AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (3) TMI 1014
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....9;the Act'). Writ Petition No.19243 of 2020 4. The petitioner had filed its Return of Income for the Assessment Year 2017-18 on 31.10.2017 by declaring an income of Rs. 2,75,64,380/- under normal provisions and Rs. 16,00,17,514/- under MAT provision and had paid a tax on MAT of Rs. 3,41,50,298/-. 5. An Assessment Order dt.23.12.2019 was passed by the Assistant Commissioner of Income Tax, Circle - 2(2), Hyderabad (1st respondent) making a total addition of Rs. 36,34,89,72/- to the income returned by the petitioner under the MAT provisions and raising a demand for tax of Rs. 8,01,57,967 under Section 156 of the Act. 6. Petitioner preferred an Appeal against it before the Commissioner of Income Tax (Appeals) and also filed an application seeking stay of the demand before the 1st respondent. 7. On 29.01.2020, the 1st respondent disposed of the stay application following CBDT Instruction No.1914 dt.02.02.1993 directing the petitioner to pay 20% of the disputed demand for grant of stay. The 1st respondent stated that stay will be granted on submission of challan for 20% of the demand raised for the Assessment Year 2017-18. 8. According to petitioner, oral discussion....
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....ear 2017-18 (Annexure A.8). 15. Petitioner filed a letter Ex.A.9 dt.15.06.2020 with the 1st respondent apprising the 1st respondent of these facts and protesting against the adjustment of the excessive refund against the outstanding demand for Assessment Year 2017-18 mentioning that there was no demand outstanding for Assessment Year 2008-09 and seeking that the excess amount adjusted to the tune of Rs. 1,06,06,740/- be refunded to it. The Assessment Order passed for Assessment Year 2008-09 and the challan evidencing payment of demand were also filed as Annexures A.10 and A.11. 16. Thereafter, the 1st respondent passed the order dt.23.07.2020 (Annexure A.12) acknowledging that petitioner had deposited a sum higher than 20% of the outstanding demand and granted stay of demand till the disposal of the Appeal by the CIT (Appeals). 17. Petitioner filed Annexure A.13 letter dt.07.08.2020 with the 1st respondent protesting against the entire actions of the respondents and complaining that the adjustment of refunds was unjust and contrary to law. 18. Petitioner therefore filed Writ Petition No.19243 of 2020 challenging the action of respondents in making such alleged unjust ad....
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....s a last resort, petitioner filed its grievance before the 1st respondent's on-line portal as well as by physical letters apprising the 1st respondent regarding the facts of the case and questioning how refunds have been adjusted against the demand which had already been stayed by 2nd respondent. The copy of online grievance filed with the e-Nivaran portal and the letter filed with the 1st respondent dt.10.09.2020 are attached herewith as Annexures A.17 and A.18, respectively. 26. In response to such grievance petition, the 1st respondent closed the grievance by stating that the demand details for the Assessment Year 2017-18 were uploaded by the 2nd respondent and stated their inability to assist in the matter. The e-mail dt.12.09.2020 is attached as Annexure A.19. 27. Thereafter, petitioner filed Writ Petition No.19259 of 2020 seeking refund of Rs. 6,25,70,390/- with interest. Contentions of petitioner 28. Petitioner contends : (a) in terms of the CBDT Instruction No.1914 r/w Office Memorandum and the 1st respondent's order dt.29.01.2020, the petitioner was mandated to only deposit a sum of 20% of the outstanding demand and therefore, the respondents c....
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....ndent nos.1 and 2 filed counter-affidavits in both Writ Petitions. 30. They admit that an intimation ought to be given to the assessee before making an adjustment of refund towards pending tax dues under Section 245 of the Act. 31. As regards Writ Petition No.19243 of 2020 is concerned, both respondents state that for Assessment Year 2017-18, the demand was collectible on 23.01.2020, and for Assessment Year 2008-09, it was collectible on 29.01.2020. 32. It is contended that the letter dt.29.01.2020 merely communicated the condition for consideration of the stay application for staying the demand for Assessment Year 2017-18 pending Appeal before the CIT (Appeals), but it is contended that the stay was granted only on 23.07.2020 and in the meantime the refund due to the petitioner for 2018-19 was adjusted against the demands for Assessment Years 2008-09 and Assessment Year 2017-18 on 18.03.2020 and 22.07.2020, i.e., prior to the order of stay as they were marked as collectible in January, 2020 itself. 33. It is also stated that the petitioner had raised an objection in regard to demand for Assessment Year 2008-09 on 06.09.2017 itself contending that the demand had already....
