- 1 - HC-KAR NC: 2025:KHC:54223 WP No. 33909 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 18TH DAY OF DECEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR WRIT PETITION NO. 33909 OF 2025 (T-IT) BETWEEN: ALTISOURCE BUSINESS SOLUTIONS PRIVATE LIMITED, C/O ALTISOURCE BUSINESS SOLUTIONS PRIVATE LIMITED, VAISHNAVI TECH PARK, GROUND FLOOR, TOWER C, OUTER RING ROAD, BELLANDUR, BANGALORE, BENGALURU, KARNATAKA, INDIA-560 103. PAN AAAC09467A REP. BY SOMNATH MITRA, DIRECTOR, REGISTERED UNDER THE COMPANIES ACT 1956. …PETITIONER (BY SRI VISHWANATH K, ADVOCATE) AND: 1. CENTRALIZED PROCESSING CENTRE, BENGALURU, INCOME TAX DEPARTMENT, BENGALURU-560 500. 2. DIRECTOR GENERAL OF INCOME TAX (SYSTEMS), POST BOX NO.2, ELECTRONIC CITY POST, BENGALURU-560 500. 3. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1(1)(1), BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, BENGALURU-560 095. 4. THE DEPUTY COMMISSIONER OF INCOME TAX, DCIT/ACIT CIRCLE 1(1)(1), BMTC BUILDING, 80 FEET ROAD, 6TH BLOCK, NEAR KHB GAMES VILLAGE, KORAMANGALA, Digitally signed by NANDINI R Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:54223 WP No. 33909 of 2025 BENGALURU-560 095. …RESPONDENTS (BY SRI ARAVIND V CHAVAN, ADVOCATE FOR R-1 & R-2; SRI M DILIP, ADVOCATE FOR R-3 & R-4) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING FOR I) QUASHING OR SETTING ASIDE THE IMPUGNED NOTICE OR INTIMATION HAVING (DIN) CPC/1415/G8A/538571969 DATED 24.04.2025 PASSED OR ISSUED BY THE 1ST RESPONDENT UNDER SECTION 245 OF THE INCOME TAX ACT, 1961 FOR THE AY 2014-15 (ANNEXURE-A) ETC. THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR ORAL ORDER 1. In this petition, the petitioner seeks the following reliefs: "WHEREFORE, the petitioner, most humbly and respectfully prays that this Hon'ble Court may be pleased to issue writ, order or directions: i). Quashing or setting aside the impugned notice or intimation having (DIN) CPC/1415/G8a/538571969 dated 24.04.2025 passed or issued by the 1st Respondent under Section 245 of the Income Tax Act, 1961 for the AY 2014-15 (Annexure-A); ii) Directing the 1st/3rd/4th Respondent to forthwith grant refund of Rs.52,44,682/- being the amount illegally adjusted / recovered in excess of 20% of demand for AY 2020-21 vide challans dated 05.06.2025 (Annexure-B) along with applicable interest thereon and grant refund of Rs.3,19,30,033/- being the amount illegally adjusted/recovered in excess of 20% of demand for AY 2021-22 vide challans dated 05.06.2025 (Annexure-B) along with applicable interest thereon; - 3 - HC-KAR NC: 2025:KHC:54223 WP No. 33909 of 2025 iii) Directing the respondents not to enforce or initiate or pursue any proceedings for recovery or adjustment of the balance demand of tax and interest for the AY 2020-21 and AY 2021-22 arising from final assessment order no. ITBA/ AST/ S/ 143(3)/2024-25/1066952726(1) dated 23.07.2024 and assessment order no. ITBA/AST/S/143(3)/2024- 25/1069955817(1) dated 25.10.2024 (Annexure-C and D) which is pending for disposal before Hon'ble ITAT vide Ack no. 1726862449 for IT(TP)A No.1843 and Ack no. 1800005150 for ITTPA No. 2473/Bang/2024 respectively (Annexure E) and for a period of three weeks thereafter; and iv) Pass or grant such other order or directions as this Hon'ble Court may deemed fit in the facts and circumstances of the case in the interest of justice and equity. 2. Heard learned Counsel for the petitioner and learned counsel for the respondents and perused the material on record. 3. A perusal of the material on record will indicate that pursuant to the refund granted/sanction in favour of the petitioner for the assessment year 2014-15. Subsequently, the Respondents passed final assessment orders for the Assessment years 2020-2021 and 2021-2022 against the petitioner and raised demands which were challenged by - 4 - HC-KAR NC: 2025:KHC:54223 WP No. 33909 of 2025 the petitioner before the appellate authority by depositing 20% of the disputed tax pursuant to the assessment order. 4. It is the grievance of the petitioner that though the petitioner had deposited 20% of the disputed tax at the time of filing the appeal before the appellate authority and the said appeal is pending adjudication as on today, the respondents have proceeded to adjust the refund payable in favour of the petitioner without taking into account the 20% deposit already made by the petitioner and declined to grant refund in favour of the petitioner who is before this Court by way of the present petition. He has placed reliance upon the judgment of this Court in M/S. Price Waterhouse, Bangalore vs. National Faceless appeal centre, Delhi and others in W.P.No.23784/2024. 