Refund adjustment against unenforceable tax demand quashed where no assessment order or demand notice was served.

Where no assessment order or demand notice was available and served, a tax demand shown only on the portal could not be treated as legally enforceable. The court held that, in the absence of a valid assessment order and service of demand notice, the consequential adjustment of refund had no legal foundation. The intimations issued under section 245 of the Income-tax Act were therefore quashed, the outstanding demand entry was directed to be deleted, and the amount adjusted from the refund was ordered to be returned with applicable interest.

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Issues: Whether, in the absence of an available and served assessment order and demand notice, the reflected tax demand and the consequential adjustment of refund could be sustained, and whether the impugned intimations under section 245 of the Income-tax Act, 1961 were liable to be quashed.

Analysis: The assessment records did not disclose a copy of the assessment order with the Assessing Officer, and therefore there could be no question of service on the assessee. In the absence of an assessment order and demand notice, a demand reflected only on the portal could not acquire legal enforceability. The consequential adjustment of refund, made against such non-existent enforceable demand, also lacked legal foundation.

Conclusion: The intimations issued under section 245 were illegal and were quashed. The outstanding demand entry was directed to be deleted, and the amount adjusted from refund was ordered to be returned with applicable interest.

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