Point of Law : Taxation - Lieu of payment of refund tax - Government is bound to follow rules and standards they themselves had set on pain of their action being invalidated.

JUDGMENT :

MANMOHAN, J.

1. The petition has been heard by way of video conferencing.

2. Present writ petition has been filed with the following prayers:-

(a) issuance of a writ of certiorari quashing the Impugned Order No.1 dated June 11, 2020 issued by CPC adjusting the entire refund for AY 2019-20 against the disputed demand for AY 2017-18;and

(b) issuance of a writ of mandamus directing the Respondent No. 1 to refund the amount adjusted in excess of 20% of the disputed demand for AY 2017-18; and

(c) issuance a writ of mandamus restraining the Respondents No. 1and 2 from further recovery of outstanding tax demand for AY 2017-18 until the disposal of appeal filed by the Petitioner before the Commissioner (Appeals) which is pending adjudication under the Faceless Appeal Scheme, 2020;and

(d) issuance of a writ of certiorari quashing the Impugned Order No.2 dated December 21, 2020; and e) imposition of exemplary costs on Respondent No.1 for carrying out a blatantly illegal recovery of tax against the accepted principles of reasonableness, judicial discipline and law

(f) For ad-interim reliefs as the Court may deem fit; and

(g) For the costs of this Petition;

(h) Pass any other further order (s)/direction (s) as this Hon’ble Court may deem fit and proper in the fact and circumstances of the case.

3. On 03rd June, 2021, the learned predecessor Division Bench had passed the following order:-

“CM APPL. 18229/2021

1. Allowed, subject to just exceptions.

CM APPL. 18230/2021

2. The prayer made in the captioned application is to grant extension for filing the court-fee and notarised affidavits along with the present petition. The captioned application is disposed of with a direction to the petitioner to place on record the duly notarised affidavits and deposit the requisite court fee, within three days from the resumption of the normal and usual work pattern by this court.

W.P.(C) 5819/2021

3. The petitioner is aggrieved as, the refund available to it in respect of the assessment year (‘AY’) 2019-2020, was adjusted against the disputed demand qua AY 2017-2018.

3.1. Mr. Himanshu Sinha, who appears on behalf of the petitioner, says that the adjustment is in excess of 20%, which is contrary to the guidelines contained in the Office Memorandum, dated 29.02.2016, issued by the Central Board of Direct Taxes.

4. The record shows that the petitioner had made several requests for course correction, vide letters dated 14.01.2021, 26.02.2021 and 10.03.2021. These communications are addressed to the Principal Commissioner of Income Tax, Delhi-I (in short ‘PCIT’) and are appended on pages 74, 77 and 84 of the paper book.

5. Issue notice.

5.1. Mr. Zoheb Hossain accepts service on behalf of the respondents/ revenue. Counter-affidavit will be filed within the next four weeks. Rejoinder thereto, if any, will be filed before the next date of hearing.

6. In the meanwhile, the PCIT will deliberate and deal with the petitioner's communications, dated 14.01.2021, 26.02.2021 and 10.03.2021. The PCIT will pass a speaking order, after according a hearing to the authorised representative of the petitioner.

7. List the matter on 03.08.2021.

8. In the meanwhile, the respondents/revenue will maintain status quo with regard to the future adjustments qua refunds, if any, available to the petitioner, till the next date of hearing. It is made clear that, notwithstanding this direction, the plea made in the aforementioned communications addressed to the PCIT, concerning adjustment of future refunds, if any, being made available to the petitioner, will be dealt with by the PCIT.”

4. Today learned counsel for the respondent has screen shared the order dated 02nd July, 2021 passed by the Principal Commissioner, Income Tax, Delhi-1 disposing of the petitioner’s representations dated 14th January, 2