TLG INDIA PRIVATE LIMITED,MUMBAI V. ACIT, CIRCLE 8(3)(1), MUMBAI

SA 120/MUM/2025

AI Insights

The case involves TLG India Private Limited, which filed a stay application against the demand recovery by the Assistant Commissioner of Income Tax. The demand was based on a final assessment order that included transfer pricing adjustments confirmed by the Disputes Resolution Panel. The assessee argued that the recovery was made during the pendency of a rectification application and led to double recovery of taxes. The Tribunal examined the sequence of events, including the initial demand, the rectification application, and the subsequent recovery actions by the tax authorities. The Tribunal's decision was influenced by precedents that emphasized the need for fair and lawful actions by tax authorities, particularly during the rectification process.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 826457 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Stay Application
• Pronouncement Date: 05-01-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2021-2022
• Appeal Filed On: 07-10-2025
• Other Referred Cases: Maharashtra Housing & Area Development Authority vs. ADIT E, DIT (E) vs. Income-tax Appellate Tribunal, RPG Enterprises Ltd. Vs. DCIT, ITO Vs. M.K. Mohammed Kunhi
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; Principle of natural justice; TDS; Rectification of order; Recovery proceedings; Application of stay
• Section: 154; 244A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “H” BENCH MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER SA No. 120/MUM/2025 (Arising out of ITA No. 6795/MUM/2024) Assessment Year: 2021-22 TLG India Private Limited. 15th Floor, Urmi Estate, Tower A, 95 Ganpatrao Kadam Marg Lower Parel (West), Delisle Road S.O. Mumbai, Mumbai-400013, Maharashtra, India (PAN : AAACC1756E) Vs. Assistant Commissioner of Income Tax, Circle 8(3) (1) (Assessee) (Respondent) Present for: Assessee : Shri Hiten Thacker, Revenue : Shri Virabhadra Mahajan, Sr. DR Date of Hearing : 28.11.2025 Date of Pronouncement : 05 .01.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: Assessee had moved this stay application in the present case of demand made by the assessing officer which according to the assessee is unsustainable for two reasons. (a) Recovery was made during the pendency of rectification application filed by the assessee under section 154. (b) The recovery had led to collection of demand which is more than the amount payable under the provisions of the Act leading to collection of demand twice. Printed from counselvise.com SA No.120/Mum/2025 TLG INDIA PVT. LTD. A.Y. 2021-22 2 2. Accordingly, assessee prayed for a direction to the Assessing Officer to refund the demand of Rs.25,40,43,714/- collected by him for the year under consideration. 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. Assessee again approached the Assessing Officer filing an application for rectification of the assessment order on 24.12.2024, requesting him to give credit for tax deducted at source (TDS) of Rs.19,88,28,604/-. In the said application, assessee submitted that total TDS credit granted by the ld. AO is of Rs.60,82,03,591/- as against the total TDS credit claimed by the assessee in its return of income of Rs.80,70,32,195/-, Printed from counselvise.com SA No.120/Mum/2025 TLG INDIA PVT. LTD. A.Y. 2021-22 3 resulting into a short grant of TDS credit of the said amount. Also, there was a mistake while considering the total income assessed as it was taken higher by an amount of Rs.14,63,264/-. Thus, assessee furnished a computation by incorporating the correct figures which would result into a refund once the mistakes are rectified. The said calculation is extracted below for ready reference: Particulars Amount (in Rs.) Total income after adjustment of b/f loss 1,13,26,43,260 Tax liability 28,50,63,656 Add: Interest u/s 234D 36,08,081 Total tax liability (A) 28,86,71,737 TDS claimed in ITR for A.Y. 2021-22 80,70,32,195 TCS claimed in ITR for A.Y. 2021-22 2,22,751 Total of prepaid taxes (B) 80,72,54,946 Total refund due (A-B) -51,85,83,209 Add: Interest u/s 244A -6,52,73,911 Refund receivable (incl. interest) -58,38,57,120 Refund already received as per intimation u/s 143(1) -56,46,39,305 Balance (refund receivable)/demand payable -1,92,17,815 3.1. Thus, sole thrust of the assessee in the present stay application is that once the TDS credit is granted, there would be no demand in the year under consideration. 