The Tribunal allowed my appeal, the Assessing Officer has passed the appeal effect order and worked out the refund, but the CPC will not pay because the portal shows an outstanding demand on my PAN and on my group TANs. Is that lawful?
No. Once an appellate authority (or the Assessing Officer giving effect to its order) finds an amount refundable, that becomes a vested and crystallised right, and the Assessing Officer or the CPC cannot withhold a rupee of it except by an order actually passed under section 245. Where the Revenue could not produce any such order, the Delhi High Court held that refusing the refund because of demands standing against the assessee's PAN and sister TANs was untenable in law, arbitrary, and violative of Articles 14, 19(1)(g) and 300A, and directed payment of Rs 53,09,56,470 with interest under sections 244A and 244A(1A) by a fixed date, with a further 1 per cent per month if the date was missed.
Decided by the High Court (Dinesh Mehta J and Rajneesh Kumar Gupta J) on 2026-08-18, reported as W.P.(C) 2729/2026 with CM APPL. 13253/2026; W.P.(C) 2733/2026 with CM APPL. 13254/2026; W.P.(C) 3699/2026 with CM APPL. 18059/2026 (Delhi High Court). It bears on section 245, section 244A, section 244A(1A), section 200A, section 201 of the Income Tax Act 1961, in Refunds, Interest & Condonation, TDS Defaults and Demand, Recovery & Stay matters.
This is the everyday problem of the appeal-effect refund that never arrives: the order giving effect is passed, the quantum is admitted on the file, and then nothing happens while the portal continues to display a demand. The decision gives the practitioner a clean two-step demand — produce the section 245 order, or pay. It also does two useful things beyond that. First, it deals with the Revenue's habit of blocking a TDS refund arising from a section 201 order by insisting on Form 26B: the Court held that Form 26B, Rule 31A and section 200A occupy the field of excess or inadvertent deduction before assessment, and have nothing to do with an amount found refundable after an assessment under section 201 or after an appeal from it, so the demand for Form 26B (and the Department's SOP behind it) cannot be a reason to hold the money. Second, it disposes of the aggregation of demands across a group: on the Revenue's own admission Rs 913.66 crore of the Rs 924.57 crore it was pointing to had been stayed by various authorities and courts, leaving about Rs 10.91 crore unstayed (which the assessee said was in truth Rs 27,63,141) — and the Court declined to go into that factual dispute at all, holding instead that in the absence of a section 245 order none of it justified withholding. The limit of the decision is that it is a direction on the absence of an order, not a ruling that a section 245 adjustment could never have been made: paragraph 19 expressly preserves withholding or adjustment 'by way of legally passed order under Section 245'. So the Revenue's answer in a later case is to pass the order — which is precisely why the assessee should be pressing for it, and objecting to it, rather than waiting.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
Read aloud by your device. Press again to stop.
The petitioner sought refunds with interest under sections 244A(1) and 244A(1A) for assessment years 2003-04 and 2008-09 to 2013-14, pending for about two years. The Tribunal had allowed its appeals by orders dated 30 April 2024 (AY 2013-14), 5 June 2024 (AY 2012-13) and 26 November 2024 and 3 February 2025 (AYs 2003-04 and 2008-09 to 2011-12). The Assessing Officer passed appeal effect orders on 14 October 2024, 30 October 2024 and 15 May 2026 and found a total of Rs 53,09,56,470 payable. The money was nevertheless not released. The Department first insisted on Form 26B; the petitioner, though it maintained that the form was unnecessary and that other High Courts had so held in its own cases, filed it to speed matters up, whereupon the Department rejected the form citing dues of Rs 924,57,20,992 against the petitioner's PAN and sister TANs. In its counter affidavit the Revenue admitted that Rs 913,66,12,715 of that sum had been stayed by various authorities and courts and that only Rs 10,91,08,277 was unstayed; the petitioner replied that even that figure was wrong and only Rs 27,63,141 was outstanding. The senior standing counsel for the Revenue conceded that on a reading of section 200A, Rule 31A and Form 26B the form may not apply to a case like this, but said it was the consistent practice of the Department throughout the country to ask for it whenever a TDS refund was given, even in furtherance of a court or appellate order, and that the Assessing Officer felt bound by the SOP.
