Demand, Recovery & Stay

Demand, Recovery & Stay — the law in short

Every authority in this library on demand, recovery & stay, with what each one decided.

• DIT v Mitsubishi Corporation Supreme CourtCuts both ways
  My Indian payer did not deduct tax at source and paid me gross. The Assessing Officer says I should have paid advance tax and has charged s.234B interest. Which years can he do that for?
  Only from financial year 2012-13 onwards. The Supreme Court held that for every assessment up to and including financial year 2011-12, s.209(1)(d) entitled the assessee to reduce, in computing its advance tax, the income-tax that WOULD BE deductible at source, even though it had in fact received the full amount without deduction — so no s.234B interest could be charged. The proviso to s.209(1)(d) inserted by the Finance Act 2012 with effect from 1 April 2012 reverses that, and from financial year 2012-13 the assessee cannot reduce tax that the payer failed to deduct.
• Radha Krishan Industries v State of Himachal Pradesh Supreme CourtHelps taxpayer
  The department has provisionally attached my receivables. Can I go straight to the High Court, or must I appeal first?
  You can go to the High Court where no appeal lies and the statutory conditions have been breached. The Supreme Court held that a provisional attachment ordered by a Joint Commissioner acting as the Commissioner's delegate is not appealable, so the writ petition under Article 226 was maintainable and the High Court was wrong to dismiss it for alternative remedy. On the merits, the power of provisional attachment is draconian, the conditions must be strictly fulfilled, the opinion must rest on tangible material that the assessee is likely to defeat the demand, and the opportunity of being heard on objections is mandatory. The attachments were set aside.
• DCIT v Pepsi Foods Ltd Supreme CourtHelps taxpayer
  Your Tribunal stay lapsed at 365 days through no fault of yours. Is that constitutional?
  No. The third proviso to s.254(2A), which vacated a stay after 365 days even where the delay was not attributable to the assessee, violates Article 14. A stay now vacates only where the delay is attributable to you.
• Vodafone Idea Ltd v ACIT Supreme CourtHelps departmentSuperseded by amendment
  My refund is being held back because scrutiny is pending. Can the officer simply sit on it?
  Not for AYs 2017-18 to 2022-23 without doing the statutory paperwork first. Section 241A required the Assessing Officer to separately record satisfaction that granting the refund would adversely affect the revenue, and to obtain the PCIT's previous approval with reasons in writing. On these facts the Court found that those steps had been taken — satisfaction recorded, approval obtained, order passed in time — so the withholding was upheld and the appeal was dismissed; the ₹733 crores the Court directed flowed from the final assessment order under s.143(3) for AY 2014-15, not from any failure under s.241A, and even that direction was made subject to any proceedings the Revenue might initiate, including set-off under s.245. For years before AY 2017-18 s.143(1D) governed, and issue of a s.143(2) notice was itself enough to hold back the refund until assessment was complete. Section 241A ceased to apply from 1 April 2023 (Finance Act 2023); for AY 2023-24 onwards the equivalent power, in the same terms, is s.245(2).
• PCIT v LG Electronics India Pvt Ltd Supreme CourtHelps department
  Is 20% of the disputed demand a fixed price for a stay, or can the officer take less?
  Less is possible. The CBDT Office Memoranda of 29 February 2016 and 31 July 2017 do not fetter the quasi-judicial discretion of the officer or the Commissioner, who may on the facts grant stay on a deposit of under 20%.
• Shabina Abraham v Collector of Central Excise & Customs Supreme CourtHelps taxpayer
  The sole proprietor died while a demand was pending. Can the department carry on the assessment against his widow and daughters?
  Not under the Central Excises and Salt Act 1944. The Supreme Court held that assessment proceedings against a dead person's legal representatives cannot continue where the statute contains no machinery provision for it, and that Act, unlike the Income-tax Act, has none. Section 11 deals only with modes of recovery of sums already payable and says nothing about dead persons. Equitable or moral considerations, including unlawful enrichment, have no place in construing a taxing statute. The Kerala High Court's Division Bench judgment was set aside and the Single Judge's order quashing the proceedings restored.
• JCIT v Rolta India Ltd Supreme CourtHelps departmentValidity unconfirmed
  My company paid no advance tax because we only knew we would fall under MAT once the accounts were audited — is interest under sections 234B and 234C still chargeable on the tax on book profit?
