TaxTMI 
TaxTMI 
TaxTMI 
2016 (6) TMI 217
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....n (Civil) No. 10895 of 2015 in a matter of grant of refund due to the deceased Assessee for the Assessment Year ('AY') 2006-07. 2. The deceased Assessee has filed his return for the AY 2006-07 on 31st July 2006 declaring taxable income of Rs. 25,64,290 which comprised income from salaries and income from other sources. The Assessee claimed tax exemption on long term capital gains with respect to sale of agricultural land. 3. The return was picked up for scrutiny and assessment order was passed by the Assessing Officer ('AO') on 30th December 2008 under Section 143 (3) of the Income Tax Act, 1961 ('Act') for AY 2006-07 assessing the total income of Rs. 8,28,42,803. The AO denied the exemption from capital gains as claimed by the Assessee i....
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....ed the Revenue's appeal against an order of the ITAT. Thereafter on 28th September 2015 the Petitioner sent a third reminder. It was explained that the Assessee had expired as a result of cancer and the Petitioner, his legal heir, was in urgent need of the refund along with statutory interest. 9. When no response forthcoming even thereafter, the Petitioner filed Writ Petition (Civil) No. 10985 of 2015 in this Court which came to be disposed by the following order on 15th December 2015: "The learned counsel for the Respondent informs us that the refund, consequent upon the appeal effect along with interest, in accordance with law, has been processed and the same shall be paid to the Petitioner within two weeks. In view of the statement m....
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.... amount 'to be adjusted' worked out to Rs. 36,34,267 which, according to the Petitioner, was in fact adjusted against the total refund amount resulting in the Petitioner being issued a demand draft only for a sum of Rs. 1,29,01,503. The Petitioner's contention is that such adjustment of demand pertaining to AY 2008-09, without prior intimation to the Petitioner or affording him an opportunity of being heard was in gross violation of Section 245 of the Act. Further, the Petitioner states that against the demand raised for AY 2008-09 by the AO, the Petitioner had already filed an appeal before the CIT (A) together with an application for stay which is still pending disposal by the CIT (A). 12. Mr. Piyush Kaushik, learned counsel for ....
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....ng of notice under Section 245 of the Act did not arise since the Revenue had not 'adjusted' any sum but merely withheld it pending verification. Mr. Manchanda stated that after notice was issued in the present petition on 27th January 2016, a notice under Section 245 of the Act was issued to the Petitioner on 21st March 2016 requiring the Petitioner to file a response within 15 days. He further submitted that after the Assessee submits his response thereto an order will be passed in a time-bound manner. 14. The above submissions have been considered. The mandate of Section 245 of the Act is clear. It states that where a refund is found to be due to any person, then in lieu of payment of the refund, it would be in the discretion of....
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....ized. If reasonable time limits are not set for the processing of and disposal of an application for refund by the Revenue, it may result in the Assessee not being able to get the refund at all. Also, the statute by stipulating the payment of interest on refunds (Section 244A) and interest on delayed refunds (Section 243) has underscored the importance of timely processing of refund claims. 28. As already noticed, this discretionary power has to be exercised after giving an opportunity to the Assessee of being heard preceded by an intimation to the Assessee in writing of the action proposed to be taken under Section 245. A further implicit requirement is that the Revenue will have to be satisfied that the Assessee will not be in a position....
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....al and the application are pending for disposal before the CIT (A). Therefore, it cannot be said that the withholding of the above amount was pending 'verification' of the demand for AY 2008-09 or AY 2010-11. 18. Incidentally the show cause now issued to the Assessee under Section 245 of the Act is dated 21st March 2016, i.e., two months after notice had been issued by this Court in the present petition. Whatever the demand may be for the AYs 2008-09 and 2010-11, the fact remains that prior making the adjustment of such demand against the refund due to the Petitioner, no notice was issued to the Petitioner as mandatorily required under Section 245 of the Act. By issuing a notice on 21st March 2016 under Section 245 of the Act, two months a....