4. Upon rejection of the said application by the ld. AO and during the pendency of application filed for rectification of the mistake as well as during the pendency of appeal before the Tribunal, assessee moved another application before the ld. PCIT on 14.01.2025 for the stay of demand. During the pendency of the said application before the ld. PCIT and the rectification application before the ld. AO, the outstanding demand along with interest under section 220(2), aggregating to Rs.25,40,43,714/- was recovered by way of adjustment of refund due to the assessee for A.Y. 2024-25. Subsequently, ld. PCIT Printed from counselvise.com SA No.120/Mum/2025 TLG INDIA PVT. LTD. A.Y. 2021-22 4 disposed of the said petition vide order dated 20.08.2025 by rejecting the said application wherein he held that there is no demand outstanding on the date, based 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 the said application since assessee had not received the said order passed under section 154 as informed by the ld. DR, a copy of the same was directed to be served on the assessee for its perusal. 4.3. Before us, upon perusal of the order passed under section 154 against the rectification application, learned Counsel for the assessee Printed from counselvise.com SA No.120/Mum/2025 TLG INDIA PVT. LTD. A.Y. 2021-22 5 apprised the Bench that ld. AO had computed a refund of Rs.28,60,83,771/- after taking into account the recovery already made of Rs.25,40,43,714/- which was made during the pendency of the rectification application. On this factual position which is uncontroverted by ld. DR, he strongly asserted that recovery made by ld. AO of Rs.25,40,43,714/- during the pendency of rectification application amounts to double recovery of taxes it is unsustainable in law. According to him, when a demand raised by the Assessing Officer suffers from a mistake apparent from record and a rectification application under section 154 is filed by the assessee for rectifying such mistake, ld. AO is duty bound to consider the rectification application before taking any adversarial steps for recovery of such mistaken demand as it is his bounden duty to determine correct demand and thereafter, take steps if required for recovery of the same. The fact of refund arising out of the order passed under section 154 upon processing of rectification application proves the point raised by the assessee beyond any doubt that once the credit for TDS sought is give effect to, the demand so raised will get completely wiped off. Thus, the recovery made of Rs.25,40,43,714/- has resulted in recovery of taxes twice. 4.4 Ld. AO had computed a refund of Rs.28,60,83,771/- after giving credit for the recovery of Rs.25,40,43,714/-. On this, he further submitted that if the aforesaid recovery of Rs.25,40,43,714/- is excluded from the computation, there would still be a refund of Rs.3,20,40,057/-which is entirely on account of mistakes pointed out in the rectification application. Thus, there is no demand payable by the assessee for the year under consideration for which it is in appeal before the Tribunal. On these set of facts, assessee claims a refund of Printed from counselvise.com SA No.120/Mum/2025 TLG INDIA PVT. LTD. A.Y. 2021-22 6 the recovery made by the ld. AO of Rs.25,40,43,714/-which is unlawful recovery made during the pendency of rectification application. 5. Assessee is assertive to claim refund of the money which has been recovered 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, no Appellate Authority and much less a Tribunal can be silent spectator to the arbitrary and illegal action on the part of the Assessing Officer so as to frustrate the legal process provided under the Act.” Printed from counselvise.com SA No.120/Mum/2025 TLG INDIA PVT. LTD. A.Y. 2021-22 7 5.1 Relevant paragraphs in this respect from the said judgment are extracted below for ready reference: \"8. Therefore, the above action on the part of the Assessing Officer was against the elementary principles of rule of law. The State is expected to act fairly. The undue haste on the part of the Assessing Officer in recovering a sum of Rs.159.84 crores wa s not only contrary to the binding decisions of this Court but also shocking to the judicial conscience. The entire action appears to have been directed to make the Tribunal and