Bombay High Court struck down the practice of adjusting tax refunds beyond the 20% demand payment as illegal and against CBDT Circulars.
Recently the excess Refund Adjustment is held as illegal by the Bombay HC.
In Kishore Mohanlal Dingra v. ACIT (Writ Petition No. 2839 of 2022), the Bombay High Court has struck down the practice of adjusting tax refunds beyond the 20% demand payment as illegal and against CBDT Circulars.
CBDT Circular mandates a stay on balance demand once 20% of the disputed tax is paid, pending appeal.
Adjusting refunds (e.g., AY 2014-15) against demands (e.g., AY 2016-17) post-20% payment is unjustified.
Court ordered refund of wrongful adjustments within 4 weeks and expedited appeal disposal within 4 months.
The copy of the order is as under:
