Facts of the Case

The petitioner, Landmark Property Development Co. Ltd., approached the Delhi High Court seeking credit of advance tax that had been paid under the PAN of its predecessor entity but was required to be given credit in the hands of the petitioner pursuant to a demerger. Due to technical limitations in the Income Tax Department’s systems, partial credit of the advance tax challan paid under a different PAN could not be given automatically, resulting in an outstanding demand and consequential issues on the CPC portal.

On an earlier date of hearing, the Court granted time to the Revenue to ensure resolution of the grievance raised by the petitioner.

Issues Involved

Whether the Income Tax Department is required to grant credit of advance tax paid under the PAN of a predecessor entity to the demerged entity, whether such credit can be granted manually where system limitations prevent automated adjustment, and whether the demand reflected on the CPC portal should be stayed to prevent adjustment of future refunds.

Petitioner’s Arguments

The petitioner contended that advance tax had been duly paid, albeit under the PAN of the predecessor entity, and denial of credit in the hands of the petitioner was purely on account of technical limitations of the Department’s system. It was argued that the petitioner could not be prejudiced for no fault of its own and that the demand and consequential adjustments required immediate rectification.

Respondent’s Arguments

The Revenue placed on record an email dated 15.09.2025 from the Deputy Commissioner of Income Tax, Central Circle-01, stating that the Systems Directorate had expressed its inability to allow partial credit of advance tax paid under a different PAN. It was submitted that the issue was proposed to be handled manually.

The Revenue further informed the Court that a proposal had been submitted to the Chief Commissioner of Income Tax (Central), New Delhi seeking approval for issuance of a paper refund by manually giving credit of the advance tax. It was also proposed to mark the demand as “stayed” on the CPC portal to avoid automatic adjustment of future refunds. The Revenue sought about two weeks’ time to resolve the issue.

Court Order / Findings

The Delhi High Court took on record the stand of the Revenue as reflected in the email dated 15.09.2025. The Court noted that the proposal for issuance of a paper refund by manually granting credit of advance tax paid under a different PAN was already under consideration of the Chief Commissioner of Income Tax (Central), New Delhi.

Accepting the Revenue’s request, the Court disposed of the writ petition by directing the respondent to take follow-up action and suitably settle the issue within an outer limit of three weeks.

Important Clarification

The Court clarified that if the Revenue fails to take appropriate action within the stipulated period of three weeks, liberty would remain with the petitioner to seek revival of the writ petition.

Final Outcome

The writ petition was disposed of. The Delhi High Court directed the Income Tax Department to resolve the issue of advance tax credit by taking follow-up action within three weeks, including issuance of a manual paper refund and appropriate handling of the demand on the CPC portal. Liberty was granted to the petitioner to revive the petition in case of non-compliance. Pending applications, if any, were dismissed as infructuous.

Link to download order- https://www.mytaxexpert.co.in/uploads/1769682102_LANDMARKPROPERTYDEVELOPMENTCOLTDVsDEPUTYCOMMISSIONEROFINCOMETAXCENTRALCIRCLE1.pdf

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