Hvderabad Race Club v. Centralized Processing Centre

.....RESPONDENTS Petition Under Article 226 oI lhe constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High court may be pleased to issue an appropriate writ, Direction, or order, particularly one in the nature of writ of Mandamus declaring the lmpugned action of Respondent No.1 in adjusting the entire refund for AY 2024-25 against the disputed demand for AY 2022-23, as unconstitutional, violati\ie of section 245 0f the lncome Tax Act, 1961, and bad in law and consequently directing the Respondent No.1 to refund the amoUnt adjusted in excess of 20 percentage of the disluted demand for AY 2022-23. |.A.NO:1 OF 2025 Petition Under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, ttie High Court may be pleased to direct Respondent No.1 to deposit refund amount in exces;s of 20Y. before this Hon'ble Court, pending disposal of the writ petition. Counsel for the Petitioner : SRI AVINASH DESAI, SENIOR 'SOUNSEL FOR SRI CUDDAPAH NANDA GOPAL Counsel for the Respondents : Ms. J.SUNITHA (JUNIOR SC FOR INCOME TAX) The Court made the following ORDER l:!!--7 THE HON'BLE SRI JUSTICE P.SAM KOSHY AND THE HON'BLE SRI JUSTICE IiIARSING RAO NANDIKONDA WRIT PETITTON NO.13927 OF 2O2S ORDER: (per Hon'ble Sri Justice P.Sam Koshv) Heard Mr.Avinash Desai, learned Senior Counsel along with Mr.Cuddapah Nanda Gopal, learned counsel for the petitioner and Ms.J.Sunitha, learned Standing Counsel for the Income Tax Department appearing for the respondents. Perused the record

2. The grievance of the petitioner in this writ petition seems to be the so called adjustment made by the respondent department of the refund outstanding payable to the petitioner for the year 2024-25 against the demand raised for assessment order passed for the assessment year 2022-23.

3. Learned Senior Counsel appearing for the petitioner submits that the refund payable to the petitioner in the instant case for the assessment year 2024-25 comes to around Rs.8.96 crores and the demand for the assessment year 2022-23 is Rs.7.25 crores. Meanwhile, the petitioner have preferred an appeal for the demand raised for the assessment yea-r 2022-23 and the matter is pending consideration belore the appellate authority. The petitioner has also meanwhile moved an appropriate petition seeking for refund for the year 2024-25. However, it has been informed to the petitioner by the department that the entire amount of outstanding refund stands adjusted against the demand for the previous assc ssment year 2022- '23 which has lead to the filing of the present writ pt:tition.

4. l,earned Senior Counsel for the petitioner submits that, even if the petitioner would have sought for an interirn direction of the demand for the assessment year 2022-23, the aur-horities concerned would had normally allowed the stay petition subject to the petitioner payrng 2Oo/o of the demand amount which in the instant case, comes to around Rs. 1.58 crore. Therefore, if the Income Tax Department intended to adjust any amount from the demand or the assessment year 2022-23, the adjustment could had been only to the extent of 2Oo/o of the total demand amount and the balance <>f amount ought to have been refunded back to the petitioner.

5. l.earned Senior Counsel also refers to the off-rce memorandum, issued by the Ministry of Finance, Central Board of Direct Taxes (CBDT), dated 29.02.2016, wherein in clause four (4) of the said memorandum as reads as under: A. In a case where the outstanding demand is disputed before CIT (A), the assessing officer shall grant stay of d em ar-rd till disposal of flrst appeal on payment of l5o/o of the disputed demand, unless the case falls in the category disctrssecl in para (B) hereunder B. in a situation where, a) the assessing officer is of the view that nature of addition resulting in the disputed demand is such that paJment of a lump sum amount higher than 15yo is u.arranted (e.g. in a case where addition on the same issue has beeq confirmed 1 / PaBe 3 of6 by appellate authorities in earlier yea-rs or the decision of the Supreme Court or jurisdictional High Court is in favour of Revenue or addition is based on cfedible evidence collected in a search or survey operation etc.) or, b) the assessing ofhcer is of tho view that nature of addition resulting in the disputed demand is such that payment of a lump sum amount lower than 15% is warranted (e.g. in a case where addition on the same issue has been deleted by appellate authorities in earlier yeErrs or the decision of the Supreme Court or jurisdictional High Court is in favour of the assessee, etc.) the assessing officer shall refer the matter to the administrative PT.CIT/CIT, who after considering a-tl relevant facts shall decide the quantum/proportion of demand to be paid by the assesse as lump sum payment for granting a stay of the balance demand.

