TaxTMI 
TaxTMI 
2024 (8) TMI 183
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....: (i) the action of Respondent No. 3 on 9th March 2023 of adjusting the refund of Rs.3,53,99,815/- for AY 2017-18, against demand for AY 2018-19, wherein stay applications were pending and without issuing any intimation to the Petitioner under Section 245 of the Income Tax Act, 1961; (ii) the action of Respondent No. 3 on 10th March 2023, of adjusting the refund of Rs.2,30,52,355/- and Rs.80,74,925/- for AY 2022-23, against stayed tax demand for AY 2018-19, wherein stay applications were pending and without issuing any intimation to the Petitioner under Section 245 of the Act; and (iii) the inaction of the Respondent No. 1 in disposing off the stay application and rectification application for AY 2018-19 and rectification application for AY 2017-18 and AY 2022-2023 filed by the Petitioner. (b) that this Hon'ble Court may be pleased to issue a Writ of Mandamus or a Writ in the nature of Mandamus, or any other appropriate Writ, order or direction under Article 226 of the Constitution of India, directing the Respondents to issue consequential refunds of Rs.3,53,99,815/- and Rs.2,30,52,355/- and Rs.80,74,925/- for AY 2017-18 and AY 2022-23 respective....
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....be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this sub-section. (2) Where a part of the refund is set off under the provisions of sub-section (1), or where no such amount is set off, and refund becomes due to a person, and the Assessing Officer, having regard to the fact that proceedings for assessment or reassessment are pending in the case of such person, is of the opinion that the grant of refund is likely to adversely affect the revenue, he may, for reasons to be recorded in writing and with the previous approval of the Principal Commissioner or the Commissioner, as the case may be, withhold the refund up to the date on which such assessment or reassessment is made." 9. As Section 245(1) shows, it is permissible for the Revenue to set off a refund that is found due against a demand but only after an intimation is given in writing to the person of the action proposed, i.e., the proposed set off or adjustment. Sub-section (2) of Section 45 was introduced by an amendment. It speaks of ....
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....the Petitioner for AY 2018-19, which is wholly erroneous, arbitrary and contrary to law and judicial precedents. Further, without considering that the issues are covered in favour of the Petitioner by the order passed by the Hon'ble Income Tax Appellate Tribunal (hereinafter referred to as "Tribunal") for the AY 2016-17 and 2017-18, it shows non-application of mind, which is wholly erroneous, arbitrary and contrary to law. Hereto annexed and marked as Exhibit "A" and "B" is a screenshot of the TIN NSDL website and corresponding challan status as per OLTAS reflecting the status of the income tax refund for AY 2017- 18 as adjusted against the demand for AY 2018-19; (b) On 10 March 2023, Respondent No 3 adjusted the refunds of Rs.2,30,52,355/- and Rs.80,74,925/- for AY 2022-23 against the demands for AY 2018-19 without issuing any intimation to the Petitioner under section 245 of the Act and without disposing off the stay application dated 23 September 2021 and letter dated 9 November 2022 filed by the Petitioner for AY 2018-19 which is wholly erroneous, arbitrary and contrary to law and judicial precedents. Further, without considering that the issues are covered in....
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....n were pending disposal. 23. Similarly, Respondent No 3, on 10 March 2023, without issuing any intimation under Section 245 of the Act and contrary to the record and law, and without complying with the procedure under Section 245 of the Act, wrongfully adjusted the refunds for AY 2022-23 amounting to Rs.3,11,27,280/- (refund determined in the intimation issued under section 143(1) of Rs.3,18,77,915/- less Taxes Deducted at Source of Rs.7,50,635/- on interest) entirely against the demand including interest under section 220 of he Act for AY 2018-19 (wherein the issues are entirely covered in favour of the Petitioner by the order passed by the Hon'ble Tribunal in earlier AYs and the stay application were pending disposal)." 19. Reliance is placed by the Petitioners on the following authorities: Jet Privilege (P) Ltd v Deputy Commissioner of Income Tax- 5(2)(1), Mumbai, (2021) 131 taxmann.com 119; 2021 SCC OnLine Bom 1799 decided by a Division Bench of this Court and Hindustan Unilever Ltd v Deputy Commissioner of Income Tax- 1(1), (2015) 60 taxmann.com 326; 2015 SCC OnLine Bom 6006 also decided by a Division Bench of this Court. 20. In Hindustan Unilever Ltd, the Divis....
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....it and must record reason why the objection is not sustainable and also communicate it to the party. This before or at the time of adjusting the refund. This alone would ensure that that the power of adjustment under Section 245 of the Act is not exercised arbitrarily. Such a procedure would cause no prejudice to the revenue as the occasion to grant the refund would not arise till the objection to the intimation is disposed of. Of course the objections should be disposed of expeditiously as undue delay in granting of refund would cause prejudice to the party entitled to the refund. 24. The Delhi High Court in the case of Maruti Suzuki India Ltd. (supra) had an occasion to deal with a similar contention as is being raised by the Revenue in the present case namely the recovery of tax cannot and would not include adjustment under Section 245 of the Act and the stay of recovery under Section 220(6) of the Act would not fetter the rights of the Revenue to adjust the demands out of refund due to the assessee. This submission was negatived by the Delhi High Court holding that recovery could be made by various modes including adjustment under Section 245 of the Act. The Delhi High....
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....d not really matter because 20% has been deposited and respondents have accepted the same. The stay for both A.Y. 2015-16 and 2016-17 have to be in force. 5. Mr. Pardiwalla submitted that before any adjustment is made, it is mandatory to give intimation under Section 245 of the Act to the person to whom the refund is due of the proposed action. In this case, admittedly, and we say admittedly because the affidavit in reply/additional affidavit filed by respondent confirms that the intimation under Section 245 of the Act was given only on 13th May, 2020. At this point, if one refers to Form 26 AS which is the annaul tax statement under Section 203 (AA) of the Act for the A.Y. 2015-16 and for A.Y. 2016-17, adjustment against the refund due has been made on 5th May, 2020, whereas the mandatory notice under Section 245 of the Act has been given only on 13th May, 2020. Mr. Pardiwalla submits that it is settled law that failure to comply with this mandatory requirement of prior intimation would make the entire adjustment as wholly illegal and therefore, respondent could not have made the adjustment as they wanted to. Mr. Pardiwalla also submitted in any event, petitioner having d....
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....funded. It can be neither simultaneous nor subsequent. We find support for this view in Suresh B. Jain v. A.N. Shaikh, Sixteenth Income-tax Officer [1986] 28 Taxman 321 [1987] 165 ITR 151 (Bom.), confirmed by the Division Bench of this court in A.N. Shaikh, Sixteenth Income-tax Officer v. Suresh B. Jain [1986] 29 Taxman 191 [1987] 165 ITR 86 (Bom.) and in Hindustan Unilever Limited v. Deputy Commissioner of Income-tax-1 [2015] 60 taxmann.com 326/233 Taxman 353/377 ITR 281 (Bom.) relied upon by Mr. Pardiwalla. 9. The fact that respondent has not followed the mandatory prior requirement of intimation under Section 245 of the Act would make the adjustment wholly illegal and therefore, respondent was clearly in error in not refunding the amount. 10. As per the Office Memorandum [F. No. 404/72/93 - ITCC] issued dated 29th February, 2016, amended by another Office Memorandum dated 25th August, 2017 the assessing officer shall grant stay of demand where the outstanding demand is disputed on assessee paying 20% of the disputed demand. Admittedly, petitioner has filed an appeal disputing the outstanding demand for A.Y. 2015-16 and A.Y. 2016-17 and have deposited 20% of the....