TMI Blog2012 (12) TMI 904X X X X Extracts X X X X X X X X Extracts X X X X ..... the Court’s order. Violation of provision of Section 245 - Procedure to set off amounts due to an assessee from the demands pending against him – Held that:- Section 245 is clear in its mandate regarding the requirement of prior intimation in writing to the assessee whose refunds are being adjusted against amounts payable to the Revenue; the assessee has to be given notice, and heard. The revenue clearly did not follow the provision, and give any notice or hearing before making adjustments. Appeal decides in favour of assessee - WP (C) No. 2773/2012 - - - Dated:- 28-8-2012 - MR. S. RAVINDRA BHAT AND MR. R.V. EASWAR JJ. Petitioner: Mr. Ajay Vohra, Advocate. Respondent: Mr. Sanjeev Sabharwal, Sr. Standing Counsel. MR. J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. On 21.07.2011, the respondent issued a show cause notice against the Petitioner with regard to the default in payment of the demand of Rs.28,45,97,327/- and penalty for the same. On 9.8.2011, the Petitioner filed reply to notice under Section 221 stating that in view of the stay order passed by this Court in WP (C) 8130/2010, the demand could not have been made. Further, the action in adjusting the refund due by the respondent against the demand without notice of the same was in violation of the provisions of Section 245 (2) of the Income Tax Act. Since this reply was ignored, other letters raising these objections were filed on 17.11.2011 and 2.12.2011, with a reminder letter on 23.4.2012 requesting a release of the refunds. 5. The pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions has been fulfilled in this case. The demand was not payable being in violation of the stay order passed by the High Court in WP (C) 831/2010. Counsel argues that several High Courts have held that the requirement of written intimation to the assessee of the proposed action of adjustment of refund is mandatory. 7. The revenue, on the other hand, argues that since this Court had directed completion and finalization of the reassessment proceedings, the demand against the assessee was only raised after completing the reassessment proceedings. However, no coercive measures were taken against the Assessee to enforce the demand. Thus withholding of the refund due to the assessee is thus not in violation of the High Court s order as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue to recover demand of one year which is pending by adjusting the refund due for another year. The term 'refund' has not been defined in the Act and, therefore, it has to be understood and interpreted in the manner in which it is understood in day to day life. The term 'recovery' in common parlance includes adjustments . 17. At the same time, different parameters and requisites may apply when the appellate authority considers the request for stay against coercive measures to recover the demand and when stay of adjustment under Section 245 of the Act is prayed for. In the first case, coercive steps are taken with the idea to compel the assessee to pay up or by issue of garnishee notice to recover the amount. In the second case, mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eputy 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 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." 11. The above provision makes it adequately clear that before the Revenue can set off the payment of refund against the assessee, it is mandatory that notice in writing be given to the person against who such action is being taken. This point has been adjudicated upon by many High Court. In the case of Glaxo Smith Kline Asi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without giving a prior intimation to the assessee as required by that section. The Bombay High Court reiterated the same opinion in Suresh Jain v A.N. Shaikh [1987] 165 ITR 151(Bom). 12. It is thus evident that in this case that the actions of the Revenue were violative of the stay order of this Court; they were also contrary to the provisions of Section 245 of the Income Tax Act. The term recovery includes adjustment of the refund due to the assessee. Thus the High Court order which directed that the assessment proceedings would not be given effect to without the leave of the court translated to a bar on adjustments as well. Furthermore, Section 245 is clear in its mandate regarding the requirement of prior intimation in writin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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