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2025 Supreme(Online)(KAR) 11150
KARNATAKA HIGH COURT
MEDIAKIND INDIA PRIVATE LIMITED – Appellant
Versus
DEPUTY DIRECTOR OF INCOME TAX – Respondent
WP 8863 / 2025
Adjustment of tax refunds exceeding 20% during appeal is unlawful; full refund mandated.
Headnote:(A) Income-Tax Act, 1961 - Sections 143B, 245, and 243-A - Quashing of adjustment of refund - Petitioner challenged the adjustment of Rs.2,59,55,300/- despite filing an appeal and depositing 20% of the demand. Court held that excess adjustments violate the Income-Tax Act provisions and directed full refund with interest. (Paras 1, 3, 4, 6, and 8)
(B) Appeal - Stay application - Petitioner entitled to stay of demand upon depositing 20% and should not face recovery until appeal decision. Court emphasized the importance of adhering to procedural guidelines under the Income-Tax Act. (Paras 5, 6, and 7)
Facts of the case:
The petitioner filed an appeal against an assessment order for Rs.10,36,84,140/- and deposited 20% as required. Despite this, respondents adjusted an additional sum, leading to this petition.
Findings of Court:
The court found the adjustment of refunds in excess of 20% unlawful and ordered full refund with applicable interest.
Issues: The main issues involved the legality of refund adjustments and the procedural rights of the petitioner under the Income-Tax Act.
Ratio Decidendi: The court ruled that adjustments beyond the stipulated 20% are impermissible, ensuring compliance with statutory provisions.
Result: The petition was allowed with directions for refund and procedural adherence.
ORAL ORDER
In this petition, the petitioner seeks for the following reliefs:
(i) Quashing the impugned order dated 15.05.2024 bearing CPC/2324/G23/213796979 passed by the 1st Respondent under Section 245 of the Income-Tax Act, 1961 for the Assessment Year 2023-24 (Annexure-‘A’);
(ii) Directing the 1st Respondent to forthwith grant refund of Rs.2,59,55,300/-, being the amount illegally adjusted vide the impugned order dated 15.05.2024 bearing CPC/2324/G23/413796979 passed under Section 245 of the Income-Tax Act, 1961 for the Assessment year 2023-24 (Annexure-‘A’), to the Petitioner along with interest thereon;
(iii) In addition, directing the 2nd Respondent to dispose off the stay application filed by the Petitioner on 21.12.2023 (Annexure-‘B’) in accordance with law and the various instructions issued by the CBDT on the matter, and after granting a reasonable opportunity of hearing to the Petitioner;
(iv) Restraining the Respondents from initiating or pursuing any proceedings to recover the balance demand of tax and interests arising from the assessment order 31.10.2023 for the Assessment Year 2020-21 bearing No.ITBA/AST/S/143(3)/2023- 24/1057556479(1) and bearing No.ITBA/AST/S/156/2023-24/1057556643(1) (Annexures-‘J’ and ‘J1’) during the pendency of the appeal filed before the CIT (A); and
(v) Pass such other or further orders as this Hon’ble Court may deem fit in the facts and circumstances of the case, and in the interest of justice and equity.
2. A perusal of the material on record would indicate that pursuant to the proceedings initiated by the respondents against the petitioner, by issuance of show- cause notice dated 18.09.2023 under Section 143B of the Income-Tax Act, 1961 (for short “Act”) to which the petitioner submitted reply dated 25.09.2023, respondent No.3 passed an assessment order dated 31.10.2023 resulting in total demand of Rs.10,36,84,140/- for the Assessment Year 2020-21. Aggrieved by the said order, the petitioner has preferred an appeal before the Commissioner of Income-tax (Appeals) under Section 243-A of the Act along with detailed submissions and documents. In addition to thereto, on 21.12.2023, the petitioner has also filed an application before the 2nd respondent-Jurisdictional Assessing Officer seeking stay of recovery, pending disposal of the appeal.
3. The material on record also indicates that, at the time of filing the appeal, out of the total demand of Rs.10,36,80,858/-, the petitioner deposited 20% on 21.12.2023. It is the grievance of the petitioner that despite the petitioner having filed an appeal within the prescribed period and depositing 20% on 21.12.2023 for the purpose of prosecuting the appeal as well as the stay application, the respondents have recovered an additional sum of Rs.2,59,55,300/- which is impermissible in law and the same deserves to be refunded back to the petitioner in the light of the judgments of this Court in W.P.No.23784/2024 disposed of on25.09.2024 (M/S.PRICE WATERHOUSE , BANGALORE v/s NATIONAL FACELESS APPEAL CENTRE, DELHI AND OTHERS) and in W.P.No.1204/2025 disposed of on26.03.2025 ( CAREWORKS FOUNDATION v/s CENTRALIZED PROCESSION CENTER AND OTHERS).
4. Per contra, learned counsel for the respondents submits that there is no merit in the petition and the same is liable to be dismissed.
5. As rightly contended by the learned counsel for the petitioner, under identical circumstances in relation to the amount in excess of 20% being adjusted by the respondents despite pendency of an appeal and pendency of the application for Stay filed by the petitioner therein, this Court held as under:
“ORAL ORDER I
n this petition, petitioner seeks for the following reliefs:
“i) Declaring that the adjustment of refund of Rs.2,24,18,499/-determined for the assessment year 2019-20 and the refund of Rs.4,53,93,633/- determined for the assessment year 2023-24 against the demand for assessment year 2021-22 is illegal and without jurisdiction;
(ii) Directing the Respondents to forthwith re