5. Per contra, learned counsel for the respondents submits that there is no merit in the petition and the same is liable to be dismissed. - 5 - HC-KAR NC: 2025:KHC:54223 WP No. 33909 of 2025 6. A perusal of the material on record will indicate that subsequent to sanctioning/granting refund in favour of the petitioner for the assessment year 2014-2015, the petitioner has also deposited 20% of the disputed tax amount at the time of filing an appeal which are pending before the appellate authority for the assessment years 2020-2021 and 2021-2022. Under identical circumstances in M/s.Price Waterhouse, Bangalore case supra, this Court held as under: “In this petition, the petitioner seeks the following relief's: “(i) Directing the 3rd Respondent to forthwith refund Rs.21,08,91,940/-, being demand recovered in excess of 20% of the demand raised for the assessment year 2012-13, along with applicable interest; (ii) Directing the 1st / 2nd Respondent to dispose of the appeal pending before it for the assessment year 2012-13 in Appeal No.CIT(A), Bengaluru-1/10224/2015-16 (old appeal No.9/10002/2017-18 (Manual Appeal Register No.:40/BU/2015-16)) (Annexure0B dated 29.04.2015 in a time bound manner, expeditiously; (iii) Directing the Respondents not to enforce the balance demand raised vide demand notice dated 31.03.2015 (Annexure-A2) until disposal of the appeal by the 1st / 2nd Respondent and for a period of three weeks thereafter; and - 6 - HC-KAR NC: 2025:KHC:54223 WP No. 33909 of 2025 (iv) Pass such other or further orders as this Hon’ble Court may deem fit in the facts and circumstances of the case, in the interests of justice and equity.” 2. Heard the learned Senior Counsel appearing for the petitioner and the learned counsel appearing for the respondents and perused the material available on record. 3. In addition to reiterating the various contentions urged in the petition and referring to the material available on record, the learned Senior Counsel for the petitioner submitted that aggrieved by the demand notice dated 31.03.2015 issued by respondent No.3 in relation to the assessment year 2012-13, the petitioner filed an appeal before respondent No.1 on 29.04.2015. In addition thereto, the petitioner filed stay applications before respondent No.3 seeking stay of the demand raised for the assessment year 2012-13 and the said applications were filed on 05.05.2015, 18.05.2015, 12.06.2015, 30.11.2016. On 05.10.2017, the petitioner filed written submissions and application for additional evidence and the proceedings before respondent No.1 are still pending adjudication. It is submitted that though the petitioner would be - 7 - HC-KAR NC: 2025:KHC:54223 WP No. 33909 of 2025 liable to pay only 20% by way of pre-deposit for the purpose of stay before the Appellate Authority in terms of the Circular dated 31.07.2017 and the petitioner would be entitled to refund of all the amounts payable to him in excess of the aforesaid 20%, the respondents have proceeded to adjust the amounts in excess of 20%, which is the maximum of amount of pre-deposit to be made by the petitioner, who is before this Court seeking direction for refund of the amounts adjusted in excess of 20% and for direction to the Appellate Authority to dispose of the appeals as expeditiously as possible. 4. In support of his submissions, the learned Senior Counsel appearing for the petitioner placed reliance on the judgment of this Court in the case of Pan Synthetics Private Limited and Centralized Processing Centre and others –W.P.No.9835/2024 dated 23.07.2024 as well as the Office Memorandum dated 31.07.2017 issued under Section 220 of the Income Tax Act, 1961. 5. Per contra, learned counsel appearing for the respondents submits that respondent No.1 would take up the appeals and dispose of the same as expeditiously as possible. - 8 - HC-KAR NC: 2025:KHC:54223 WP No. 33909 of 2025 6. A perusal of the material available on record will indicate that it is an undisputed fact that the petitioner filed an appeal on 29.04.2015 and multiple stay applications were also filed by him between 05.05.2015 and 30.11.2016 and the petitioner is making earnest efforts to get the appeals as well as the stay applications disposed of. In this context, perusal of the Circular/Office Memorandum dated 31.07.2017 will indicate that in the event, the petitioner deposits 20% by way of pre-deposit, there shall be stay of demand till disposal of the appeal by the Appellate Authority. However, in the instant case, despite the petitioner having filed the appeal as long back as in the year 2015 and multiple stay applications between 2015 to 2016, the Assessing Officer has neither passed any orders on the stay applications nor as the Appellate Authority disposed of the appeals. On the other hand, the respondents have proceeded to adjust the refunds payable to the petitioner in excess of maximum 20%, which is clearly impermissible in law, particularly, having regard to the office memorandum dated 31.07.2017 and the judgment of this Court in W.P.No.9835/2024 dated 23.07.2024 referred supra wherein it is held as under: - 9 - HC-KAR NC: 2025:KHC:54223 WP No. 33909 of 2025 ORAL ORDER The petitioner has sought for directions to the respondents to refund an amount of Rs.1,99,98,090/- being the demand raised for the assessment year 2015-16 and 2016-17 which is stated to have been adjusted as against the refund due for the assessment year 2023-24. 