TMI Blog2000 (2) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties that if in a case there is no tax arrears, then an assessee cannot make a declaration and no settlement can be made under the scheme. "Tax arrear" has been defined in s. 87 to mean in relation to direct tax enactment, the amount of tax, penalty or interest determined on or before 31st March, 1998, under that enactment in respect of an assessment year as modified in consequence of giving effect to an appellate order but remaining unpaid on the date of declaration. 3. As mentioned above, the petitioner's declarations which were five in number have been rejected by the Designated Authority on the ground that when the declarations were made on 31st Dec., 1998, there was no tax arrears, i.e., tax remaining unpaid against the petitioner. 4. The petitioner's contention is that there was an HUF in the name and style of Seth B.D. Gupta, HUF, which was being assessed to income-tax and wealth-tax. There was a partition in that family under which an industrial unit, viz., Modern Industries, fell to the share of Sri B.B. Bindal, a coparcener. The said Sri B.B. Bindal was the Karta of the present petitioner and under the terms of the partition, Sri B.B. Bindal was liable to any tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner refusing to allow the petitioner's application under s. 154. The CIT(A) by a consolidated order dt. 28th Jan., 1999, allowed the appeals and held that the impugned adjustment of refund under the IT Act against the wealth-tax demand for different years and in some cases of different assessees, were not legally correct. The CIT, therefore, cancelled the adjustments and the AO was directed to make fresh adjustments after following the procedure under s. 245 of the IT Act. After the decision of the CIT(A), the petitioner moved an application before the Designated Authority under the Kar Vivad Samadhan Scheme claiming that since the adjustments had been cancelled, the wealth-tax demand became outstanding on the date of the filing of the declarations and, therefore, the declarations may be proceeded with. The declarations were, however, rejected by the Designated Authority on the ground that on the date of the declaration, no amount was in arrears. The contention of the petitioner is that this view taken by the Designated Authority is wrong because the order passed by the CIT(A) would relate back to the date on which the petitioner's application under s. 154 was rejected by the J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of income-tax refunds due to the assessee for the asst. yrs. 1990-91, 1987-88, 1993-94, 1992-93, 1996-97 and 1993-94 were adjusted on various dates in the years 1995-96. Thus, according to the respondent, the adjustment of total amount of Rs. 49,73,597 was made several years ago and the petitioner never objected to the above adjustment. It is averred that the petitioner raised his objection only in November, 1998, for availing of the benefits of the Kar Vivad Samadhan Scheme which came into force on 1st Sept., 1998, as one of the conditions was that arrears of tax should be outstanding. It is claimed that the petitioner's conduct in remaining silent for so long shows that there was deemed consent to the adjustments. It is claimed that since there were no outstanding dues, the declarations were rightly rejected. It is also averred that an intimation dt. 3rd July, 1992, was sent to the petitioner for adjustment of the refund of Rs. 4,83,619 relating to the bigger-HUF named B.D. Gupta. With regard to the order passed by the CWT(A), it is claimed that the CWT(A) was not competent to entertain the appeals and that in any case no appeal effect was given to the appellate order and, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of the income-tax refund against income-tax dues in the case of the same assessee and likewise wealth-tax refund against the wealth-tax dues of the same assessee. In other words, the conditions necessary for adjustment are : (i) Income-tax refund can be adjusted against income-tax demand only; (ii) Wealth-tax refund can be adjusted against wealth-tax demand only; (iii) The adjustment of refund can be made against arrear demand in the case of the same assessee and not in the case of different assessees. These are apparent and obvious requirements of law and the language of the two sections cited above is plain and simple which does not lead to two opinions. In the instant case the refund of different assessees had been adjusted against the arrear demand of the present assessee and moreover, income-tax refund had also been adjusted against wealth-tax liability. Such adjustments, therefore, are contrary to the provisions of ss. 245 and 34A(5) of the IT Act and WT Act, respectively. Such adjustments, therefore, being wrong and based on mistaken view of specific statutory provisions, deserve to be reversed and the refund so adjusted deserve to be restored back to the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djustments after following the procedure laid down under s. 245." 8. Sec. 245 of the IT Act, merely requires that the adjustments or set off will be made after giving an intimation in writing to such person of the action to be taken under this section. Therefore, what is required is merely an intimation so that the person concerned may choose to raise any objection and may not make unnecessary payments. The intimation is certainly not a jurisdictional requirement and absence thereof is merely an irregularity which, if a person objects to, can be pointed out to the concerned officer and if need be, suitable amendments may be made. In case no intimation has been given and the person concerned has any objection, he can approach the officer concerned. Therefore, want of intimation does not vitiate the adjustment and it is merely an irregularity which can be ignored if no prejudice has been caused to the party concerned. In this case, no prejudice is even alleged to have resulted to the petitioner whose own money due as the refund was adjusted towards its own liabilities. The adjustments did not cause any prejudice to the petitioner and that it knew fully well of the adjustments is ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity. That was a case in which the Court held that the cash seized had to be applied first towards the liability arising out of a block assessment under s. 158BC and, therefore, the adjustment was invalid. In the present case before us, there is no lack of jurisdiction, The refunds were due to the assessee and, were adjusted towards the assessee's own liabilities and without any objection by the assessee. Therefore, the want of an intimation if at all it was there, was a mere irregularity that could not invalidate the adjustments made long back and consented to by the petitioner. 10. It was contended that in any case the adjustments having been cancelled by the CWT(A), the same no longer stand and, therefore, the demand would relate back to the date when the applications under s. 154 were rejected. This may be the consequence in a general manner but the provisions of the scheme require that the tax should actually be in arrears on the date of the declaration. The declarations were made on 31st Dec., 1998, and on that date, the appellate order was not even in existence. The scheme contains a special legislation granting substantial benefit to tax defaulters and, therefore, its pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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