respondent No.2 helpless so that no relief can be granted in favour of respondent No.2. Leaving aside the case laws in favour of respondent No.2, on first principle itself no appellate authority and much less the Tribunal can be a silent spectator to the arbitrary and illegal actions on the part of the Assessing Officer so as to frustrate the legal process provided under the Act. 9. In the aforesaid circumstances, the submissions on behalf of the revenue that the Tribunal having held that it had no jurisdiction to grant a stay in view of same being a subject matter agitated before this Court was not entitled to direct refund, is unacceptable . Once the amount of Rs.159.84 crores being the balance amount of tax payable by respondent No.2 to the petitioner revenue was withdrawn by the revenue there is no occasion for the Tribunal or the High Court to grant any stay. Therefore, the impugned order could not have granted any stay as there was nothing to be stayed. However, the grant of refund was in the exercise of Tribunal's inherent powers to ensure that the assessee is not left high and dry only on account of illegal and highhanded actions on the part of the petitioner revenue and the Assessing Officer.\" (emphasis supplied by us, by bold and underline) 6 In the present case before us, it is important to note that post passing of rectification order under section 154 of Printed from counselvise.com SA No.120/Mum/2025 TLG INDIA PVT. LTD. A.Y. 2021-22 8 the Act by the learned AO, there remains no demand to be recovered from the assessee. Since there is no tax payable by the assessee, there is nothing to be stayed under the present stay application before the Tribunal. Through 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 appropriate cases the Tribunal bas all the powers relating to the subject matter of appeal including the powers of granting Printed from counselvise.com SA No.120/Mum/2025 TLG INDIA PVT. LTD. A.Y. 2021-22 9 stay of recovery and refund of tax recovered by the Revenue authorities. In this view of the matter we are of the considered view that the Tribunal has the power to direct the Revenue authorities to refund the tax recovered by the Assessing Officer by misusing his powers. Since the Assessing Officer has misused his powers, we consider it our duty to curb such a trend. We are conscious of the fact that the power to direct refund of tax when the appeal is pending in the Tribu nal is to be exercised only in exceptional cases. In our view, this case falls within the category of such exceptional cases. If we do not interfere in this case it would amount to allowing a public servant to circumvent the law and prevent the subjects from taking recourse to the legal remedies available to them. It will amount to our failure to discharge our duty. We accordingly exercise our power and direct the Assessing Officer to refund a sum of Rs. 19,43,000 recovered from the Standard Chartered Bank to the assessee within a period of fifteen days from the date of service of this order.\" (emphasis supplied by us, by bold and underline) 8. Having considered the facts of the case and the judicial precedents narrated above, merits are much stronger being in favour of the Assessee. Since, it is not merely a case of procedural defect adopted for recovery of demand during the pendency of rectification application but such a recovery of tax has resulted into double jeopardy in the hands of assessee, well established by the outcome of the rectification order passed under section 154 of the Act by the ld. AO. Printed from counselvise.com SA No.120/Mum/2025 TLG INDIA PVT. LTD. A.Y. 2021-22 10 8.1 Prayer for the refund of recovery made by the learned AO leading to double jeopardy carries a heavy force in favour of the assessee and therefore, unhesitatingly, we exercise powers under section 254 of the Act to direct the ld. AO to grant the refund of recovery of tax made by him of Rs. 25,40,43,714/- to the assessee for the year under consideration. 9. Accordingly, stay application prayed for by the assessee is allowed. Order is pronounced in the open court on 05 January, 2026 Sd/- Sd/- Sd/- Sd/- (Sandeep Gosain) (Girish Agrawal) Judicial Member Accountant Member [Dated: 05 January, 2026] RY, Sr.P.S. Copy to : 1. The Assessee 2. The Respondent 3. DR, ITAT, Mumbai 4. 5. Guard File CIT BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai Printed from counselvise.com "