  Yes. The Supreme Court held on 7 January 2011 that interest under sections 234B and 234C is payable on failure to pay advance tax in respect of tax payable under section 115JA or section 115JB. Neither interest section makes any exception for the minimum alternate tax, and assessed tax means the tax determined on regular assessment, which is the tax determined by applying those provisions. Both sections 115JA and 115JB expressly say that all other provisions of the Act apply to a MAT company, and the Finance Acts provided for advance tax on them. Circular No. 13/2001 therefore has no application.
• Brij Lal v CIT Supreme CourtCuts both waysValidity unconfirmed
  My settlement application was admitted years before the Commission passed its final order — can it charge me section 234B interest for that whole period, and reopen the settled order later to add interest it forgot?
  No to both. A Constitution Bench of the Supreme Court held on 21 October 2010 that sections 234A, 234B and 234C do apply to Settlement Commission proceedings, but only up to the order admitting the case under section 245D(1). Parliament did not extend the liability beyond the date of the settlement application, so no interest runs between admission and the final order under section 245D(4). Hindustan Bulk Carrier, which had taken the section 245D(4) date as the terminus, does not survive on that point. And the Commission cannot reopen its concluded proceedings under section 154 to levy interest it did not levy at the time, section 245I making its order final.
• CIT v Hindustan Bulk Carriers Supreme CourtHelps departmentPartly overruled — read this first
  I went to the Settlement Commission. Up to what date can section 234B interest be charged on the income I disclosed there?
  Up to the date of the Commission's order under section 245D(4), the Supreme Court held. Interest under section 234B runs from 1 April following the relevant financial year to the date of that order, and is charged on the consolidated income, that is the income already returned plus the income disclosed before the Commission. The Special Bench of the Commission had fixed different end points depending on whether a regular assessment or a reassessment had been made; that view was rejected. After the Commission acts under section 245D, the separate interest under that section takes over. The Revenue's appeals were allowed.
• CIT v Anjum M.H. Ghaswala Supreme CourtHelps department
  Can interest under ss.234A, 234B and 234C be waived?
  Not by the authority hearing your case. The levy is mandatory and automatic, and even the Settlement Commission cannot reduce or waive it. The only route to relief is a CBDT circular issued under s.119.
• Vikrant Tyres Ltd v First ITO Supreme CourtHelps taxpayerValidity unconfirmed
  I paid the demand on time, won in appeal, got a refund, then lost on reference and paid again on a fresh demand. Can the department charge me s.220(2) interest for the period in between?
  No. The condition precedent for s.220(2) is a default in paying the amount demanded within the time stipulated in the notice under s.156. Where the assessee satisfied the original demand on time, and later satisfied a fresh demand on time after the Revenue succeeded, there was never a default, and no interest can be charged for the intervening period during which the money was with the assessee under a refund granted by the Revenue itself.
• M/s. Vikrant Tyres Ltd v The First Income Tax Officer Supreme CourtHelps taxpayerValidity unconfirmed
  I paid the original demand in full, got a refund when I won in appeal, and repaid on a fresh demand after losing in reference. The department now wants s.220(2) interest for the period in between. Must I pay it?
  No. The Supreme Court held that the condition precedent for s.220(2) is a notice of demand under s.156 AND a default in paying the amount demanded within the time allowed. Where the assessee satisfied the original demand promptly and later satisfied the fresh demand promptly, there was no default at any point, and s.220(2) cannot be invoked for the period during which the refunded money was in his hands.
• Union of India v. M.V. Valliappan — a five-Judge Bench upholds s.171(9), and holds that a partial partition after the cut-off has no significance even if an earlier assessment recognised it Supreme CourtHelps department
  The department is ignoring a partial partition my client's family made in April 1979, even though the Income-tax Officer recognised it and gave the family the benefit of it in that very assessment year. Is there any authority that the recognition once given must stand?
  No — the Supreme Court has held the opposite, and by a Constitution Bench. In Union of India v. M.V. Valliappan the Court allowed the Revenue's appeals, set aside the judgments of the Madras and Karnataka High Courts which had struck down s.171(9) of the Income-tax Act, 1961 and s.20A of the Wealth-tax Act, 1957, and dismissed the writ petitions challenging the sub-section. Dealing directly with the argument that a partial partition of 13 April 1979 had been recognised in the assessment year and the benefit given to the assessee, the Court held that this "has no significance in view of crystal clear language used in the sub-section that partial partition taking place after the cut off date is not to be inquired into and if inquired the findings would be null and void."
