TMI Blog2021 (3) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... standing demand, and the petitioner deposited on 31.01.2020 ₹ 80,00,000/- and requested the 1st respondent to adjust the remainder of ₹ 80,31,593/- against the determined refund for Assessment Year 2018-19 vide letter dt.10.02.2020 (Annexure A.5). As per Office memorandum F.No.404/72/93-ITCC dt.29.2.2016 issued by the CBDT clarifying it's Instruction No.1914 dt.21.3.1996, the Assessing Officer can, while granting stay of the demand, reserve the right to adjust refunds arising, if any, against the demand, to the extent of amount required for granting stay subject to provisions of Sec.245. There is no dispute that the Office Memorandum is binding on both the respondents. 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. The dates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 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. - WRIT PETITION Nos. 19243 and 19259 of 2020 - - - Dated:- 22-1-2021 - HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO And HONOURABLE SRI JUSTICE T.AMARNATH GOUD FOR THE PETITIONER : G NARENDRA CHETTY FOR THE RESPONDENT : K MAMATA ORDER ( Per Hon'ble Sri Justice M. S. Ramachandra Rao ) Since common issues of law and fact arise for consideration and since both cases are filed by the same petitioner against theIncome Tax Department of the Union of India, they are being disposed of by this Common Order. 2. Heard Sri Deepak Chopra, Senior Counsel appearing for G. Narendra Chetty, counsel for petitioner, and Ms. Mamta Choudhary, Senior Standing Counsel for the Income Tax Department,for respondent nos.1 and 2 in both the Writ Petitions. 3. The petitioner is a limited Company and is engaged in the business of developing I.T. Parks in Hyderabad. It is an assessee under the Income Tax Act, 1961 (for short, 'the Act'). Writ Petition No.19243 of 2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st an alleged outstanding demand for Assessment Year 2008-09. Petitioner has annexed as Annexure A.6, copy of the refund status for Assessment Year 2018-19 evidencing adjustment of refund on 15.04.2020. 11. Thereafter, on 09.05.2020, the 2nd respondent issued a notice under Section 245 of the Act proposing to adjust the determined refund of Assessment Year 2019-20 against the outstanding demand for Assessment Year 2017-18 and Assessment Year 2008-09. 12. This notice is subject matter of Writ Petition No.19259 of 2020. 13. Petitioner contends that in the notice dt.09.05.2020, the 2nd respondent acknowledged that the outstanding demand for Assessment Year 2017-18 as on 09.05.2020 was ₹ 5,91,12,157/- [being ₹ 8,01,57,967 minus (₹ 80,00,000/- + ₹ 1,30,45,813/-)] indicating that the adjustment of excessive refund for Assessment Year 2018-19 had occurred on 15.04.2020. 14. Thereafter, on 13.05.2020, another notice under Section 245 of the Act was issued by the 2nd respondent proposing to adjust the refund (which had in fact already been adjusted) due to the petitioner for Assessment Year 2018-19 against the outstanding demands of Assessment Year 2008-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 019-20; and reiterating its objection to the adjustment of demand for Assessment Year 2017-18 against the refund for the Assessment Year 2019-20 as already stated in the 07.06.2020 on-line reply. 23. On 08.07.2020, an order Annexure A.11 under Section 143(1) of the Act was passed by the 1st respondent for the Assessment Year 2019-20 determining the refund due to the petitioner to the tune of ₹ 6,25,70,390/-; and simultaneously 1st respondent issued the impugned notice dt.08.07.2020 (Annexure A.1) under Section 245 of the Act proposing to again adjust the above mentioned determined refund against the outstanding demands for Assessment Years 2008- 09 and 2017-18 and asked the petitioner to file a response thereto in (30) days. 24. Even before the said period of 30 days period granted to the petitioner to respond to the said notice expired, the 1st respondent on 24.07.2020 itself adjusted the entire refund for Assessment Year 2019-20 against the remainder outstanding demand for Assessment Year 2017-18 including the principal amount of ₹ 5,91,12,157/- and interest of ₹ 34,58,233/- which is evidenced by the screen-shot (Annexure A.13) and extracts of Form 26AS of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand, is patently illegal; that in terms of Circulars issued by the CBDT, adjustment of refunds only to the extent of 20% is permitted, and the 2nd respondent had acted contrary to binding Circulars of the CBDT; that the said adjustment was made without issuing any notice under Section 245 prior to such adjustment, and a notice under Section 245 issued after such adjustment of refund, is also illegal; and consequently, the respondents ought to refund ₹ 1,06,06,740/- with interest in Writ Petition No.19243 of 2020; (e) the notice dt.08.07.2020 issued by the 1st respondent under Section 245 of the Act and the consequential adjustment of refunds due to the petitioner for Assessment Year 2019-20 against