The writ petitions were allowed. Sections 200A and 201 operate in entirely different fields and spheres (para 17). Once an assessment under section 201 has been made or an appellate authority passes an order and a refund arises from it, it becomes a vested and crystallised right of the assessee to receive the refund with applicable interest (para 18). Neither Rule 31A applies nor can the Assessing Officer or the CPC compel an assessee to furnish Form 26B, and the amount found refundable on giving effect to the appellate order must be paid with interest, subject only to withholding or adjustment by a legally passed order under section 245 (para 19). Unless such an order is passed, the Assessing Officer or the CPC cannot withhold any amount (para 20). The Revenue having failed to show any such order, its plea that the refund was held back because of outstanding demand on the PAN and sister TANs was untenable in law, arbitrary and violative of Articles 14, 19(1)(g) and 300A (para 21). The respondents were directed to pay Rs 53,09,56,470 with applicable interest under sections 244A and 244A(1A) on or before 30 September 2026 (para 22), failing which the entire amount would carry interest at 1 per cent per month over and above statutory interest (para 23).
The Court began with the scheme of the Act and separated the two provisions the Department had conflated. Section 200A, Rule 31A and Form 26B are meant for the case where a deductor asks for refund of an amount wrongly or inadvertently deducted or an incorrect amount deducted or deposited; section 201 is the assessment of the deductor. They therefore operate in entirely different fields (para 17). Once the assessment under section 201 has been completed, or an appellate or higher authority has passed an order and a refund emanates from it, the right to the refund with interest is vested and crystallised (para 18). From that the Court drew the operative rule: the machinery of Form 26B cannot be superimposed on a refund of that character, and the only lawful route by which the Revenue may keep the money is an order under section 245 (paras 19 and 20). Because the Revenue could produce no such order, the retention had no statutory foundation at all, and the Court characterised it not merely as illegal but as arbitrary and as an infringement of Articles 14, 19(1)(g) and 300A (para 21). The Court expressly refused to resolve the disputed arithmetic of what was actually outstanding, leaving that to the authorities (para 8), because on its reasoning the quantum of the demand was irrelevant in the absence of a section 245 order. The Department's plea that it was following a nationwide practice and an SOP was met by the concession of its own counsel that the statute did not require Form 26B in such a case (paras 12 and 13). The direction was then made date-certain and self-enforcing by attaching a penal 1 per cent per month to any delay beyond 30 September 2026.
Unless any order under Section 245 of the Act of 1961 is passed, the AO or the CPC cannot withhold any amount of an assessee once the Appellate Authority or the AO finds an amount to be refundable after passing of an order under Section 201 of the Act of 1961 or pursuant to an appeal arising therefrom.
