TaxTMI 
TaxTMI 
2026 (8) TMI 352
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.... 2.1. In order to deal with the present stay application and the contention of the assessee, chronology of various events which took place in course of recovery of demand by the ld. AO and the steps taken by the assessee need to be taken note of. 3. Assessee had filed its return of income reporting total income at nil. Transfer pricing adjustment of Rs. 113,11,80,000/- were proposed by the ld. Transfer Pricing Officer (TPO) vide order dated 26.10.2023 which was objected by the assessee before the ld. Disputes Resolution Panel (DRP). The proposed adjustment was confirmed by the ld. DRP based on which final assessment order was passed by the ld. Assessing Officer on 23.10.2024, assessing total income at Rs. 113,11,80,000/-, raising a demand of Rs. 23,30,67,630/-. Against this final assessment order passed pursuant to the directions of ld. DRP, assessee filed an appeal before the Tribunal on 24.12.2024. Prior to filing of this appeal before the Tribunal, an application for stay of demand was filed before the Assessing Officer on 22.11.2024 which was rejected by holding that Assessing Officer does not have power to stay demand when the appeal is pending before the Tribunal. Asses....
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....ased on letter received from the Assessing Officer. All these aforesaid incidents led the assessee to file the present application before the Tribunal claiming refund of recovery of Rs. 25,40,43,714/- made by the department. 4.1. Assessee presented this stay application before the Tribunal on 07.10.2025. Learned Counsel for the assessee pointed out above stated facts before the Tribunal in the course of hearing on 10.10.2025 and submitted that once the rectification application is give effect by the Assessing Officer, the demand raised pursuant to the assessment made would not survive on account of credit of TDS sought by the assessee. 4.2. To ascertain this factual position a direction was given by the Bench in the course of hearing held on 10.10.2025 through the ld. CIT DR asking him to submit a report from the Assessing Officer in respect of the pending application filed by the assessee under section 154 as well as to decide the said application pending before him. The matter came up for hearing on 21.11.2025 wherein ld. DR submitted that rectification application filed by the assessee has been disposed of by the Assessing Officer by giving the credit for TDS as sought in ....
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....red by ld. AO during the pendency of rectification application for which it is seeking a direction to the ld. AO in this regard, as it amounts to double recovery of taxes which is now validated and confirmed by the order passed under section 154 of the Act, rectifying the mistake apparent from the record. For this, assessee has drawn its force from the decision of Coordinate Bench of ITAT Mumbai, in case of Maharashtra Housing & Area Development Authority vs. ADIT E (49 taxmann.com 341) wherein the Coordinate Bench directed the Revenue to refund the amount in view of ld. AO misusing his powers which was held to be in gross violation of the directions as well as basic rule of law and principles of natural justice. This order of the Coordinate Bench was challenged by the Department in a writ petition before the Hon'ble jurisdictional High Court of Bombay in the case of DIT (E) vs. Income-tax Appellate Tribunal (43 taxmann.com 46) (Bom) whereby the Hon'ble Court upheld the decision of the Tribunal that it was correct in directing the refund of money as the action of the ld. AO was unlawful. In para 8 of its judgment Hon'ble Court specifically observed that "On first principle itself, ....
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.... this stay application, assessee is seeking direction from the Tribunal for the refund of the money which has been recovered unlawfully during the pendency of the rectification application. 6.1 For the purpose of grant of refund, Hon'ble Court in the above referred decision has observed in Para 9 that granting of refund is in the exercise of Tribunal's inherent powers so as to ensure that the assessee is not left high and dry only on account of illegal and high-handed action on the part of revenue and its Assessing Officer. 7. Another decision of the Coordinate Bench of the ITAT Mumbai, in the case of RPG Enterprises Ltd. Vs. DCIT (74TTJ391) (Mum.) has observed by following the judgment of Hon'ble Supreme Court in the case of ITO Vs. M.K. Mohammed Kunhi (1969) 71 ITR 615 (SC), that Tribunal has the power to direct the Authorities to refund the tax recovered unlawfully. Relevant paragraphs in this respect from the order of the Coordinate Bench is reproduced below: "20. Considering the principles of law laid down by Lordships of the Supreme Court that the Tribunal has the power to grant stay of recovery and all other powers to make the power effective we hold that in a....