Income Tax Recovery Without Supplying Assessment Order Is Illegal: Delhi High Court

The Delhi High Court has held that recovery of tax from an assessee without supplying the underlying assessment order is illegal and amounts to recovery without authority of law.

A Division Bench of Justices Dinesh Mehta and Vinod Kumar thus directed the Income Tax Department to refund Rs 11.14 lakh to Philco Exports Private Limited along with applicable interest.

The Court was hearing a writ petition filed by the exporter challenging the adjustment of ₹11,14,660 from its refunds for subsequent years towards an alleged outstanding demand for Assessment Year (AY) 2001–02.

Petitioner contended that despite repeated representations and applications under the Right to Information Act, the Department had failed to provide a copy of the assessment order or a demand notice under Section 156 of the Income Tax Act, 1961.

The department, on the other hand, claimed difficulty in tracing the assessment records for AY 2001–02 due to digitisation and the passage of time.

It was also contended that since the Petitioner had failed to change his address in the PAN database at the relevant time, the Department cannot now be blamed for the assessment order not being served.

The Court was however of the view,

“when the amount was recovered from the petitioner, and the petitioner had asked for copy of the assessment order, it was incumbent upon the respondents to have supplied him a copy of the assessment order, which the Department has failed to do. Recovery of the amount from the petitioner and not supplying copy of the order amounts to recovery without authority of law.”

Accordingly, the Court directed the Department to refund the amount to the Petitioner along with interest, on or before March 31, 2026.

However, it clarified that if the Department is able to trace and serve the assessment order raising the demand by that date, the refund would not be required to be made.

Case Title: Philco Exports Private Limited v. Assistant Commissioner Of Income Tax, & Ors.

Citation: 2026 LLBiz HC(DEL) 51

Case Number: W.P.(C) 12318/2021

For Petitioner: Advocates Somil Agarwal, Mr. Dushyant Agarwal, Advs.

For Respondents: Advocates Sunil Agarwal, SSC, Ms. Priya Sarkar, JSC, Mr. Anugrah Dwivedi, Adv.