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....r for Assessment Year 2018-19 of Rs. 1,86,38,333/- against the outstanding demand for Rs. 1,30,45,813/- for Assessment Year 2017-18 and for Rs. 55,92,520/-, the alleged outstanding demand for Assessment year 2008-09. Only thereafter under Annexure A.8 dt.13.05.2020, after such adjustment was made, intimation under Section 245 of the Act was issued to the petitioner. 41. A Division Bench of the Andhra Pradesh High Court in Japson Estates (P) Ltd. (1 supra) held that absence of prior intimation in terms of Section 245 of the Act deprives an assessee of the right to raise objections to the order of adjustment. It held that intimation allegedly given under Sec.143(1) of the Act that there has been an adjustment of refund cannot be valid because there ought to be an intimation of a proposed adjustment and not post-facto and that the assessee had no occasion to dispute it. It therefore quashed the intimation to the extent of adjusting the refund. 42. The Delhi High Court in Glaxo Smith Kline Asia P. Ltd. (2 supra) held that the pre-requisite for invoking Section 245 of the Act is giving of prior intimation in writing about the proposed adjustment of refund and that the revenue must....
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....n 31.1.2020 in part compliance of the condition of 20% deposit of the tax liability for Assessment Year 2017-18 ( 20% comes to Rs. Rs. 1,60,31,593/-); and the 1st respondent could not have adjusted Rs. 1,30,45,813/- out of total refund determined for Assessment Year 2018-19 of Rs. 1,86,38,333/- towards the outstanding demand for Assessment Year 2017-18 (as opposed to the agreed sum of Rs. 80,31,593/-) and Rs. 55,92,520 against an alleged outstanding demand for Assessment Year 2008-09. 47. We reject the plea of the respondents that demands for Assessment Year 2017-18 were collectible on 23.01.2020 and for Assessment Year 2008-09 was collectible on 29.01.2020, that the stay of collection of the demand for Assessment Year 2017 - 18 was granted only on 23.07.2020, and therefore, the adjustment made against the demands for Assessment Year 2008-09 and Assessment Year 2017-18 on 18.03.2020 and 22.07.2020 was prior to the order of grant of stay and so the adjustment was valid. 48. The dates of adjustments mentioned above i.e. 18.03.2020 and 22.07.2020 are factually incorrect and no documentary evidence in support thereof has been filed by the respondents. We may point out that Annexu....
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.... refrained from proceeding with the adjustment on 22.07.2020 for the demand for Assessment Year 2017-18. Also admittedly, there was no tax payable for Assessment Year 2008-09. 55. There was thus no occasion for making any such adjustment of the refund determined for Assessment Year 2018-19 and consequently we are of the opinion that out of the sum of Rs. 1,86,38,333/- which is the refund determined for that Assessment Year, after deducting Rs. 80,31,593/- (the 20% of Rs. 8,01,57,967 = Rs. 1,60,31,593/- less Rs. 80,00,000/-), a sum of Rs. 1,06,06,740/- is refundable to the petitioner with interest at 15% per annum from the date on which it was determined, i.e., 02.10.2019 till the date of payment of the same to the petitioner. 56. As regards W.P.No.19259 of 2020, the issue pertains to Assessment Year 2019-20 and is regarding the illegal adjustment of refunds arising for the said Assessment Year against the demands for Assessment Year 2017-18 when there was in subsistence a stay order of recovery granted by 2nd respondent on 23.07.2020. 57. In para-6 of the counter-affidavit of the 1st respondent and in para-7 of the counter-affidavit of 2nd respondent, it was wrongly stated....