Justice Dinesh Mehta, Justice Rajneesh Kumar Gupta, Delhi High Court
“Grim Picture Of IT Dept": Delhi High Court Orders ₹53 Cr Refund To Vodafone Idea, Says Form 26B Inapplicable Post-Assessment
|The Bench noted that the Revenue cannot compel taxpayers to file Form 26B or withhold refunds without a valid order under Section 245 of the IT Act.
The Delhi High Court sharply criticizing the Income Tax Department for its procedural resistance and persistent delay in disbursing lawful refunds to taxpayers, has observed that delaying a ₹53.09 Crore refund for over a decade portrays a "grim picture" of the Income Tax Department, holding that the Revenue cannot compel taxpayers to file Form 26B or withhold refunds without a valid order under Section 245 of the Income Tax Act, 1961.
The Bench affirmed that once an assessment under Section 201 of the Income Tax Act, 1961 is finalized or an appellate order is passed, the assessee’s right to receive the refund along with interest crystallizes.
A Division Bench comprising Justice Dinesh Mehta and Justice Rajneesh Kumar Gupta observed, “The case in hands portrays a grim picture of the state of affairs prevailing in the Department so far as issues relating to refund is concerned. The amount relating to the petitioner for AYs 2003-04, 2008-09, 2009-10, 2010-11, 2011-12, 2012-13 and 2013-14 is still lying with the Department after 10 years of legal battle which it had won before the Tribunal in June 2024. The petitioner’s plight does not end here. After having won the legal battle before the Tribunal, though the AO found an amount of Rs.53,09,56,470/- refundable to the petitioner in October 2024 & May 2026 but has still not remitted the amount. This time the AO took refuge of Form 26B and purported outstanding demand of petitioner’s sister TANs to the tune of Rs.10,91,08,277/-“.
Senior Advocate Sachit Jolly appeared for the petitioner and Indruj Singh Rai, SSC appeared for the respondent.
The case arose from a batch of writ petitions filed by Vodafone Idea Limited seeking directions for the immediate release of ₹53,09,56,470/- in pending refunds with statutory interest for Assessment Years 2003–04 and 2008–09 to 2013–14.
Despite the Income Tax Appellate Tribunal (ITAT) ruling in favor of the telecom operator between April 2024 and February 2025, and the Assessing Officer issuing corresponding Appeal Effect Orders, the Department withheld the money. The Revenue sought to justify its inaction by demanding Form 26B and citing an unstayed demand of approximately ₹10.91 Crore across sister TANs under the CPC Standard Operating Procedure dated March 23, 2023.
Holding that Section 200A and Section 201 operate in entirely distinct fields, the Court clarified that Section 200A, Rule 31A, and Form 26B apply solely to pre-assessment adjustments of Tax Deducted at Source at the CPC level. Once a formal assessment under Section 201 is completed or an appellate order is passed, neither Rule 31A nor Form 26B can be imposed on the taxpayer. The Bench emphasized that the Department cannot unilaterally set off or retain refund amounts without passing a reasoned order under Section 245 of the Act.
The Court allowed the writ petitions and directed the Income Tax Department to credit the full amount of ₹53,09,56,470/- alongside applicable interest under Sections 244A and 244A(1A) to Vodafone Idea on or before September 30, 2026. The Court warned that failure to meet this deadline will attract an additional penal interest of 1% per month over and above the statutory interest rate.
Cause Title: Vodafone Idea Limited Successor Of Vodafone Mobile Services Limited (VMSL) Which Merged With Idea Cellular Limited (ICL) And Is Now Known As Vodafone Idea Limited Represented Through Its Authorized Representative Aditya Aggarwal v. Assistant Commissioner of Income Tax Circle 78(1) New Delhi & Anr. (Neutral Citation: 2026:DHC:6989-DB)
Appearances:
Petitioner: Sachit Jolly, Sr. Adv., Soumya Singh, Abhyudaya Shankar Bajpai, and Ms. Ananya Kapoor, Advocates.
Respondents: Indruj Singh Rai, SSC, Sanjeev Menon, Rahul Singh, Priya Sarkar, JSCs, Gaurav Kumar, Prateek Bhati, Advocates and Sanjula Halder, DCIT.