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Handle my notice → Ask a CA on WhatsAppNo. Once an appellate authority (or the Assessing Officer giving effect to its order) finds an amount refundable, that becomes a vested and crystallised right, and the Assessing Officer or the CPC cannot withhold a rupee of it except by an order actually passed under section 245. Where the Revenue could not produce any such order, the Delhi High Court held that refusing the refund because of demands standing against the assessee's PAN and sister TANs was untenable in law, arbitrary, and violative of Articles 14, 19(1)(g) and 300A, and directed payment of Rs 53,09,56,470 with interest under sections 244A and 244A(1A) by a fixed date, with a further 1 per cent per month if the date was missed. This was decided by the High Court (Dinesh Mehta J and Rajneesh Kumar Gupta J) and bears on section 245, section 244A, section 244A(1A), section 200A, section 201 of the Income Tax Act 1961. It is reported as W.P.(C) 2729/2026 with CM APPL. 13253/2026; W.P.(C) 2733/2026 with CM APPL. 13254/2026; W.P.(C) 3699/2026 with CM APPL. 18059/2026 (Delhi High Court). This is the everyday problem of the appeal-effect refund that never arrives: the order giving effect is passed, the quantum is admitted on the file, and then nothing happens while the portal continues to display a demand. The decision gives the practitioner a clean two-step demand — produce the section 245 order, or pay. It also does two useful things beyond that. First, it deals with the Revenue's habit of blocking a TDS refund arising from a section 201 order by insisting on Form 26B: the Court held that Form 26B, Rule 31A and section 200A occupy the field of excess or inadvertent deduction before assessment, and have nothing to do with an amount found refundable after an assessment under section 201 or after an appeal from it, so the demand for Form 26B (and the Department's SOP behind it) cannot be a reason to hold the money. Second, it disposes of the aggregation of demands across a group: on the Revenue's own admission Rs 913.66 crore of the Rs 924.57 crore it was pointing to had been stayed by various authorities and courts, leaving about Rs 10.91 crore unstayed (which the assessee said was in truth Rs 27,63,141) — and the Court declined to go into that factual dispute at all, holding instead that in the absence of a section 245 order none of it justified withholding. The limit of the decision is that it is a direction on the absence of an order, not a ruling that a section 245 adjustment could never have been made: paragraph 19 expressly preserves withholding or adjustment 'by way of legally passed order under Section 245'. So the Revenue's answer in a later case is to pass the order — which is precisely why the assessee should be pressing for it, and objecting to it, rather than waiting. If it applies to you, the first step is this: Get the appeal effect order and the computation on record and identify the exact figure the Assessing Officer has himself certified as refundable — the case works only where the quantum is no longer in dispute.
The petitioner sought refunds with interest under sections 244A(1) and 244A(1A) for assessment years 2003-04 and 2008-09 to 2013-14, pending for about two years. The Tribunal had allowed its appeals by orders dated 30 April 2024 (AY 2013-14), 5 June 2024 (AY 2012-13) and 26 November 2024 and 3 February 2025 (AYs 2003-04 and 2008-09 to 2011-12). The Assessing Officer passed appeal effect orders on 14 October 2024, 30 October 2024 and 15 May 2026 and found a total of Rs 53,09,56,470 payable. The money was nevertheless not released. The Department first insisted on Form 26B; the petitioner, though it maintained that the form was unnecessary and that other High Courts had so held in its own cases, filed it to speed matters up, whereupon the Department rejected the form citing dues of Rs 924,57,20,992 against the petitioner's PAN and sister TANs. In its counter affidavit the Revenue admitted that Rs 913,66,12,715 of that sum had been stayed by various authorities and courts and that only Rs 10,91,08,277 was unstayed; the petitioner replied that even that figure was wrong and only Rs 27,63,141 was outstanding. The senior standing counsel for the Revenue conceded that on a reading of section 200A, Rule 31A and Form 26B the form may not apply to a case like this, but said it was the consistent practice of the Department throughout the country to ask for it whenever a TDS refund was given, even in furtherance of a court or appellate order, and that the Assessing Officer felt bound by the SOP. The matter was decided on 2026-08-18 by the High Court (Dinesh Mehta J and Rajneesh Kumar Gupta J). On those facts the High Court held as follows. The writ petitions were allowed. Sections 200A and 201 operate in entirely different fields and spheres (para 17). Once an assessment under section 201 has been made or an appellate authority passes an order and a refund arises from it, it becomes a vested and crystallised right of the assessee to receive the refund with applicable interest (para 18). Neither Rule 31A applies nor can the Assessing Officer or the CPC compel an assessee to furnish Form 26B, and the amount found refundable on giving effect to the appellate order must be paid with interest, subject only to withholding or adjustment by a legally passed order under section 245 (para 19). Unless such an order is passed, the Assessing Officer or the CPC cannot withhold any amount (para 20). The Revenue having failed to show any such order, its plea that the refund was held back because of outstanding demand on the PAN and sister TANs was untenable in law, arbitrary and violative of Articles 14, 19(1)(g) and 300A (para 21). The respondents were directed to pay Rs 53,09,56,470 with applicable interest under sections 244A and 244A(1A) on or before 30 September 2026 (para 22), failing which the entire amount would carry interest at 1 per cent per month over and above statutory interest (para 23).