6. This memorandum stands subsequenfly modified vide offrce memorandum, dated 31.07.2017, where the 157o reflected in clause a (A) of the ofhce memorandum dated 29.02.2016 stands enhanced to 20%o instead of l5%o. 7 . Learned Senior Counsel refers to a series of writ petitions of similar nature which have been allowed by the various High Court and few of them of the recent past is that of the Bombay High Court, in the case Tlent Ltd. v. Deputg Cornmissioner of Income Toxt, Vodafone India Ltd. o. Deputg Corntnissioner of Income Td.*, and by the Delhi High Court in the case of Eko Indla fino,nctal *ratces (P.) Ltd. u. Assistant Commissioner of Income Tasc,, Circle-7(7f , Jind.al t 2 12025; zl tar.an.com 506 (Bombay) [2018] 92 taxman.com 399 (Bombay) '120211 132 tar-an.com 154 (Delhi). Storialess Ltd. u. Deputg Comrnissioner ol Income To*, Skytine Engineering Contracts $ndla) (P.) Ltd. a. Deputg Commissioner of 'Income Tax, Circl6. Further, the Calcutta High Court also in the case of Graphite Ind.ia Ltd. a. Deputg Commissioner of Income Tdx6. Nl of which have been categorically holding that the action on the part of the respondents in adjusting the entire amount of refund over and above the 2Oo/o of the demand of any previous years to be bad in law and arbitrary. In all these writ petitions, the High Courts have been taking consistent rriew that the respon<lent income tax department, if at all, if they intend to make adjustment, the adjustment can be only to the extent of 2Oo/. of the demand outstanding and the balance of amount of refund outstanding has to be paid back to the assessees.

8. Given the series of judicial precedents on tht: r,ery same issue practically by all the major High Courts of this Country, we are inclined to allow the instant writ petition also to tht: aforesaid extent. We therefore direct that, let the respondents take appropriate decision on the application which is pending consider.rtion before the respondents. The respondents, in turn, to take n _-cessary steps to refund the outstanding amount payable to the petitioner for the o t 12023; 154 taxman.com 649 (Delhi). 12ozt1 t32 tar.an.com 158 (Delhi). " 120231 t47 taxman.com 372 (Catcutta assessment year 2024-25 after adjusting 20o/o of the amount from the demand for the assessment year 2022-23 against which the appeal preferred by the petitioner is pending and subject to the outcome of the said appeal. L,et the refund of the amount over and above 2Oo/o be refunded within an outer limit of eight (08) weeks from the date of receipt ofcopy of this order

9. With the 'hfqresaid observation and direction, this writ petition is disposed of. As a sequel, miscellaneous applications pending if any, shall stand closed. No costs. SD/- N. CHANDRASEKHAR RAO DEPUTY RE STRAR //TRUE COPY// SE OFFICER To -O"prty Electronic City Post Office, Bengaluru - 560500.' S. i6A1;."ment Unit, lncome Tax Department,, National Faceless -

1. The centralized Processing centre, lncom-e Tax Department, POSI Bag No' 1 ' Commissionei oflln"to'" Tax, Circle - 2(1)'-B99.m No' 514' Sth Z. in" -' iioor, dgn'atrt" Toweis, Sv No 6(P) q[Kgl.d3PY'' Sv' 37(P) of Kothasuda' Opp.'eo6"i"ur Caraeni, Serilingampallv (M), R R' District' Hyderabad' Telangana - 500084. nss.siment centre, Room No. 401, 2;d Floor, E-Ramp, Jawaharlal Nehru Stadium, New Delhi - 110003. +. iilJ5".l"iurv, Llnion of tndia, Ministry of Finance, Department of Revenue, ' in""""r"1, R'oom No. 46, North Blogt lgry.De.lhi s. b"" dCi6'snicuoonphH NANDA GoPAL, Advocatg [oP.UQ. 6: o;; cc 6 Mr. J.suNlrHA (JUNloR sc FoR INCoME TAX) Advocate 7. Two CD CoPies - 1 10001 ' loPUCl SA GJP Yy I -iHli Sr oR J; oz sEP rozs t ca, s ,n t c, ,-.,,^ _,.-/ HIGH COURT DATED:0110512025 ORDER WP.No.13927 ot 2025 DISPOSING OF THE W.P WITHOUT COSTS. .",r.{t'h Y,.,.- --,(1 \.y