• TRO v Gangadhar Vishwanath Ranade Supreme CourtHelps taxpayer
  The TRO has attached property the defaulter transferred years ago and calls the transfer void. Can he do that?
  No. In a Rule 11 enquiry under the Second Schedule the Tax Recovery Officer can only decide who is in possession and in what capacity; he has no power to declare a transfer by the assessee to a third party void under s.281. To get that declaration the Department must file a suit.
• Imperial Chit Funds (P) Ltd v. Income Tax Officer, Ernakulam (Supreme Court, 19 March 1996) — the amount the liquidator must set aside under section 178(3) stands outside the winding up, and if he does not set it aside he is personally liable Supreme CourtHelps departmentSuperseded by amendment
  I am the official liquidator. The Income-tax Officer has notified an amount under section 178(2) and is demanding payment now, before the list of creditors is settled. Can he do that, or must he prove his claim in the winding up like everyone else?
  On the law as it stood before the Insolvency and Bankruptcy Code, he could. The Supreme Court dismissed the liquidator's appeal and affirmed the Kerala High Court Full Bench, holding that the amount set aside by the liquidator under section 178(3) is marked off as outside the area of the winding up proceedings and the jurisdiction of the winding up court, that on a total view of the statutory provisions the Income Tax Department is treated as a 'secured creditor', and that the crucial words in section 178(3) and 178(4) are that the Official Liquidator 'shall set aside' the amount notified by the Income Tax Officer and that if it is not so done the Official Liquidator is personally liable to pay the amount of tax which the company would be liable to pay. The Court held that the decisions of the Mysore, Calcutta, Rajasthan, Gujarat and Delhi High Courts to the contrary did not lay down the correct law.
• Assistant Collector of Central Excise v Dunlop India Ltd Supreme CourtHelps department
  I have a strong case against the demand. Will the High Court stay recovery if I offer a bank guarantee for the amount?
  Not on that alone. The Supreme Court set aside interim orders that had restrained collection of revenue against a bank guarantee, holding that even an established prima facie case is not sufficient justification for such an order. Where public revenue is concerned more is required: the balance of convenience must be clearly in favour of an interim order and there must not be the slightest indication of likely prejudice to the public interest. Governments are not run on bank guarantees, and liquid cash is necessary to run a government as much as any other enterprise. The appeal was allowed with costs.
• ITO v M.K. Mohammed Kunhi Supreme CourtHelps taxpayer
  My appeal is pending before the Tribunal and recovery of the demand is going on. Can the Tribunal stay recovery when no section gives it that power?
  Yes. The Supreme Court held that the Tribunal has the power to stay recovery as incidental or ancillary to its appellate jurisdiction. No provision confers it expressly, and the statutory stay in section 220(6) is available only while an appeal is pending before the first appellate authority, not the Tribunal. But an express grant of statutory power carries by necessary implication the authority to use all reasonable means to make the grant effective, and the wide powers in section 254(1) carry with them everything incidental and necessary to make their exercise fully effective - including, in proper cases, orders preventing a successful appeal from being rendered nugatory.
• ITO, Kolar v Seghu Buchiah Setty Supreme CourtHelps taxpayerValidity unconfirmed
  My assessment was reduced in appeal after the officer had already sent a recovery certificate to the Collector and my property was attached. Can he carry on with the old certificate?
  No, on the law as it then stood. By a majority the Supreme Court held that once the assessment order is revised in appeal, the notice of demand founded on it, the default and the recovery proceedings that followed are superseded. There cannot be two defaults in respect of one liability, so the officer must serve a fresh notice of demand for the amount now due, give the assessee an opportunity to pay, and only then treat him as in default. The Mysore High Court had rightly quashed the certificates and the attachment. Shah J dissented, holding that a modification which does not vacate the assessment leaves the earlier default intact.
• Vodafone Idea Ltd v ACIT (Delhi HC, 2026) High CourtHelps taxpayerValidity unconfirmed
  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.
• Manohar Ramabtar Jhunjhunwala v PCIT High CourtHelps taxpayerValidity unconfirmed
  My employer deducted tax but never deposited it, so the credit was denied on processing, a demand now sits on the portal and my later years' refunds are being eaten by it. Do I get the credit and the refund, or only a promise that nobody will recover from me?
