal. Because no further recovery was due, the coercive attachment of the bank account also had no continuing basis and was directed to be vacated if no subsisting liability remained.

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Issues: (i) Whether the petitioner was entitled to refund of amounts recovered towards a demand that no longer survived after the assessment was set aside and the appeal effect order was passed; (ii) Whether the attachment of the petitioner's bank account required to be vacated if no further recovery was due.

Issue (i): Whether the petitioner was entitled to refund of amounts recovered towards a demand that no longer survived after the assessment was set aside and the appeal effect order was passed.

Analysis: The return for the assessment year 2020-21 was taken up for scrutiny and notices were issued under Section 143(2) and Section 142(1) of the Income-tax Act, 1961. The assessment order was later set aside in appeal, and the Assessing Officer thereafter passed an appeal effect order restoring the returned income. In these circumstances, the outstanding demand raised on the basis of the earlier assessment ceased to survive, and the amounts recovered against that demand were required to be processed for refund with applicable interest.

Conclusion: The petitioner was held entitled to refund of the recovered amounts with applicable interest, and the authorities were directed to process the claim within eight weeks or communicate reasons if refund was declined.

Issue (ii): Whether the attachment of the petitioner's bank account required to be vacated if no further recovery was due.

Analysis: Though no specific prayer was framed on this aspect, the attachment was a coercive recovery measure linked to the disputed demand. Once the assessment stood set aside and no further amount was shown to be recoverable, continuation of the attachment had no basis.

Conclusion: The authorities were directed to vacate the bank account attachment if no further amount was required to be recovered.

Final Conclusion: The petition succeeded and the petitioner obtained consequential refund relief together with protection against continued recovery measures.

Ratio Decidendi: When the assessment underlying a recovery demand is set aside and the appeal effect order restores the declared income, recovery already made against that demand must be processed for refund with applicable interest, and any connected coercive attachment cannot continue absent a subsisting liability.

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