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2015 (7) TMI 366 - HC - Income TaxAdjustment of refund due with demands outstanding - Unconditional stay granted under Section 220(6) of the Act - Discretionary power of adjustment - Adjustment depend upon the facts and circumstances of each case - Sanctity of order passed by an superior officer - Held that:- It is an admitted position that there is no demand outstanding/payable for Assessment year 2004-05. Thus no occasion to adjust any part of the refund due to the petitioner for Assessment year 2005-06 to meet a non existing demand for A.Y. 2004-05 can arise. Consequent demanding of interest under Section 220(2) of the Act as demanded by order dated 22 August 2013 for A.Y.2004-05 would not arise. Therefore in view of above agreed position the Revenue is directed to hand over the sum of ₹ 3.76 lakhs retained/adjusted out of the refund due for the alleged dues of A.Y.2004-05 to the petitioner along with interest in accordance with the Act. So also we set aside the impugned order dated 22 August 2013 being Exhibit P to the the petition demanding interest of ₹ 1.05 lakhs. For Assessment Year 2007-08 is concerned, the demand of ₹ 18 crores had been stayed by the order of Commissioner dated 22 March 2011 under Section 220(6) till the disposal of the petitioner's appeal before the CIT (Appeals). The appeals are still pending. Further, stay was granted in respect of the demands attributable to transfer pricing adjustment which was an issue of dispute even for the Assessment Year 2006-07 and was finally resolved in favour of the petitioner. It must be pointed out that the petitioner had made an application for stay to the Assessing Officer. In response to the petitioner's application for stay under Section 220(6) of the Act, to the Assessing officer, his superior viz. the Commissioner of Income Tax granted partial stay to the extent of the demand relating to transfer pricing adjustment. We are unable to understand how an order passed by an officer superior to the Assessing Officer granting stay would not be binding upon the Assessing Officer. In fact the Commissioner of Income Tax is the administrative head and does exercise jurisdiction over the entire Commissionerate. Thus, even today, the order Commissioner of Income Tax staying the demand of ₹ 17.98 crores is in force. For Assessment Year 2008-09 is concerned, the Assessing Officer by an order dated 9 March 2012 stayed the demand of ₹ 25 crores attributable to transfer pricing adjustment done in the assessment order till the disposal of the petitioner's appeal by the CIT(Appeals). These transfer pricing dispute are identical to the issue in A.Y. 2006-07 and the same are now resolved in favour of the petitioner by the order of the Tribunal. The appeals are still pending before the CIT (Appeals) and consequently the stay for the Assessment Year 2008-09 is in force even today. The power under Section 245 is discretionary. The orders of stay have to be honoured before adjustment of the demand out of refund is done by the Revenue. If the Assessing Officer did not accept the assessee's contention at the time of making the adjustment, the petitioner should have been informed as to why the objections of the assessee to the adjustment is not sustainable. Unless the Assessing Officer exercising power under Section 245 of the Act subjects himself to this discipline, he would be exercising his powers in an arbitrary manner. In these circumstances, the refund of ₹ 129 crores due to the petitioners is payable in its entirety and no adjustment of any demand for the Assessment Year 2007-08, 2008-09 and 2004-05 was permissible. This for the reason, that factually there was no due outstanding for the Assessment Year 2004-05 and the demand for the Assessment Years 2007-08 and 2008-09 had been stayed pending disposal of the petitioner's appeal before the CIT (Appeals). Consequently, Revenue is directed to hand over the balance amount of ₹ 52 crores out of ₹ 129 crores of refund due for A.Y.2006-07 to the petitioners. The petitioner is not an assessee in default under Section 220 of the Act, till such time as its appeals are decided. Consequently no occasion to charge interest at this stage under Section 220(2) of the Act can arise. Consequently, the orders dated 22 August 2013 for the Assessment Year 2004-05, 2007-08 and 2008-09 being Exhibit N, O and P are quashed and set aside. - Decided in favour of assessee.
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