  You get the credit and the refund, not merely a bar on recovery. A Division Bench of the Bombay High Court, hearing a batch of such petitions with the assistance of an amicus, held that where an assessee establishes that tax was in fact deducted at source, the Department must grant appropriate TDS credit and cannot recover the corresponding amount from the deductee directly or indirectly, that the consequential relief including refund must follow, and that pending disposal of a credit application the demand must be marked in the system as stayed or not recoverable so that no coercive recovery or refund adjustment takes place.
• Raitha Seva Sahakara Sangha Niyamita v Union of India High CourtHelps taxpayerValidity unconfirmed
  My society's bank has marked a lien on its current account for s.194N tax on cash withdrawals which the bank itself never deducted. Can a bank do that, and is the society liable?
  No, on both counts. The Karnataka High Court held that the bank had no statutory authority to create a lien over the amount lying in its customer's current account. The obligation under s.194N is cast on the paying bank and is to be discharged at the time of payment; the consequence the Court identified is a penalty on the bank under s.271C, imposed by a Joint Commissioner, and the section does not contemplate either a deduction liability or a penalty on the customer.
• Bedmutha Industries Ltd v ACIT High CourtHelps taxpayer
  The Assessing Officer refused me s.244A interest for the years the refund sat unpaid, saying my bank details were wrong. Can he do that on his own?
  No. Section 244A(2) allows a period to be excluded only where a question arises as to the period to be excluded, and that question must be decided by the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner — the Assessing Officer has no jurisdiction to decide it and deny interest on that basis. Further, the delay contemplated by s.244A(2) is delay in the proceedings resulting in the refund, meaning the s.143(1) intimation and the s.143(3) assessment, not administrative delay in remitting a refund already determined.
• P. S. Srijan Height Developers v ACIT High CourtCuts both waysValidity unconfirmed
  The CPC gave me a section 245 intimation saying I had 21 days to respond, then adjusted my whole refund the very next day against a demand for a year that is under appeal. What do I actually get back, and do I get interest?
  You get back everything adjusted in excess of 20 per cent of the disputed demand, but on these facts you get no interest on it. The Calcutta High Court held that adjusting the refund one day after issuing a 21-day section 245 intimation was a clear breach of the power to adjust and an abject violation of the law governing section 245, and directed refund of the excess over 20 per cent within eight weeks — but refused interest because the assessee had waited about two years before coming to court, and refused to touch an earlier adjustment made three years before the writ petition on the ground of laches.
• Saurav Chachra v CBDT High CourtHelps taxpayerValidity unconfirmed
  I have a stay on my demand and they still adjusted my refund against it. Can they do that?
  No. The Orissa High Court held that adjustment is a mode of recovery, so setting a refund off against a demand whose recovery is stayed under s.220(6) does indirectly what the stay forbids directly. The refund was ordered released with s.244A interest within four weeks.
• Surajit Ghosh v ITO, Ward-29(4), Kolkata High CourtHelps taxpayerValidity unconfirmed
  A section 154 order was passed on me in 2022 rectifying a 2015 assessment, with no notice and no DIN. What can I do about it four years later?
  The Calcutta High Court set the order aside. An order passed beyond the four years in s.154(7) suffers from a jurisdictional error, so it can be challenged in writ even after long delay, and the Court also recorded the Department's failure to comply with s.154(3) by not showing that any prior notice was served, and the absence of a Document Identification Number required by the CBDT circular dated 14 August 2019.
• AMNS Gandhidham Ltd v ACIT High CourtHelps taxpayerValidity unconfirmed
  My client took over a company through an IBC resolution plan. The assessing officer has begun assessments for years before the takeover and says he will examine whether the brought forward losses survive the change in shareholding. Can he?
  On these facts, no. Where the resolution professional gave the jurisdictional Principal Commissioner the opportunity of being heard that s.79(2)(c) requires and the Principal Commissioner made no submissions before or at the approval of the resolution plan, the Bombay High Court held that the Revenue could not afterwards reopen the allowability of the carried forward losses, and quashed assessment proceedings relating to a period before the plan's implementation date.
• Vilas Babanrao Kalokhe v Principal Commissioner of Income Tax (Central), Pune High CourtHelps taxpayerValidity unconfirmed
  I filed my return but could not pay the self-assessment tax with it. I paid it a couple of months later. They have prosecuted me under s.276C(2). Can that stand?
  On these facts, no. The Bombay High Court quashed the complaint and the order issuing process, holding that s.276C(2) punishes a wilful attempt to evade payment of tax and not a mere failure to pay, and that the averments in the complaint fell short of any inference of wilfulness where the assessee had pleaded financial difficulty and had in fact paid the tax with interest.
• Huawei Telecommunications India P Ltd v ACIT High CourtHelps taxpayerValidity unconfirmed
  There is interim protection against recovery for that year. Can the department still adjust my refund?
  No. Adjustment of a refund against a demand may itself amount to a coercive measure, so doing it for years already covered by interim protection is not a neutral accounting entry. For the year where no prior s.245 notice or intimation had been issued at all, the mandatory procedure had simply not been followed. The adjustment was quashed and the refund ordered released with applicable interest within eight weeks.
• ACIT v Muhammed Shameer (Kerala) High CourtHelps departmentValidity unconfirmed
  Can a bank account be provisionally attached under s.281B at all, and how much can be attached?
  Yes. A Division Bench of the Kerala High Court held that money in bank accounts is property liable to provisional attachment under s.281B, reversing a single judge who had held otherwise. But the attachment must be commensurate with the probable demand including penalty, and must not be a blanket order attaching property worth far more than that demand.
• Jitendra M. Doshi v CCIT High CourtHelps departmentValidity unconfirmed
  Can the interest on my tax demand be waived because paying it is a genuine hardship?
  Only if all three conditions in s.220(2A) are satisfied together — genuine hardship, default due to circumstances beyond your control, and cooperation in the inquiry or the recovery proceedings. Failing any one limb defeats the application, and the Bombay High Court will not re-appreciate a reasoned rejection by the Chief Commissioner.
• Padma Sree Chigurupati v Union of India High CourtHelps taxpayerValidity unconfirmed
  The first I knew of the s.179 order was when my bank account was attached. Nobody ever gave me a notice. Is that enough to get it set aside?
  Yes. The Andhra Pradesh High Court held that the principles of natural justice are to be read into s.179(1), because the reverse burden the sub-section places on the director can only be discharged if he is put to notice and given an opportunity to prove it. Both the s.179 order and the consequential attachment order were set aside, with liberty to the department to start again on notice.
• Kundlas Loh Udyog v Union of India High CourtHelps taxpayerValidity unconfirmed
  The officer has attached my cash credit account under 226(3). Can an unutilised overdraft limit be garnished?
  No. Section 226(3) is garnishee machinery: it reaches money due to the assessee or held for him, which presupposes a debtor-creditor relationship. A bank that has merely sanctioned a cash credit or overdraft limit owes the customer nothing until it is drawn — if anything, drawing makes the customer the debtor.
• Srirangapattinam Desigan Srinivasan v DCIT (CPC-TDS) High CourtHelps taxpayerValidity unconfirmed
  I bought a flat, deducted one per cent under s.194-IA, and CPC has hit me with a demand because the seller's PAN was not linked to Aadhaar. Is there a High Court decision I can put in front of the officer?
  Yes. The Madras High Court disposed of a writ against exactly such a demand by holding that nothing survived for adjudication once Circular No. 6/2024 applied and the department had itself reprocessed the statement and reported no defaults. The judgment is worth having chiefly because it reproduces Circular No. 6/2024 in full, with its file number and date, which is otherwise hard to source.
• AMNS Khopoli Ltd v ACIT High CourtHelps taxpayerValidity unconfirmed
  Our company came out of the NCLT under an approved resolution plan. The department now says it will not recover anything but wants to complete the assessment for an earlier year to build a case against the old promoters. Can it?
  No. Once the resolution plan is approved, claims that are not part of it stand extinguished and no proceedings in respect of them may be initiated or continued for any period before the effective date - and that covers the assessment itself, not merely recovery. The Bombay High Court quashed notices under s.143(2) and s.142(1) even though the Revenue had accepted on the record that it would not enforce any resulting demand.
• Incredible Unique Buildcon P Ltd v ITO High CourtHelps taxpayerHigh Courts differ
  My customer deducted TDS on my bills and deposited almost none of it, and I have no Form 16A. Can I still get the credit and stop the demand?
  Yes. The Court held that the bar in s.205 operates as soon as it is established that tax was deducted at source, whether or not the deductor deposited it and whether or not a TDS certificate was issued. Form 16A is not the only evidence of deduction; other reliable material — the return disclosures supported by ledger accounts — will do.
• Bharat Petroleum Corporation Ltd v ADIT High CourtHelps taxpayerValidity unconfirmed
  Does a stay granted under s.220(6) lapse after six months, freeing the department to adjust your refund?
