Facts of the Case

The Petitioner, Louis Dreyfus Company India Pvt. Ltd., filed the present writ petition seeking a direction to the Respondents to pass an order under Section 154 of the Income Tax Act, 1961 concerning Assessment Year 2012–13.

The Petitioner also sought:

  • Deletion of demand amounting to ₹35,66,808/-, and
  • Issuance of consequential refund/credit arising from non-adjustment of such demand.

The case arose from reassessment proceedings initiated under Section 147 of the Act, wherein:

  • The National Faceless Assessment Centre (NFAC) passed a reassessment order,
  • No addition was made to the returned income,
  • Yet, a demand of ₹35,66,808/- was raised.

The Petitioner contended that this demand resulted from:

  • Non-grant of interest on refund, and
  • Grant of lower withholding tax credit.

A rectification application under Section 154 was filed on 28 October 2021, but no decision was taken within the prescribed statutory period.

Issues Involved

  1. Whether the Respondents failed to comply with the statutory mandate under Section 154(8) of the Income Tax Act, 1961 by not disposing of the rectification application within six months.
  2. Whether the Petitioner is entitled to a direction for disposal of the rectification application and consequential refund.
  3. Whether delay in rectification justifies judicial intervention under writ jurisdiction.

Petitioner’s Arguments

  • The reassessment under Section 147 resulted in no addition, yet an unjustified demand was raised.
  • The demand arose due to apparent errors in computation, including:
    • Non-grant of interest on refund, and
    • Incorrect withholding tax credit.
  • A valid rectification application under Section 154 was filed on 28 October 2021.
  • As per Section 154(8), such application must be decided within six months, but more than eight months had elapsed without any response.

Respondent’s Arguments

  • The Respondents, represented by the Revenue, accepted notice.
  • No detailed counter-arguments were recorded in the order as the matter was disposed of at a preliminary stage considering the limited relief sought.

Court’s Findings / Order

The Delhi High Court disposed of the writ petition with the following directions:

  • Directed Respondent No. 1 to decide the rectification application filed under Section 154 for AY 2012–13.
  • Ordered that the decision be taken within six weeks.
  • Directed issuance of consequential refund along with applicable interest, if due.

Important Clarification by the Court

  • The Court explicitly clarified that it has not commented on the merits of the controversy.
  • All rights and contentions of the parties remain open.
  • The matter was listed for compliance review on a later date.

Sections Involved

  • Section 154 – Rectification of mistake apparent on record
  • Section 154(8) – Time limit for disposal of rectification application
  • Section 147 – Income escaping assessment (Reassessment proceedings)

 

  • Authorities are statutorily bound to dispose of rectification applications within prescribed timelines.
  • Failure to act within time invites judicial intervention under writ jurisdiction.
  • Even where no addition is made in reassessment, erroneous demand due to computational mistakes must be rectified promptly.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:2769-DB/MMH22072022CW109762022_173411.pdf

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