AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2009 (2) TMI 133
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....4.12.1998, before the respondent claiming the benefit of the Scheme in respect of an amount of Rs.26,82,606/- due as interest from the petitioner as per Exhibit P1 assessment order. Pursuant thereto, Exhibit P3 order dated 5.2.1999 was passed, whereby the petitioner was given benefit under the Scheme amounting to only fifty percent of Rs.12,29,969/-. This Rs.12,29,969/- was arrived at by the respondent after adjusting the refund of Rs.22,00,000/- due to the petitioner in respect of subsequent assessment years. That adjustment of refund was made under Section 245 of the Income Tax Act, by Exhibit P5 and similar orders dated 7.9.1998. Against those orders, the petitioner filed revision dated 26.11.1998 before the respondent herein, which is Exhibit P4. It was at a time when Exhibit P4 was pending, the petitioner has filed this original petition challenging both the adjustment of the refund due to him under Section 245 as also Exhibit P3 order under the Kar Vivad Samadhan Scheme, in which, for computing the amounts due from the petitioner, the refunds due to the petitioner had been deducted to arrive at the tax arrears on which only the benefit under the Scheme was computed, which is ....
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.... against tax due and also in support of the contention that such invalid adjustment of refund could not have been taken into account for the purpose of determining the amounts payable by the petitioner pursuant to Kar Vivad Samadhan Scheme: Hiralal and Sons v. Income-tax Officer [1985] 156 ITR 30 (All.), J. K. Industries Ltd. v. CIT [1999] 238 ITR 820 (Cal.) and, Japson Estates (P) Ltd. v. Deputy CIT [(2006) 285 ITR (AP) 40 (AP). 4. The prayers of the petitioner in the original petition are stoutly opposed by the respondent. According to the Revenue, the petitioner cannot after having suffered Exhibit P3 order now contend that he must be permitted to retract from the declaration filed under the Kar Vivad Samadhan Scheme and permitted to pursue the appeal pending before the Tribunal in respect of the assessment in question in view of the specific provisions in Section 90(4) of the Kar Vivad Samadhan Scheme. 5. Regarding the second contention, the Revenue would contend that the petitioner had in fact been put on notice regarding the adjustment of refund by a specific intimation given to the petitioner, which has been produced by the petitioner as Exhibit P5. According to the....
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....declaration under section 88, the designated authority shall, by order, determine the amount payable by the declarant in accordance with the provisions of this Scheme and grant a certificate in such form as may be prescribed to the declarant setting forth therein the particulars of the tax arrear and the sum payable after such determination towards full and final settlement of tax arrears: Provided that where any material particular furnished in the declaration is found to be false, by the designated authority at any stage, it shall be presumed as if the declaration was never made and all the consequences under the direct tax enactment or indirect tax enactment under which the proceedings against the declarant are or were pending shall be deemed to have been revived: Provided further that the designated authority may amend the certificate for reasons to be recorded in writing. (2) The declarant shall pay the sum determined by the designated authority within thirty days of the passing of an order by the designated authority and intimate the fact of such payment to the designated authority along with proof thereof and the designated authority shall thereupon issue the certificate ....
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.... Scheme. Further the petitioner filed Exhibit P2 declaration dated 24.12.1998 after being made aware of the adjustment of refund by Exhibit P5 dated 7.9.1998 served on the petitioner on 24.9.98. Therefore, there is no merit in the first contention of the petitioner and I hold that the petitioner cannot retract from the declaration made under the Kar Vivad Samadhan Scheme once the order under the Scheme is passed by the competent authority, which in this case is Exhibit P3. 10. Regarding the second contention, I find considerable merit in the contention of the petitioner that adjustment of refund under Section 245 could not have been made without first issuing a notice to the petitioner. Section 245 of the Income Tax Act reads thus: "245. Set off of refunds against tax remaining payable.- Where under any of the provisions of this Act, a refund is found to be due to any person, the Assessing Officer, Deputy Commissioner (Appeals), Commissioner (Appeals) or Chief Commissioner or Commissioner, as the case may be, may in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the pe....
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....t fall for my consideration. But quite clearly the Revenue has no jurisdiction to make an adjustment of a refund without following section 245 and without giving a prior intimation to the assessee as required by that section. Each assessment year for each assessee is generally kept separate in the Act. The assessee has no right to club together assessment years. The Revenue also has no general right to dissect an assessment year into more than one period of time or agglomerate assessment years as they please. Since section 245 is a special right of set off given to the Revenue as a departure from the general rule of keeping assessment years and rights and liabilities in regard thereto separate and isolated, it is essential that the section be followed in letter and spirit. The wording of the section is so celar that its letter and its spirit speak the same way." 14. These decisions have been referred to and agreed with in Japson Estates' case [(2006) 285 ITR 40 (AP). In fact the facts in Japson Estates' case [(2006) 285 ITR 40 (AP), are very identical to the facts of this case, wherein paragraphs 8 to 10 it is stated thus (page 44) : '8. In this case, at the footnote of the inti....
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.... of the petitioner, the petitioner should succeed in this original petition. However, still I have to consider the other contentions raised by the Revenue in respect of the adjustment of refund. As I have pointed out, the counsel for the Revenue argues that since the adjustment itself has been made the subject matter of a revision under Section 264 of the Income Tax Act, which has been repelled by the revisional authority by Exhibit R(B) order, the petitioner having not challenged that order, cannot now raise a contention that the adjustment is bad. The Revenue also points out that the contention of the petitioner is a pure technicality in so far as even now, the petitioner cannot now point out any valid objection as to why that refund cannot be adjusted against tax due for other assessment years, which is a statutory right of the Revenue under Section 245. The counsel for the petitioner would submit that if he had been given a notice regarding the proposed adjustment, he could have pointed out that since the appeal is pending, adjustment should not be made and also that in view of the benefits available to him under the Kar Vivad Samadhan Scheme, such adjustment cannot be ma....