Calcutta High Court
M/S. Asa International India … vs Deputy Commissioner Of Income Tax on 19 May, 2026
OD-2
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
ORIGINAL SIDE
WPO/1249/2023
M/S. ASA INTERNATIONAL INDIA MICROFINANCE LIMITED
VS
DEPUTY COMMISSIONER OF INCOME TAX,
CIRCLE 5(1), KOLKATA AND ORS.
BEFORE:
The Hon'ble JUSTICE SMITA DAS DE
Date : May 19, 2026.
Appearance:
Mr. J. P. Khaitan, Sr. Adv.
..for the appellant
Mr. Prithu Dudhoria, Adv.
Mr. Madhu Jana, Adv.
Mr. Wahed Reja, Adv.
..for the respondents
1. The petitioner in the present case, inter alia, challenges the recovery of the
disputed demand for the assessment year 2012-13 during the pendency of the
petitioner’s appeal before the Commissioner of Income Tax (Appeals) by adjusting
refunds due to the petitioner for the assessment years 2018-19, 2019-20, 2020-
21, 2021-22 and 2022-23.
2. The petitioner’s assessment for the assessment year 2012-13 was
completed on March 19, 2015 under Section 143(3) of the Income Tax Act, 1961
(“the Act”) raising a demand of Rs.48,95,220/-. A further demand of
Rs.7,99,50,700/- was raised for Assessment Year 2011-12. The petitioner
preferred appeal before Commissioner of Income Tax (Appeals) on 24.01.2020.
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Prior thereto on 22.01.2020 an application for rectification and stay of demand
was filed.
3. On December 25, 2019, a re-assessment order was passed under Sections
144/147 for the said assessment year raising a demand of Rs.7,99,50,700/-.
4. On March 3, 2020, the Assessing Officer issued garnishee notices under
Section 226(3) of the Act to the petitioner’s Bankers for recovery of the disputed
demands for Assessment years 2011-12 and 2012-13.
5. On March 17, 2020, the petitioner applied for adjustment of its refunds for
Assessment Year 2017-18 and undertook to pay a further sum of Rs.3,76,950/-
so that 20% of the disputed demand stood paid.
6. The garnishee notices were withdrawn on 17.03.2020, since a refund of
Rs.1,67,50,378/- for Assessment Year 2017-18 was already adjusted on
28.02.2020. Against the said disputed demand a further sum of Rs.3,76,950/-
was paid on 19.03.2020.
7. In view of the said office memoranda dated February 29, 2016 and July 31,
2017, the petitioner has already paid more than 20% of the disputed demand, it
was entitled to stay of the balance outstanding disputed demand. In the instant
case, there is nothing to show that the Principal Commissioner of Income
Tax/Commissioner of Income Tax had decided that there should be payment of a
lumpsum amount higher than 20% of the disputed demand. The petitioner had
prayed for stay in its letter dated March 17, 2020 addressed to the Assessing
Officer. By withdrawing the garnishee notices, the Assessing Officer granted such
request.
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8. Notwithstanding the same between May, 2020 and December, 2022, the
Department adjusted further refunds aggregating Rs.8,98,17,185/- for
Assessment Years 2018-19 to 2022-23 against the disputed demands.
9. The petitioner through learned Senior counsel submitted that action of the
Assessing Officer in issuing garnishee notices and adjusting refunds is contrary
to the binding CBDT Office Memoranda dated 29.2.2016 and 31.07.2017.
10. The petitioner is entitled to stay of recovery as more than 20% of the
disputed demand has been adjusted.
11. It is further submitted that adjustment of Rs.8,19,18,502/- without notice
under Section 245 of the Act is illegal. Coercive recovery during pendency of
appeal before CIT(A) is violation of principles of natural justice.
12. The learned counsel for the respondents submits that Section 245
expressly permits the Assessing Officer to set off refunds against any sum
payable by the assessee. Section 220(6) vests discretion in the Assessing Officer
to treat the assessee as not being in default. Thus, stay is not automatic. The OM
of CBDT is directory and not mandatory.
13. The sole issue involved in the present case is as follows:
Whether refunds for the Assessment Years 2018-19 to 2022-23 can be adjusted
against disputed demand for Assessment Years 2011-12 and 2012-13 during
pendency of appeal when 20% of disputed demand has already been paid as per
CBDT OM dated 29.02.2016 and 31.07.2017.
14. After hearing the rival contention of the parties and upon perusing the
records made available, this Court finds that the petitioner has complied with
the CBDT Office Memorandum dated 31.07.2017 by paying more than 20% of
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the disputed demand for Assessment Years 2011-12 and 2012-13. There is
no order from the principal Commissioner directing payment higher than
20%. Therefore, the petitioner is entitled to stay of recovery. The adjustment
of refunds amounting to Rs.8,98,17,185/-, specifically Rs.8,19,18,502/-
without issuing prior intimation under Section 245 of the said Act runs
contrary to law. The action of the Assessing Officer is unsustainable in light
of the judgment of the Co-ordinate Bench of this Court in Danieli India
Limited Vs. Assistant CIT, reported at 2023 (9) TMI 1726, Gaurav
Enterprises Vs. Union of India reported at 2025(12) TMI 624 and decision
dated 12.05.2026 in WPO/139/2026 (Bothra Shipping Services Pvt. Ltd
Vs. Union of India).
15. In view of the above, the Writ Petition being WPO No. 1249 of 2023 is
disposed of with the following directions:-
a) The respondents are directed to release a sum of Rs.8,98,17,155/- for
the Assessment Years 2018-19 to 2022-23 along with interest under
Section 244A within six weeks from the date of communication of this
order.
b) The Commissioner of Income Tax (Appeals) is directed to dispose of the
pending appeal in a time bound manner, preferably within eight weeks
from the date of communication of this order.
c) The Assessing Officer shall not take any coercive steps for recovery of
the demand for Assessment Year 2012-13 until the appeal pending
before Commissioner of Income Tax (Appeals) is disposed of.
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16. Urgent photostat certified copy of this order, if applied for, be given to the
learned counsel for the parties on usual undertakings.
(SMITA DAS DE, J.)
bp.