  No. A stay under s.220(6) operates until the appeal is disposed of. Combined with the missing prior intimation under s.245, the adjustment was quashed and Rs 211.42 crore was ordered refunded with interest.
• Prakash B. Kamat v PCIT High CourtHelps taxpayer
  The department wants to recover the company's tax dues from me because I was a director. Can they?
  No, not on directorship alone. Section 179(1) is subject to an escape clause, and once the director puts material on record showing the non-recovery was not due to his gross neglect, misfeasance or breach of duty, the burden is discharged and the officer must deal with that material.
• Sanjay Sudan v ACIT High CourtHelps taxpayerHigh Courts differ
  My employer deducted TDS but never deposited it. The department has raised a demand on me and set my later refund off against it. Can it do that?
  No. s.205 bars a direct demand on the person from whose income the tax was deducted, and the Court held that adjusting a later year's refund against that demand is an indirect recovery of the same tax. The demand notice and the adjustment were quashed and the refund directed to be released.
• Jagesh Savjani v Union of India High CourtHelps taxpayerValidity unconfirmed
  Can the department recover a private company's tax from you personally as a director?
  Only after it has tried and failed to recover from the company. Section 179 is engaged where the tax cannot be recovered, and the notice and order must show what recovery steps were taken. Bare notices were quashed.
• Xiaomi Technology India Private Limited v DCIT High CourtHelps taxpayerValidity unconfirmed
  The Assessing Officer has provisionally attached our deposits under s.281B saying a large demand is likely. Is an expected demand enough?
  No. A mere apprehension that huge tax demands are likely to be raised on completion of assessment is not enough. The officer must record his own formation of opinion, on tangible material, that the assessee is likely to defeat the demand and that attachment is necessary - not merely expedient - to protect the revenue, and the attachment must be proportionate. An order resting on the Investigation Wing's and the Transfer Pricing Officer's findings is borrowed satisfaction, and the Principal Commissioner's approval is not an empty formality.
• FCS Manufacturing (India) Pvt Ltd v DDIT High CourtCuts both waysValidity unconfirmed
  Your bank accounts are provisionally attached and the business cannot operate. Is there a way out short of paying?
  Yes — offer security. Provisional attachment exists to protect the revenue, not to freeze a business indefinitely. Where a bank guarantee and directors' undertakings could secure the revenue, continuation of the attachment was set aside.
• Anil Kumar Malhotra v Union of India High CourtHelps departmentValidity unconfirmed
  My stay application was rejected on the 20% ground while my appeal is pending. Can I go straight to the High Court under Article 226 saying the assessment breached natural justice?
  This Court said no. Having already filed the statutory appeal, the assessee cannot simultaneously attack the assessment order in writ under the guise of challenging the rejection of his stay application; that is resort to two forums at once. The remedy against the rejection is the review route in clause 4(C) of the Office Memorandum dated 29.02.2016 read with a revision under s.264, and the writ petitions were dismissed with liberty to take that route.
• Rajendra Kumar v ACIT High CourtHelps taxpayer
  The CPC has adjusted my entire refund against a demand that is under appeal. Do I have to file a separate stay application before I can complain?
  No. The Rajasthan High Court held that nowhere in section 220(6) is it specified that a stay application has to be filed; once an appeal under section 246A has been filed within time and in the prescribed form, the assessee is not to be treated as an assessee in default. Adjusting the whole refund suo motu, without the intimation and opportunity that section 245 requires, was held to be de hors sections 245 and 220(6) and outside the recovery machinery of sections 222 and 223. The Court directed refund, with statutory interest, of everything adjusted beyond twenty per cent of the disputed demand.
• Ashish Jayantilal Sanghavi v ITO High CourtHelps taxpayerValidity unconfirmed
  I applied within thirty days to have the asset seized in a search released and explained the source, and the Assessing Officer has simply sat on the application. The hundred and twenty days have long gone. Can he keep holding it?
  No. The Gujarat High Court held that the time limit in the proviso to clause (i) of sub-section (1) of section 132B is mandatory and not directory, and that it is not permissible for a court to read it as merely directory, because doing so would dilute the statutory rigour and give the Assessing Officer unbridled power to retain seized assets indefinitely against a possible future liability without ever deciding the application. The Court directed the seized diamonds to be handed over to the writ applicant within four weeks.
