LSI India Research and Development Private Limited V. Assistant Director of Income Tax Centralized Processing Center, Income-Tax Department, Bengaluru and Director General of Income Tax (Systems), ARA Centre, New Delhi and Deputy Commissioner of Income Tax Circle-4(1)(1), Bengaluru and Principal Commissioner of Income Tax-2, Bengaluru

WP/15960/2024

AI Insights

The case involves LSI India Research and Development Private Limited, which filed a writ petition under Article 226 of the Constitution of India against various officials of the Income Tax Department. The petitioner sought a directive for the refund of Rs. 17,48,31,871/-, which was erroneously adjusted towards a demand for the assessment year 2017-18, despite a stay order. The court examined the legality of the adjustment of the refund against the backdrop of the stay order and relevant office memos concerning the procedure for handling disputed tax demands during the appeal process.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 796185 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 25-07-2024
• Assessment Year: misc
• Laws Referred To: Article 226 of the Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: E I SANMATHI
• Assessee Lawyers: T SURYANARAYANA; TANMAYEE RAJKUMAR
• Keywords: Adjustment of Refund; Assessment Year; Income Tax Refund; Legal Authority; Stay order
• Section: 404/72/93-ITCC

Judgement Text

" - 1 - NC: 2024:KHC:29365 WP No. 15960 of 2024 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 25TH DAY OF JULY, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 15960 OF 2024 (T-IT) BETWEEN: 1. LSI INDIA RESEARCH AND DEVELOPMENT PRIVATE LIMITED A COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956 S1, WIPRO ELECTRONIC CITY SEZ DODDATHOGUR VILLAGE, BEGUR HOBLI, ELECTRONIC CITY, BANGALORE 560 100 REPRESENTED HEREIN BY ITS DIRECTOR MR. JIJU GEORGE … PETITIONER (BY SRI.T. SURYANARAYANA, SENIOR ADVOCATE FOR SMT TANMAYEE RAJKUMAR., ADVOCATE) AND: 1. ASSISTANT DIRECTOR OF INCOME TAX CENTRALIZED PROCESSING CENTER, INCOME-TAX DEPARTMENT BENGALURU KARNATAKA - 560 500 2. DIRECTOR GENERAL OF INCOME TAX (SYSTEMS) ARA CENTRE, GROUND FLOOR E-2, Digitally signed by PRAKASH N Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:29365 WP No. 15960 of 2024 JHANDEWALAN EXTENSION, NEW DELHI - 110 055 3. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE -4(1)(1), 2ND FLOOR, BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, KORAMANGALA BANGALORE - 560 095 4. THE PRINCIPAL COMMISSIONER OF INCOME TAX -2 5TH FLOOR, BMTC BUILDING, 6TH BLOCK, 80 FEET ROAD, KORAMANGALA BANGALORE - 560 095 … RESPONDENTS (BY SRI. E.I. SANMATHI., ADVOCATE) THIS W.P. IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO i) DIRECT THE RESPONDENTS TO FORTHWITH REFUND AN AMOUNT OF RS. 17,48,31,871/- BEING REFUND DETERMINED FOR THE ASSESSMENT YEAR 2014-15 ERRONEOUSLY ADJUSTED TOWARDS THE DEMAND FOR THE ASSESSMENT YEAR 2017-18, ALONG WITH APPLICABLE INTEREST AND ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S SUNIL DUTT YADAV - 3 - NC: 2024:KHC:29365 WP No. 15960 of 2024 ORAL ORDER The petitioner has sought for issuance of directions to respondents to forthwith refund an amount of Rs.17,48,31,871/- being the refund determined for the assessment year 2014-15 erroneously adjusted towards the demand for the assessment year 2017-18 along with applicable interest. 2. Though the relief is sought for refund of an amount of Rs.9,50,32,320/- being the balance refund due to the petitioner for the assessment year 2014-15, the said prayer is not pressed in light of the submission that the said amount has been refunded. 3. Learned Senior Counsel appearing for the petitioner submits that as regards assessment year 2014- 15, the petitioner was entitled for refund in terms of the order giving effect insofar as an amount of Rs.26,98,64,191/- which order was passed on 24.01.2024. It is submitted that insofar as assessment year 2017-18, - 4 - NC: 2024:KHC:29365 WP No. 15960 of 2024 the demand was raised after the assessment order was passed which was taken up in appeal. After paying the amount of 20%, order of stay was also passed on 10.08.2021 at Annexure-G. 4. It is submitted that despite such order of stay as regards demand for the assessment year 2017-18, refund amount due to the petitioner for the year 2014-15 was adjusted towards such demand. Accordingly, it is submitted that petitioner is entitled for refund of the amount adjusted towards his refund order which effectively stood stayed which order of stay was extended. The above facts are not in dispute. 5. The refund order at Annexure-B could not have been adjusted once there is an order of stay as regards the demand for the assessment year 2017-18. The receipt at Annexure-F indicates demand of 20% of filing of appeal. If that were to be so, the adjustment of refund towards the demand for the assessment year 2017-18 is without - 5 - NC: 2024:KHC:29365 WP No. 15960 of 2024 authority of law considering that there was an order of stay as against such demand in light of the appeal. 6. In terms of the Office Memo No.404/72/93-ITCC dated 29.02.2016 and subsequently followed by O.M.No.404/72/93-ITCC dated 31.07.2017, it is clear that once demand of 20% of the disputed demand (15% of the disputed amount in terms of earlier O.M.No.29.02.2016 was enhanced to 20% in the notification on 31.07.2017) is paid, the assessing officer \"shall grant stay\" of the demand till disposal of appeal. In light of such demand the assessing officer has no discretion once the deposit is made. 7. Noticing the interim order of stay at Annexure-G was passed prior to adjustment, the impugned action of adjustment of demand would be wholly illegal. 8. Accordingly, the third respondent is directed to refund an amount of Rs.17,48,45,320/- within a period of eight weeks with applicable interest. - 6 - NC: 2024:KHC:29365 WP No. 15960 of 2024 9. Accordingly, the petition is disposed off. Sd/- (S SUNIL DUTT YADAV) JUDGE NP "