the outstanding demand for Assessment Year 2017-18, is illegal since recovery had already been stayed by the 2nd respondent post compliance of the 20% deposit as required; in any event there could not have been any adjustment even before the expiry of the 30 days period granted to petitioner to respond to the intimation under Section 245; and consequently, the respondents ought to refund ₹ 6,25,70,390/- with interest in Writ Petition No.19259 of 2020; The stand of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 2019-20 along with an intimation under Section 245 of adjustment of such refund against the demand outstanding for Assessment Year 2017-18 and the adjustment was made on 22.07.2020. The consideration by the Court: 38. We have noted the contentions of the respective parties. 39. Section 245 of the Income Tax Act states : 245. 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 Principal Chief Commissioner or Chief Commissioner or Principal 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 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 section. (emphasis supplied) 40. It is admitted in para no.8 of the counter-affidavit filed by respondent nos.1 in Writ Petition No.19243 of 2020 that intimation under Section 245 of the Act was not issued by oversight by the 1st respondent before adjusting on 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to adjust the remainder of ₹ 80,31,593/- against the determined refund for Assessment Year 2018-19 vide letter dt.10.02.2020 (Annexure A.5). 44. Even according to the respondents, there was no liability due for the Assessment Year 2008-09 since the assessee had objected on 06.09.2017 itself stating that the demand for the said Assessment Year had already been paid and proceedings were initiated for refund for Assessment Year 2008-09 on 22.06.2020 which was processed and allegedly issued on 09.12.2020. 45. We may also point out that as per Office memorandum F.No.404/72/93-ITCC dt.29.2.2016 issued by the CBDT clarifying it's Instruction No.1914 dt.21.3.1996, the Assessing Officer can, while granting stay of the demand, reserve the right to adjust refunds arising, if any, against the demand, to the extent of amount required for granting stay subject to provisions of Sec.245. There is no dispute that the Office Memorandum is binding on both the respondents. 46. So at best the 1st respondent could have adjusted a portion of the total refund due to the petitioner for the Assessment Year 2018-19 i.e., ₹ 80,31,593/- only as sought by the petitioner, since the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 55.92 lakhs. The respondents have to therefore release the balance refund of ₹ 1.13 lakhs also because there is no valid reason why a short refund was granted. 52. The respondents defence for not issuing Section 245 Intimation before making adjustment was that subsequently on 13.05.2020 such intimation was issued under Section 143(1) of the Act, but the said Intimation is not valid in law as held in Japson Estates Private Limited (1 supra). 53. The letter dt.29.01.2020 issued by the 1st respondent stated that in respect of Assessment Year 2017-18 petitioner was required to deposit 20% of the disputed demand in terms of CBDT instructions. In para-6 of the counter, the respondents state that this is only a communication and the actual stay was granted on 23.07.2020. We do not agree with the said plea because the said communication specifically states that the stay will be granted on payment of 20%, and on 30.01.2020 itself part payment was made of ₹ 80.00 lakhs with a request letter dt.10.2.2020 to adjust the balance of ₹ 80.31 lakhs from the determined refunds of Assessment Year 2018-19. 54. So the 1st respondent ought to have held that the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed as Annexure A.10 belie this stand of the respondents. The respondents therefore cannot contend that petitioner had not objected to the proposed adjustment indicated in the notice dt. 09.05.2020 issued under Sec.245 to the petitioner. 61. There is also no explanation forthcoming from the respondents why on 24.7.2020, even before the expiry of 30 days fixed under the second notice of intimation under Section 245 dt.8.7.2020, the adjustment was made without adverting to the objections filed on 7.6.2020 and 15.6.2020. In fact, petitioner filed his objection under Annexure A-15 on 29.07.2020 within the 30 day period required by the intimation dt.08.07.2020. Therefore the petitioner cannot be denied refund of ₹ 6,25,70,390/- for the Assessment Year 2019-20 with 15% interest thereon either. 62. Accordingly, both the Writ Petitions are allowed with costs of ₹ 5,000/- each; and the respondents are directed to refund a sum of ₹ 1,06,06,740/- and ₹ 6,25,70,390/-, after deducting a sum of ₹ 54.78 lakhs which is refunded already to the petitioner, with interest at 15% p.a. from the dates of adjustment of the said amounts till the date of payment within ..... X X X X Extracts X X X X X X X X Extracts X X X X
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