Assessment authorities must adhere to statutory guidelines that allow only 20% recovery of disputed demand pending appeal, requiring justifications for any higher recovery.

Headnote:(A) Income Tax Act, 1961 - Section 143(3) and Section 245 - Office Memorandum dated 29th February, 2016 and 25th August, 2017 - Writ petitions for refund of amount recovered in excess of 20% of disputed demand - Binding directions obliging the respondent to grant stay of demand till disposal of appeals if 20% is paid - Recovery of 86.43% opposed to prescribed norms - No specific order justifying excess recovery - Respondents directed to refund excess amount within four weeks. (Paras 9-13)

(B) Judicial adherence to prescribed guidelines - Government must follow its own established rules - Invalid action if deviations occur. (Paras 9-10)

Facts of the case:
The petitioner filed two writ petitions contesting the recovery of Rs.2,24,50,412/-, claiming that it exceeded the prescribed limit during pending appeals before CIT(A).

Findings of Court:
The court determined that only 20% of the disputed demand should be deposited to avoid excessive recovery, thus directing a refund of the excess amount collected.

Issues: Key questions included adherence to procedural guidelines and the justification for excessive recovery.

Ratio Decidendi: The court established that the government must comply with the standards it sets, asserting the necessity of justifying deviations from prescribed procedures to maintain validity.

Result: Writ petitions disposed of with directions to refund the excess amount.

Table of Content
1. writ petitions seeking refund of excess tax demand. (Para 3 , 4)
2. contention regarding improper tax recovery process. (Para 6 , 7 , 8)
3. court's view on adherence to cbdt rules. (Para 9 , 10 , 11)
4. entitlement to seek only 20% pre-deposit during appeals. (Para 12)
5. order for refund of excess amount and disposal of petitions. (Para 13 , 14 , 15)

JUDGMENT

Manmohan, J. (Oral)

1. The appeals have been heard by way of video conferencing.

2. The matter has been taken up for hearing today as 20th August, 2021 was declared a holiday.

3. Present writ petitions being W.P.(C) 6172/2021 and 6200/2021 have been filed seeking virtually similar reliefs. The prayers sought in one of the writ petition being W.P.(C) 6200/2021 are reproduced herein below:

"a) to issue a writ of mandamus or any appropriate writ or an order directing the respondents to return/refund an amount of Rs.2,24,50,412/- plus interest to the petitioner which was recovered in excess of 20% of the total disputed demand for the assessment year 2015-16;

b) .......

c) ......

d) to issue directions to the Respondent No.2 to hear the appeal relating to assessment year 2015-16 and dispose of the same expeditiously;

e) .........."

4. On 07th July, 2021, the learned predecessor Division Bench had passed the following order in W.P.(C) No.6200/2021:

"CM No.19635/2021

1. The prayer made in the captioned application is to grant exemption from filing attested affidavits along with the present petition. The prayer made in the captioned application is allowed, subject to the petitioner placing on record the duly attested affidavits, within three days of the Court resuming its normal and usual work pattern.

CM No.19636/2021

2. Allowed, subject to just exceptions.

W.P.(C) 6200/2021 & CM No.19634/2021 [Application filed on behalf of the petitioner seeking interim relief]

3. It is the contention of Mr. Salil Aggarwal, learned senior counsel, who appears on behalf of the petitioner, that even while the petitioner's appeal, against the assessment order dated 23.12.2018, passed by the Assessing Officer under Section 143(3) of the Income Tax Act, 1961 is pending consideration before the Commissioner of Income Tax (Appeals) [in short" CIT(A)"], a substantial amount has been recovered from the petitioner, which is, an act, contrary to the Office Memorandum issued by the Central Board of Direct Taxes (in short "CBDT"), dated 31.07.2017, that prescribes payment of 20% of the disputed demand if the demand is contested before CIT(A) (See: Annexure-12, which is appended at page 134 of the paper book).

4. Mr. Salil says that, pursuant to the assessment order, dated 28.12.2017, which concerns the assessment year (AY) 2015-2016, against the total demand amounting to Rs.3,37,95,120/-, Rs.2,92,09,436/- has been recovered till now. Mr. Salil states that the amount recovered, in percentage terms, is 86.43%.

5. Accordingly, issue notice to the respondents. Mr. Sunil Agarwal accepts notice on behalf of the respondents/revenue.

6. Mr. Agarwal says that he will revert with instructions. In case instructions are received to resist the writ petition, a counter-affidavit will be filed before the next date of hearing.

7. Till the next date of hearing, subject to the verification of the aforesaid figures, status quo will be maintained qua further recovery (ies).

8. List the matter on 02.08.2021."

5. Today, Mr. Sunil Aggarwal, learned counsel for Revenue states that he would like to argue the matters without filing any counter affidavits. Accordingly, the matters are taken up for hearing.

6. Learned counsel for the petitioner submits that as per the binding directions issued by the CBDT, the respondent was obliged to grant a stay on recoveries of outstanding demands for the Assessment Years 2015-16 and 2016-17 to the petitioner upon recovery of 20%, as appeals challenging the assessment orders are pending adjudication before the Commissioner of Income Tax (Appeals). The relevant portion o

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IN THE HIGH COURT OF DELHIManmohan, Navin Chawla, JJ.Skyline Engineering Contracts (India) Private Limited - AppellantVersusDeputy Commissioner of Income Tax - RespondentW.P.(C) 6172 of 2021 & CM Appl. 19561 of 2021 and W.P.(C) 6200 of 2021 & CM Appl. 19634 of 2021Decided On : 23-08-2021

Assessment authorities must adhere to statutory guidelines that allow only 20% recovery of disputed demand pending appeal, requiring justifications for any higher recovery.

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IN THE HIGH COURT OF DELHI
Manmohan, Navin Chawla, JJ.
Skyline Engineering Contracts (India) Private Limited - Appellant
Versus
Deputy Commissioner of Income Tax - Respondent
W.P.(C) 6172 of 2021 & CM Appl. 19561 of 2021 and W.P.(C) 6200 of 2021 & CM Appl. 19634 of 2021
Decided On : 23-08-2021