TMI Blog2000 (11) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year 1995-96, there was outstanding assessed tax due from the appellant to the tune of Rs. 18,59,056 which was later on reduced in appeal to Rs. 14,75,003. For the assessment year 1996-97, the assessee was assessed to tax and a demand of Rs. 40,22,586 was raised. It was later on rectified on August 31, 1998, resulting in an order of refund of Rs. 22,87,134. Out of this Amount, a sum of Rs. 3,96,505 was adjusted towards the demand for the assessment year 1995-96. For the assessment year 1997-98, the appellant was due a refund of Rs. 10,78,700. The appellant received a communication annexure B stating that the said amount has been adjusted towards demand for the assessment year 1995-96. Thus, the total adjustment made towards the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim regarding the sum of Rs. 10,78,700. Regarding the adjustment of Rs. 3,96,505, the respondent was directed to pass an order treating the sum of Rs. 3,96,505 as outstanding dues under the scheme. Regarding the amount of Rs. 10,78,700, it was held that the assessee was intimated by a letter dated March 28, 1998, informing him that the demand to the extent of Rs. 10,78,700 had been adjusted/set off for the amount of tax due for the assessment year 1995-96. The appellant aggrieved by the order passed by the single judge rejecting the relief regarding the sum of Rs. 10,78,700 has come up in appeal. Section 245 of the Act reads as under : "Where under any of the provisions of this Act, a refund is found to be due to any person, the Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of refund due for the assessment year 1997-98 stood adjusted against the outstanding demand for the assessment year 1995-96. It would not be same thing as a prior intimation of the proposed action. As the adjustment of the refund amount was made without following the provisions of section 245 and without giving a proper intimation the same was bad in law. The provisions of section 245 being mandatory in nature, any action taken contrary to such provision would be bad in law. This is the consistent view of other High Courts as well. A reference may be made to the following judgments. The Delhi High Court in Vijay Kumar Bhati v. CIT [1994] 205 ITR 110, while interpreting section 245 held : "For the purpose of any set off under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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