Refund Income Tax Recovered Without Supplying Assessment Order: Delhi HC

The Delhi High Court has held that recovery of income tax dues without supplying a copy of the underlying assessment order amounts to recovery “without authority of law”, and directed the Income Tax Department to refund Rs. 11.14 lakh along with interest to the assessee. The bench of Justice Dinesh Mehta and Justice Vinod Kumar has observed that recovery of tax without providing the assessment order amounted to recovery without authority of law. The Court also took note of the fact that despite repeated directions during the pendency of the writ petition, the Department failed to trace or produce the assessment order in question. According to the petitioner, the Income Tax Department had recovered the amount over various dates between 2010 and 2017 by adjusting refunds due for later assessment years. The existence of this recovery came to light only after the petitioner sought information under the Right to Information Act, 2005, pursuant to which the Department furnished a communication in February 2019 showing details of the adjustments made. The petitioner contended that despite repeated representations and RTI applications, the Department failed to provide a copy of the assessment order for AY 2001–02 under which the demand was allegedly raised. It was argued that in the absence of service of an assessment order and a valid demand notice under Section 156 of the Income Tax Act, 1961, no statutory liability could arise, and therefore, the recovery was illegal and unconstitutional. The department conceded before the Court that it had not been able to provide a copy of the assessment order for AY 2001–02. However, it sought to justify the situation by contending that the assessee had failed to update its address in the PAN database, which contributed to non-service of the assessment order. The Department further submitted that since the demand pertained to an old assessment year and records had since been digitised, the original assessment records were not easily traceable, though efforts were being made to locate them. The High Court observed that even if the Department’s contention regarding non-updation of address by the assessee were accepted, it could not justify recovery of tax without supplying the assessment order once the assessee specifically demanded it. The Court noted that when amounts were recovered and the assessee sought a copy of the assessment order, it was incumbent upon the Department to furnish the same. The High Court directed the Assistant Commissioner of Income Tax to refund the recovered amount of Rs. 11,14,660 along with applicable interest to the petitioner by 31 March 2026. However, the Court clarified that if the Department succeeds in tracing and validly serving the assessment order for AY 2001–02 by that date, the refund would not be required to be made. The Court further granted liberty to the assessee to challenge the assessment order, if served, by filing an appeal under Section 246A of the Income Tax Act within 30 days of service. It directed that in such a case, the appellate authority should not raise any objection on the ground of limitation. The Court restrained the Centralised Processing Centre (CPC) from making any further recovery in relation to the purported demand for AY 2001–02 until 31 March 2026 and directed the Department to make appropriate entries reflecting that the demand was not recoverable in terms of the Court’s order. Case Details Case Title: Philco Exports Private Limited Versus Assistant Commissioner Of Income Tax, & Ors. Case No.: W.P.(C) 12318/2021, CM APPL. 38748/2021(stay) Date: 12/01/2026 Counsel For Petitioner: Somil Agarwal Counsel For Respondent: Sunil Agarwal Click Here To Read Order Read More: CIC Bars Advocates from Using RTI to Seek Case-Related Information for Clients

Refund Income Tax Recovered Without Supplying Assessment Order: Delhi HC

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