Court orders Revenue to refund deceased Assessee's heir promptly, violating Income Tax Act; stay on recovery measures granted.

The court directed the Revenue to promptly issue the balance refund with interest to the deceased Assessee's legal heir, despite citing adjustments against demands for other assessment years. The court found the Revenue's actions to be in violation of Section 245 of the Income Tax Act, emphasizing the need for prior intimation before adjustment. Additionally, the CIT (A) was instructed to decide on the stay application related to the demand for another assessment year within a specified timeframe, prohibiting coercive recovery measures until the decision. Non-compliance with the court's directions would allow the Petitioner to seek redress from the court, with no costs imposed.

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Issues:
Non-compliance with court directions for refund to deceased Assessee's legal heir for AY 2006-07.

Analysis:
The deceased Assessee filed a return for AY 2006-07, claiming tax exemption on long term capital gains from the sale of agricultural land. The Assessing Officer passed an assessment order assessing total income at a higher amount, denying the claimed exemption. The Assessee's appeal was partly allowed by the CIT (A), and both parties appealed to the ITAT. The ITAT later allowed the Assessee's appeal, entitling the Assessee to a refund of the excess tax paid. Following the Assessee's death, the legal heir pursued the matter, requesting the refund with statutory interest. Despite court directions, the Revenue delayed the refund, citing adjustments against demands for other assessment years.

The legal heir contended that the adjustment without prior intimation or opportunity to be heard was a violation of Section 245 of the Income Tax Act. The court referenced previous judgments emphasizing the discretionary nature of set-off under Section 245, requiring intimation to the Assessee before adjustment. The Revenue's explanation of withholding pending verification was deemed unacceptable, especially since the demands were under appeal with a stay application. Issuing a notice under Section 245 after court notice did not rectify the violation.

Consequently, the court directed the Revenue to issue the balance refund with interest promptly, without delay. Additionally, the CIT (A) was instructed to decide on the stay application related to the demand for another assessment year within a specified timeframe. Coercive steps for recovery were prohibited until the CIT (A) decision. Any non-compliance with the court's directions allowed the Petitioner to seek redress from the court. The writ petition was disposed of accordingly, with no costs imposed.

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