The Court began with the scheme of the Act and separated the two provisions the Department had conflated. Section 200A, Rule 31A and Form 26B are meant for the case where a deductor asks for refund of an amount wrongly or inadvertently deducted or an incorrect amount deducted or deposited; section 201 is the assessment of the deductor. They therefore operate in entirely different fields (para 17). Once the assessment under section 201 has been completed, or an appellate or higher authority has passed an order and a refund emanates from it, the right to the refund with interest is vested and crystallised (para 18). From that the Court drew the operative rule: the machinery of Form 26B cannot be superimposed on a refund of that character, and the only lawful route by which the Revenue may keep the money is an order under section 245 (paras 19 and 20). Because the Revenue could produce no such order, the retention had no statutory foundation at all, and the Court characterised it not merely as illegal but as arbitrary and as an infringement of Articles 14, 19(1)(g) and 300A (para 21). The Court expressly refused to resolve the disputed arithmetic of what was actually outstanding, leaving that to the authorities (para 8), because on its reasoning the quantum of the demand was irrelevant in the absence of a section 245 order. The Department's plea that it was following a nationwide practice and an SOP was met by the concession of its own counsel that the statute did not require Form 26B in such a case (paras 12 and 13). The direction was then made date-certain and self-enforcing by attaching a penal 1 per cent per month to any delay beyond 30 September 2026. In the words reproduced by the source cited on this page: "Unless any order under Section 245 of the Act of 1961 is passed, the AO or the CPC cannot withhold any amount of an assessee once the Appellate Authority or the AO finds an amount to be refundable after passing of an order under Section 201 of the Act of 1961 or pursuant to an appeal arising therefrom."
It was decided by the High Court on 2026-08-18 and is reported as W.P.(C) 2729/2026 with CM APPL. 13253/2026; W.P.(C) 2733/2026 with CM APPL. 13254/2026; W.P.(C) 3699/2026 with CM APPL. 18059/2026 (Delhi High Court). Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 245, section 244A, section 244A(1A), section 200A, section 201, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The writ petitions were allowed. Sections 200A and 201 operate in entirely different fields and spheres (para 17). Once an assessment under section 201 has been made or an appellate authority passes an order and a refund arises from it, it becomes a vested and crystallised right of the assessee to receive the refund with applicable interest (para 18). Neither Rule 31A applies nor can the Assessing Officer or the CPC compel an assessee to furnish Form 26B, and the amount found refundable on giving effect to the appellate order must be paid with interest, subject only to withholding or adjustment by a legally passed order under section 245 (para 19). Unless such an order is passed, the Assessing Officer or the CPC cannot withhold any amount (para 20). The Revenue having failed to show any such order, its plea that the refund was held back because of outstanding demand on the PAN and sister TANs was untenable in law, arbitrary and violative of Articles 14, 19(1)(g) and 300A (para 21). The respondents were directed to pay Rs 53,09,56,470 with applicable interest under sections 244A and 244A(1A) on or before 30 September 2026 (para 22), failing which the entire amount would carry interest at 1 per cent per month over and above statutory interest (para 23). It arises in Refunds, Interest & Condonation, TDS Defaults and Demand, Recovery & Stay matters, on section 245, section 244A, section 244A(1A), section 200A, section 201 of the Income Tax Act 1961, and was decided by Dinesh Mehta J and Rajneesh Kumar Gupta J. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Write to the Assessing Officer and the CPC asking them to produce the order under section 245 by which the refund is said to have been withheld or adjusted, and record that no such order has been served on you; the absence of the order is the whole case. If the block is a demand for Form 26B on a TDS refund flowing from a section 201 order or an appeal from it, refuse it and rely on paragraphs 17 to 19 — section 200A and Rule 31A operate in a different field, and a departmental SOP cannot add a condition the statute does not impose. Where the Revenue points to demands across group PANs or sister TANs, tabulate them and show how much is stayed and by whom; the Court here treated the Revenue's own admission that 98 per cent was stayed as decisive of the arbitrariness even without deciding the arithmetic. Claim interest under section 244A(1) and, for an appeal-effect refund, the additional interest under section 244A(1A), and ask expressly for a date-certain direction with a default rate — the Court fixed 30 September 2026 and added 1 per cent per month beyond the statutory interest for delay past it.
