Delhi High Court Orders Refund of Rs. 44.60 Lakhs in Income Tax Case

Case Name:

W.P.(C) 2697/2022 & CM Appls.50531/2023 - Syed Habeebur Rehman vs. Deputy Commissioner of Income Tax Circle 28(1) & Ors.

Key Takeaways:

1. The petitioner sought a refund of Rs. 46 lakhs for the Assessment Years 2010-11 and 2014-15, along with applicable interest.
2. The refund amount was adjusted against a demand raised for the Assessment Year 2015-16 without issuing notice under Section 245 (of Income Tax Act, 1961) of the Income Tax Act, 1961.
3. The petitioner had deposited 20% of the demand for AY 2015-16 and filed an appeal against the assessment order, which is pending adjudication.
4. The court directed the respondents/revenue to refund Rs. 44.60 lakhs to the petitioner within two weeks.
5. The petitioner was allowed to pursue a statutory remedy for the remaining refund amount and interest, which will be decided by the concerned authority.

Case Synopsis:

The case is W.P.(C) 2697/2022 & CM Appls.50531/2023, and the petitioner is Syed Habeebur Rehman. The petitioner has filed a writ petition seeking a refund of Rs. 46 lakhs (approximately) for the Assessment Years (AYs) 2010-11 and 2014-15, along with applicable interest, from the Deputy Commissioner of Income Tax Circle 28(1) and others.

The record shows that notice in the writ petition was issued on 10.03.2022. On 05.07.2023, an application was moved on behalf of the petitioner for the reasons given in the order, and the date in the main writ petition was advanced to 09.08.2023.

The petitioner’s grievance is that the refund due to them for AYs 2010-11 and 2014-15 has been adjusted against the demand raised for AY 2015-16 without issuing notice under Section 245 (of Income Tax Act, 1961) of the Income Tax Act, 1961. The petitioner claims that 20% of the demand for AY 2015-16 has been deposited, and an appeal has been filed against the assessment order for AY 2015-16, which is pending adjudication with the Commissioner of Income Tax (Appeals).

On 09.08.2023, the matter was posted for 22.09.2022, but since there was no representation on behalf of the petitioner, the matter was adjourned to 22.04.2024.

On 27.09.2023, an application was moved by the petitioner seeking clarification of the order dated 05.07.2023. The court directed the petitioner to file a formal application before the Assessing Officer (AO) within one week, setting out the facts indicated in the order. The AO was directed to rule on the application within ten days of receipt. The matter was listed for 06.11.2023.

On 06.11.2023, the matter could not be taken up for hearing, and it was posted for today’s hearing.

During the next hearing, it was informed that the respondents/revenue have computed the amount refundable to the petitioner/assessee as Rs. 44.60 lakhs. However, the petitioner claims that the amount claimed by way of refund is Rs. 46 lakhs, as indicated in the prayers made in the writ petition. The petitioner also seeks interest at the rate of 18% per annum, which is beyond the statutory rate of interest.

The court disposed of the writ petition with the following directions:

1. The respondents/revenue will remit the amount of refund already crystallized (Rs. 44.60 lakhs) to the petitioner/assessee within the next two weeks.
2. The petitioner is at liberty to take recourse to a statutory remedy for payment of interest and the balance refund claimed.
3. The concerned authority will decide the matter concerning interest and the balance principal amount in accordance with the law.

The pending applications were closed, and the date previously fixed in the matter (22.04.2024) was canceled.

FAQ:

Q1: What was the petitioner seeking in the writ petition?

A1: The petitioner sought a refund of Rs. 46 lakhs for the Assessment Years 2010-11 and 2014-15, along with applicable interest.

Q2: What was the grievance of the petitioner?

A2: The petitioner’s grievance was that the refund due to them was adjusted against a demand raised for the Assessment Year 2015-16 without issuing notice under Section 245 (of Income Tax Act, 1961).

Q3: What did the court direct in its judgment?

A3: The court directed the respondents/revenue to refund Rs. 44.60 lakhs to the petitioner within two weeks. The petitioner was allowed to pursue a statutory remedy for the remaining refund amount and interest, which will be decided by the concerned authority.