• A K M G Alloys Private Limited v CIT (Appeals) High CourtHelps taxpayerValidity unconfirmed
  My s.220(6) application against a penalty demand was rejected only because I filed no evidence of financial hardship. Is that a good enough reason?
  No. Financial stringency is only one of the three things the officer must examine; he must also consider whether a prima facie case on merits is made out and whether the balance of convenience is overwhelmingly in the applicant's favour. The Madras High Court disposed of the writ by permitting the assessee to invoke the review remedy in the Office Memorandum before the Principal Commissioner within two weeks, with four weeks' interim protection, and directed that the reviewing authority be guided by the decisions of that Court and of the Supreme Court.
• S.P. Velayutham v ACIT High CourtHelps taxpayerHigh Courts differ
  I admitted the tax in my return but could not pay it. Can that be prosecuted as a wilful attempt to evade payment under s.276C(2)?
  No, not on default alone. The Madras High Court held that a prosecution under s.276C(2) for wilfully attempting to evade payment of tax cannot be launched against an assessee who has merely defaulted in paying tax on time; without mens rea there is no wilful attempt.
• Harsh Dipak Shah v Union of India (Gujarat) High CourtHelps taxpayerValidity unconfirmed
  Is 20% a floor? Can the Commissioner order me to deposit less — 5% or 10% — pending appeal?
  Yes. The Gujarat High Court held there is nothing magical about the figure of 20%: it is a starting point, not a floor, and the authority may direct 5% or 10% instead if the equities so require. The discretion under s.220(6) is coupled with a duty to be exercised judicially on prima facie case, financial stringency and balance of convenience. Note the limits of what that reasoning produced here: of the three writ applications heard together the Court allowed only Special Civil Application No. 19804 of 2021, setting aside the order and remitting it for fresh consideration, and in the two connected applications it expressly declined to interfere having regard to the quantum of the amount involved, leaving those applicants to move the Commissioner (Appeals).
• Kartik Vijaysinh Sonavane v DCIT High CourtHelps taxpayer
  My employer deducted TDS from my salary and never deposited it. The portal shows nothing in 26AS, I do not even have Form 16 for one of the years, and the department has adjusted my later refunds against the demand. Can they do that?
  No. Where the employer has in fact deducted the tax, the department is precluded from denying the deductee credit for it, and any recovery or adjustment already made must be refunded with statutory interest. The absence of the entry in the departmental system, and the absence of a Form 16 for one of the years, were both raised by the Revenue and neither saved the demand.
• Rajeev Behl v PCIT High CourtHelps departmentValidity unconfirmed
  The department is recovering the company's tax from me as a director. I resigned, and an MOU and an arbitral award put the tax liability on another director. Is that a defence under s.179?
  No. The burden under s.179(1) is on the director to prove that the non-recovery cannot be attributed to his gross neglect, misfeasance or breach of duty - it is not for the Revenue to prove that he was guilty of it. And a private arrangement between directors, even one affirmed by an arbitral award upheld by the High Court, governs rights in personam and cannot bind a statutory authority; income-tax liability cannot be apportioned by private agreement.
• Jet Privilege Pvt Ltd v DCIT High CourtHelps taxpayerValidity unconfirmed
  Your refund was adjusted against an old demand. Did they have to tell you first?
  Yes, and beforehand. Intimation under s.245 must be given before the set-off is effected — not at the same time, and not afterwards. Failure to do so made the adjustment wholly illegal, and the refund was ordered with interest.
• M/s. Queen Agencies v ACIT High CourtHelps taxpayerValidity unconfirmed
  The Assessing Officer has rejected my stay application in two lines saying pay 20%. Is that order sustainable, and can he order less than 20% without going to the Principal Commissioner?
  No, a non-speaking order under s.220(6) that simply directs payment of 20% is liable to be set aside; the Assessing Officer must pass a speaking order applying the three parameters - prima facie case, financial stringency and balance of convenience. And yes: because the Assessing Officer exercises a quasi-judicial power, he can himself direct a deposit of LESS than 20% without any reference to the Principal Commissioner; a reference upward is needed only if he wants MORE than 20%.
• Tata Communications Ltd v Union of India High CourtHelps taxpayerValidity unconfirmed
  Your refund was adjusted against demands that were already stayed. Is that lawful?
  No. Section 245 requires previous intimation of the proposed adjustment, not simultaneous intimation — and the demands adjusted were covered by subsisting stay orders. The full refund was ordered paid within four weeks.
