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2012 (9) TMI 163 - HC - Income TaxDifficulties in receiving credit of Tax Deducted at Source - Held that:- Section 245 envisages prior intimation to the assessee so that he can respond before any adjustment of refund is made towards a “demand” relating to any other assessment year. Thus opportunity of response/reply is given and after considering the stand and plea of the assesse, an order/direction for adjustment when justified and proper is made. The section postulates and mandates a two stage action. Prior intimation, and then a subsequent action when warranted and necessary of adjustment, of the refund towards arrears - as accepted by department that when a return is processed under Section 143(1), the CPU itself adjusts the refund due against the existing demand i.e. there is adjustment, but without following the procedure prescribed under Section 245, which requires prior intimation so that the assessees can respond or give their explanation, thus interim direction to the respondents that they shall in future follow the procedure prescribed under Section 245 before making any adjustment of refund payable by the CPU at Bengaluru. The assessees must be given an opportunity to file response or reply and the reply will be considered and examined by the Assessing Officer before any direction for adjustment is made. Difficulties in getting refunds on account of adjustment towards arrears - Held that:- There can be small and insignificant mismatches, which if purely technical should be condoned or ignored. After all tax has been paid or credited in the name of the assessee. Once the amount is correctly and rightly reflected in Form AS26, small or technical mismatch in the return should not be a ground to deny credit of the amount paid, in such cases, if the AO feels that benefit of TDS reflected in AS26 should not be given, he should issue notice to the assessee to revise or correct the mistake and only if the necessary rectification or correction is not made, an order under Section 143(1) should be passed and the demand should be raised. We issue an interim direction to this effect. As in several cases refunds have been adjusted on account of the debit entry made under the head “modified”. These entries are made by the AO and thus the refund is reduced to nil or zero. Copies of two such adjustment orders have been shown, thus the said orders will be filed in the Registry and copies will be given to the counsel for the Revenue, who will take appropriate instructions on this aspect. It is stated that there are thousands of cases of similar nature. Learned counsel for the Revenue will obtain instructions whether directions can be issued to the AO to provide full details and particulars of the entries made under the head "modified". We may note that in these cases, processing has been done for the purpose of intimation under Section 143(1) of the Income Tax Act, 1961.
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