Searched for later treatment; none was found. That is not the same as a source affirming it. Two searches, nothing found. The citedby search on the doc id is empty. A search on the party name with 'withholding of refund' and s.245 returns ten results and nothing dated after 18 August 2026, so nothing cites the judgment. No later decision has adopted, doubted or distinguished the holding that once an appellate authority, or the Assessing Officer giving effect to its order, finds an amount refundable that becomes a vested and crystallised right which cannot be withheld except by an order actually passed under s.245. Whether the Revenue has carried it to the Supreme Court is not known; nothing appeared. The judgment is four weeks old. Note that it construes s.245 as substituted by the Finance Act 2023. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
This is NOT the Supreme Court decision in Vodafone Idea Ltd v ACIT of 29 April 2020 on section 241A, which the library already carries; it is a separate Delhi High Court judgment of 18 August 2026 in the same assessee's TDS refund matters, and the slug and full name have been kept distinct for that reason. The indiankanoon print view returned paragraphs 19, 20, 21, 16 and 24 in shorter, partly paraphrased form on one pass and in fuller form on another; the fuller text has been used, and the tail of paragraph 20 was separately confirmed by exact-phrase retrieval on indiankanoon. Paragraph 3 refers to a table of the orders and amounts which the print view did not render, so the year-wise break-up of the Rs 53,09,56,470 could not be read. Paragraph 24 came back as 'It is a fit case for imposition of exemplary cost, but we make the case easy', which does not read as complete; nothing turns on it and it has not been relied on. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The writ petitions were allowed. Sections 200A and 201 operate in entirely different fields and spheres (para 17). Once an assessment under section 201 has been made or an appellate authority passes an order and a refund arises from it, it becomes a vested and crystallised right of the assessee to receive the refund with applicable interest (para 18). Neither Rule 31A applies nor can the Assessing Officer or the CPC compel an assessee to furnish Form 26B, and the amount found refundable on giving effect to the appellate order must be paid with interest, subject only to withholding or adjustment by a legally passed order under section 245 (para 19). Unless such an order is passed, the Assessing Officer or the CPC cannot withhold any amount (para 20). The Revenue having failed to show any such order, its plea that the refund was held back because of outstanding demand on the PAN and sister TANs was untenable in law, arbitrary and violative of Articles 14, 19(1)(g) and 300A (para 21). The respondents were directed to pay Rs 53,09,56,470 with applicable interest under sections 244A and 244A(1A) on or before 30 September 2026 (para 22), failing which the entire amount would carry interest at 1 per cent per month over and above statutory interest (para 23).
TaxSphere, “Vodafone Idea Ltd v ACIT (Delhi HC, 2026)”, https://taxnotice.vittsphere.com/caselaw/case/vodafone-idea-delhi-2026-no-refund-withholding-without-a-245-order/ (validity last checked 2026-09-07)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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The Tribunal decided my appeal years ago and the Assessing Officer still has not passed the order giving effect. What do I get besides the refund?
CPC has sent me an intimation under section 200A with a late fee on it. What does section 200A actually let them compute, when did the fee limb go in, and can I appeal it?
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