• Vrinda Sharad Bal v ITO High CourtHelps taxpayerValidity unconfirmed
  CPC keeps adjusting my refunds against a demand that is under appeal, and says the Centralised Processing Scheme requires it. Does that scheme override the CBDT's stay instructions?
  No. Clause 10 of the Centralised Processing of Return of Income Scheme, 2011 cannot be read in isolation; the power to set off a refund against an outstanding demand is circumscribed by the provisions of the Act and by the CBDT's subsisting instructions, circulars and office memoranda. The Court restrained recovery beyond what those instructions permit and directed that the excess already recovered be returned with interest, and that refunds not be adjusted until the appeal is decided.
• Forzza Projects Private Limited v Principal Commissioner of Income Tax High CourtHelps taxpayerValidity unconfirmed
  I filed my return but could not pay the self-assessment tax on time; I paid it later with interest in instalments. The Department has launched a prosecution under s.276C(2) and says s.278E presumes a culpable mental state. Is that right?
  On the Kerala High Court's view, no. A mere failure to pay the tax due, later paid with interest, is not a wilful attempt to evade the payment of tax within s.276C(2) where there is no concealment of a source of income, no false particulars and no circumstance created to enable evasion. And s.278E does not fill the gap: the presumption of a culpable mental state is a rule of evidence that comes into play only once the basic ingredients constituting the offence are disclosed, not to supply them.
• CIT v M/s. Syndicate Bank High CourtHelps taxpayerValidity unconfirmed
  My refund was paid but the s.244A interest due on it was left out. Is the department liable to pay interest on that omitted interest, or is that the forbidden interest on interest?
  The Karnataka High Court held the department is liable, and that this is not interest on interest. Following the three-Judge Bench in CIT v. HEG Ltd., it held that the interest component partakes of the character of the 'amount' that becomes due to the assessee under s.244A, so an order of refund must include the interest payable, and if it does not, the Revenue is liable to pay interest on the shortfall.
• Sonal Nimish Patel v ACIT (Gujarat) High CourtHelps taxpayerValidity unconfirmed
  The department has passed an order under s.179 making me liable for my company's tax. Must the notice first show that recovery from the company failed?
  Yes. That the tax cannot be recovered from the company is a condition precedent to any action under s.179, and the satisfaction of it must appear in the show-cause notice and in the order itself. A notice silent on what steps were taken against the company cannot be saved by explaining it later in an affidavit-in-reply. The order and the consequential s.226(3) notices to the banks were quashed.
• Tata Communications Ltd v Dy CIT High CourtHelps taxpayer
  My refund was adjusted against an old demand and I was never told first. Is that adjustment valid?
  No. Section 245 permits set-off only after an intimation in writing of the proposed action, and that requirement is a mandate, not a courtesy. A letter dated more than a year before the adjustment could not be used to deviate from it, so an adjustment of Rs. 58,07,58,796 for AY 2016-17 was quashed — with liberty to the officer to issue a fresh s.245 notice and start again properly.
• Harjeet Surajprakash Girotra v Union of India High CourtHelps taxpayerValidity unconfirmed
  The reopening notice was posted to the address in my PAN and came back undelivered. The department says it did all it had to. Was the notice served?
  No. Rule 127(2) does not stop at the PAN address: where the communication cannot be delivered there, the further proviso requires it to be sent to the address available with the banking company or co-operative bank. The department had the assessee's bank account and had built its case out of the transactions in it, but never sent the notice to the address held by the bank, so service was incomplete and, the s.149 period having run out, the reassessment could not proceed.
• Vodafone India Services Pvt Ltd v Union of India (Gujarat) High CourtHelps taxpayerValidity unconfirmed
  The AO rejected my stay application in a few lines and told me to pay 20%. Can that order stand?
  No. An order under s.220(6) that brushes aside the assessee's submissions and mechanically directs payment of 20% is not a speaking order and will be quashed. The Gujarat High Court also held that a penalty demand is not 'tax', so the CBDT's 20% benchmark and the parameters that govern a tax demand do not simply carry across to a penalty appeal.
• Mrs. Kannammal v ITO High CourtHelps taxpayer
  The stay order just says 'pay 20% as per Board's circular'. Is that a decision?
  No. Stay applications must be decided by reference to prima facie case, financial stringency and balance of convenience, and communicated as a speaking order. CBDT circulars are guidelines and cannot substitute those basic tests.

The 60 strongest entries are summarised here. The other 74 entries are listed in full below, and each has its own page.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.