TMI Blog2016 (6) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... resent petition. Whatever the demand may be for the AYs 2008-09 and 2010-11, the fact remains that prior making the adjustment of such demand against the refund due to the Petitioner, no notice was issued to the Petitioner as mandatorily required under Section 245 of the Act. By issuing a notice on 21st March 2016 under Section 245 of the Act, two months after the notice was issued in the present petition, the Revenue cannot seek to correct the fatal error arising from the clear violation of the mandatory requirement under Section 245 of the Act. - Refund allowed with directions to CIT(A) - Decided in favor of assessee. - W. P. (C) 683/2016 - - - Dated:- 25-4-2016 - S. Muralidhar And Vibhu Bakhru, JJ. For the Petitioner : Mr. Piyush Kaushik, Advocate For the Respondent : Mr. Ashok Manchanda, Senior standing counsel ORDER Dr. S. Muralidhar, J. 1. Mr. Vijay Singh Kadan, the legal heir of late Mr. Randhir Singh Kadan, (hereinafter referred to as the deceased Assessee ) has been constrained to approach the Court for a second time with this writ petition, aggrieved by the non-compliance by the Revenue of the directions issued by this Court on 15th December 2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent a third reminder. It was explained that the Assessee had expired as a result of cancer and the Petitioner, his legal heir, was in urgent need of the refund along with statutory interest. 9. When no response forthcoming even thereafter, the Petitioner filed Writ Petition (Civil) No. 10985 of 2015 in this Court which came to be disposed by the following order on 15th December 2015: The learned counsel for the Respondent informs us that the refund, consequent upon the appeal effect along with interest, in accordance with law, has been processed and the same shall be paid to the Petitioner within two weeks. In view of the statement made by the learned counsel for the Respondent, this writ petition stands disposed of. However, we are granting liberty to the Petitioner to approach this Court in case the refund is not so granted. 10. It appears that in the meanwhile on 7th December 2015 a computer generated letter was addressed to the Petitioner by the Transaction Banking Unit of the State Bank of India enclosing a demand draft in the sum of ₹ 1,29,01,503 stating it to be on account of income tax refund for AY 2006-07. The Petitioner states that his refund e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision in Genpact India v. ACIT (2012) 205 Taxman 51 (Del) and an order dated 16th October 2014 in Writ Petition (Civil) No. 6172 of 2014 (The Oriental Insurance Co. Ltd. v. DCIT). Mr. Kaushik also drew the attention of the Court to Instruction No. 1952/1998 dated 14th August 1998 issued by the Central Board of Direct Tax ( CBDT ) regarding prompt issue of refund which was reiterated by the subsequent Instruction No. 12 of 2013 dated 9th September 2013. 13. Mr. Ashok Manchanda, learned Senior standing counsel for the Revenue, referred to the counter-affidavit filed in the present case wherein in para 5 of the preliminary objections, it was stated that the balance amount of ₹ 36,34,257 was not released pending verification of unpaid outstanding demand for AYs 2008-09 and 2010-11. According to Mr. Manchanda, the question of issuing of notice under Section 245 of the Act did not arise since the Revenue had not 'adjusted' any sum but merely withheld it pending verification. Mr. Manchanda stated that after notice was issued in the present petition on 27th January 2016, a notice under Section 245 of the Act was issued to the Petitioner on 21st March 2016 requiring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortunity to the Assessee of being heard preceded by an intimation to the Assessee in writing of the action proposed to be taken under Section 245. A further implicit requirement is that the Revenue will have to be satisfied that the Assessee will not be in a position to satisfy the demand of tax and that but for the set off, the outstanding tax amount cannot be recovered at all. 15. Further, it was reiterated in para 38 of the decision in Glaxo Smith Kline Asia P. Ltd. v. Commissioner of Income Tax (supra): 38 . Unless there are sound reasons justifying the formation of an opinion that the tax that has become payable cannot be recovered from the Assessee as and when the issues are ultimately decided, the power under Section 245 should not lightly be invoked. 16. The above decision was followed by this Court in The Oriental Insurance Company Limited v. DCIT (supra). There the Court too reiterated that the adjustment which was sought to be made contrary to Section 245 of the Act, without affording an opportunity of hearing to the Petitioner before the adjustment was made would vitiate the action of adjusting the demand against such refund. 17. In the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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