TaxTMI 
TaxTMI 
2025 (3) TMI 1281
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.... petition, inter alia, impugning the rectified intimation dated 07.07.2022 [the impugned intimation] passed under Section 143(1) of the Income Tax Act, 1961 [the Act]. The petitioner, essentially, impugns the action of the Revenue in adjusting the refund of Rs. 19,37,43,880/- payable to the petitioner for assessment year [AY] 2020-21 against the outstanding demands in respect of AY 2016-17, AY 2017-18 and AY 2018-19. The petitioner also claims that the amounts adjusted be refunded along with interest as applicable. 2. A plain reading of the impugned intimation indicates that the Revenue has adjusted a sum of Rs. 7,12,46,726/- against the demand outstanding in respect of AY 2017-18 and a sum of Rs. 3,13,20,749/- in respect of AY 2018-19. ....
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.... against the demands that were raised and stayed. Undisputedly, the said issue is covered by the earlier decisions of this Court in Lease Plan India and Anr. v. Deputy Commissioner of Income Tax: Neutral Citation: 2012: DHC:5280-DB. In the said case, this Court had observed as under: "12. It is thus evident that in this case that the actions of the Revenue were violative of the stay order of this Court; they were also contrary to the provisions of Section 245 of the Income Tax Act. The term "recovery" includes adjustment of the refund due to the assessee. Thus, the High Court order which directed that the assessment proceedings "would not be given effect to without the leave of the court" translated to a bar on adjustments as well.....
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.... the petitioner, the said refund could not be adjusted in view of the interim orders passed by the learned ITAT. However, this is stoutly disputed by the learned counsel for the Revenue. He submits that the learned ITAT has not passed any blanket order proscribing the Revenue from adjusting the refunds due to the petitioner against outstanding demands for AY 2016-17. He points out that by an order dated 26.11.2021, passed by the learned ITAT in SA 141/DEL/ 2021 in respect of AY 2016-17, it had granted ad interim relief in the following terms: "Ld. Counsel for Assessee submitted that on the last date of hearing it was informed to the Hon'ble tribunal that rectification application was pending. He submitted that rectification order h....
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....en Court." 9. It is submitted by the learned counsel for the Revenue that a distinction needs to be drawn between an order granting complete stay of recovery and an order restraining the Revenue from taking "coercive action". It is the Revenue's case that an order interdicting coercive action for recovery of dues would not impede the Revenue from adjusting the refunds against the outstanding demands, as the same does not amount to coercive action. 10. Mr Sawhney, the learned counsel appearing for the petitioner countered the aforesaid submission. He referred to the decision of the Punjab and Haryana High Court in the case of Kulbhushan Goyal v. Union of India and Ors.: 2018 SCC OnLine P&H 103 and drew the attention to paragraph 7 of t....
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....r, when an order of stay of recovery in simplistic and absolute terms is passed, it would be improper and inappropriate on the part of the Revenue to recover the demand by way of adjustment. In case of doubt or ambiguity, an application for clarification or vacation/modification of stay to allow adjustment can be, and should be filed. But no attempt should be made and it should not appear that the Revenue has tried to over-reach and circumvent the stay order. Obedience and compliance with the stay order in letter and spirit is mandatory. A stay order passed by an appellate/higher authority must be respected. No deviancy or breach should be made." 12. Thus, the principal controversy that needs to be addressed is whether an order restraini....
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....ned ITAT seeking stay of recovery in respect of AY 2016-17 is pending and has not been decided as yet. This also lends this Court to understand that the interim orders passed by the learned ITAT are, essentially, to interdict the Revenue from taking any steps in the meanwhile. 16. Apart from the above, there is yet another reason why the Revenue's action for adjustment of refund against the outstanding demand for AY 2016-17 is unsustainable. Concededly, the Revenue has not issued any prior notice or intimation under Section 245 of the Act for making any such adjustment. Thus, the mandatory provisions for effecting an adjustment under Section 245 of the Act have not been followed. 17. In Vijay Singh Kadan v. Chief Commissioner of Incom....