2. It is the case of the petitioner that for the assessment year 2016-17, the third respondent has passed an assessment order and raised a demand on 26.05.2023, and for the assessment year 2015-16, the third respondent has passed an assessment order and raised the demand on 30.05.2023. 3. Aggrieved by such orders, appeals were filed before the Commissioner of Income Tax and the petitioner had filed an application seeking for stay of the demand for the assessment year 2015-16 as per Annexure-M and similar application was filed seeking stay of demand for the Assessment Year 2016-17 at Annexure-N. Petitioner submits that in terms of Annexure-P as against outstanding demand noticing that refund was granted upon processing the return for the assessment year 2023-24 and determination of refund of Rs.1,99,98,090/-, the said refund was adjusted for the demand as regards the assessment year 2015-16 and 2016-17. 4. It is the contention of the petitioner that the entirety of refund was adjusted and in light of their application for stay, if the demand for 2015- 16 and 2016-17 is stayed, the question of adjustment of entirety of refund would not arise. 5. It is noticed that the assessment order for the year 2015-16 was passed on 16.02.2024 and for the year 2016-17 was passed on 26.05.2023. 6. It is not in dispute that the application for stay was filed on 11.01.2024 as regards assessment year 2015-16 and on the same date i.e., on - 10 - HC-KAR NC: 2025:KHC:54223 WP No. 33909 of 2025 11.01.2024 application for stay was filed as regards the assessment year 2016-17. As on the date of filing of the application for stay, the petitioner had the benefit of order of refund for the year 2023-24. If as on the date of filing the application for stay dated 11.01.2024, if the petitioner had made payment of 20% remaining 80% would have been stayed. 7. In light of adjustment at Annexure-P, only manner of moulding the relief would be adjustment of refund to an extent of 20% of the demand for the year 2015-16 and 2016-17. Once adjusted, the remaining amount of 80% of refund adjusted towards demand requires to be reversed by crediting the same to the petitioner. Accordingly, the third respondent is directed to refund the amount of 80% of the demand for the assessment year 2015-16 and 2016-17 as already been adjusted. Such refund to be made within a period of eight weeks from today. 8. Accordingly the petition is disposed off. 7. In view of the aforesaid facts and circumstances, I am of the considered opinion that the respondents were clearly not justified in adjusting the refund amounts payable to the petitioner in excess of 20% and consequently, necessary directions have to be issued to the respondents to refund the entire amounts payable to the petitioner in excess of 20% of the demand for the assessment year 2012-13 within a stipulated time frame and by directing respondent No.1 to dispose of the appeals within a stipulated time frame. - 11 - HC-KAR NC: 2025:KHC:54223 WP No. 33909 of 2025 8. In the result, I pass the following: ORDER (i) The petition is hereby allowed. (ii) The concerned respondents are directed to refund the entire amount in excess of 20% of the demand raised for the assessment year 2012-13 together with the applicable interest back to the petitioner after due verification within a period of six weeks from the date of receipt of a copy of this order. (iii) The concerned respondent / Appellate Authority is directed to dispose of the appeal within a period of three months from the date of receipt of a copy of this order. (iv) Respondents are directed not to enforce the balance demand raised by any demand notice at Annexure-A2 dated 31.03.2015 till the expiry of period of three weeks after disposal of the appeal by the Appellate Authority. 7. It is an undisputed fact as borne out from the material on record that along with the appeal the petitioner has filed an application for stay of demand for - 12 - HC-KAR NC: 2025:KHC:54223 WP No. 33909 of 2025 the assessment years 2020-2021 and 2021-22 and the petitioner having deposited 20% of the disputed tax amount, in the light of the judgment of this Court in M/s. Price Waterhouse, Bangalore stated supra, I deem it just and appropriate to direct the respondents to refund the sums as sought for by the petitioner together with applicable interest within a stipulated time frame. 8. In the result the following: ORDER (i) The petition is allowed. (ii) Respondents are directed to refund sums of Rs.3,71,74,715/- for the assessment year 2014-2015 along with applicable interest subject to verification by the respondents within a period of 6 weeks from the date of receipt of copy of this order. Sd/- (S.R.KRISHNA KUMAR) JUDGE tsn* List No.: 2 Sl No.: 6