TMI Blog2000 (3) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable for the assessment years 1991-92 and 1992-93, respondent No. 2 had set off refunds. An intimation was sent to the petitioners by respondent No. 2. On receipt of the intimation, the petitioner raised objection to the set off by respondent No. 2, specially pointed out to respondent No. 2 that the refund due to the assessee cannot be adjusted against the amount seized from the residence of Shri A. K. Chhajer unilaterally but the request of the petitioner/respondent was rejected and the full amount of refund due has not been refunded to the petitioner-respondent. Then the petitioner/respondent filed this writ petition before this court. Learned single judge discussed the views expressed by various High Courts and has taken the view that no adjustment can be made of the refund due to the assessee, against any tax arrears, without intimation to the assessee as required under section 245 of the Act. Learned counsel for the appellants, Shri Roy Chowdhury submits that though the intimation was not given before setting off the amount due against the assessee but after setting off the amount against tax arrears the intimation was given and the assessee has not raised any objection fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11-9-1996 23,87,516 31-1-1996 11-9-1996 1,20,32,585 5-2-1996 21-11-1996 2,37,61,939 30-7-1996 12-8-1996 1,92,90,625 27-1-1997 14-2-1997 ----------- 5,77,94,371 ------------------------------------------------------------------------- It is also brought to our notice that in an order under section 132(5) which was passed by the assessing authority in the case of Mr. A. K. Chhajer, at Delhi, on April 15, 1994, in respect of the amount seized from the residence of Mr. A. K. Chhajer should be taxed in the hands of A. K. Chhajer but that has been wrongly taxed and the tax liability adjusted against the refund due in the assessment year 1991-92. No intimation or an opportunity was given to the assessee how the amount due can be adjusted against tax liability of Shri A. K. Chhajer. Before going into that controversy, we would like to consider whether the amount due can be set off against tax liability without prior intimation as required under section 245 of the Act, The same issue has been considered by various High Courts where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Earlier to this order it has never been the case of the Revenue to claim any set off. This order purporting to be under section 245 of the Act is neither fair, nor just, nor reasonable and has to be ignored." The prior intimation of the proposed action is the requirement of observing principles of natural justice. Any such set off without any prior intimation or opportunity is not only illegal but void and non est in the eye of law and the respondent-company is entitled to challenge the same, as, any void action is non est in the eye of law. Such illegal setting off of the amount refundable against the outstanding demand is, therefore, to be ignored. Against the decision of the Delhi High Court, a S. L. P. was filed in the Supreme Court and the Supreme Court has dismissed the S. L. P. which is reported in CIT v. Vijay Kumar Bhati. The same view has been taken by the Punjab and Haryana High Court in State Bank of Patiala v. CIT [1999] 239 ITR 421. In Shiv Narain Shivhare v. Asst. CIT (Investigation) [1996] 222 ITR 620, the Madhya Pradesh High Court has observed at page 622 as under : "Therefore, the so-called order passed on June 9, 1992, appears to be without jurisdiction a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of the principles of natural justice would, under the circumstances, be void and a nullity." From the observations referred to above it is clear that before any order under section 245 of the Act the opportunity of being heard should be given to the assessee. Without notice/intimation to the assessee before adjustment the order under section 245 is nullity. Dr. Pal further submits that after adjustment if any intimation has been given under section 245 of the Act that has no meaning, If the provision provides for any right of any party is affected, hearing should be given to the party before any such order is passed. He placed reliance on the decision of the apex court in Institute of Chartered Accountants of India v. L. K. Ratna [1987] 164 ITR 1 ; [1986] 4 SCC 537 and United Planters Association of Southern India v. K. G. Sangameswaran [1997] 90 FJR 454 ; [1997] 4 SCC 741. In the case of Institute of Chartered Accountants of India v. L. K. Ratna [1987] 164 ITR 1 ; [1986] 4 SCC 537 at page 551, their Lordships have observed as under : "It is next pointed out on behalf of the appellant that while regulation 15 requires the Council, when it proceeds to act under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee if any refund is set off against the tax liability under section 245 of the Act. The order without intimation is non est and their Lordships even have observed in some cases that unless the statute prohibits a pre-decisional hearing should be given to the person whose right is affected by that order. It is also pertinent to note that there is no provision for appeal against the set off order under section 245 of the Act. Therefore, it is all the more necessary to give intimation to the assessee before setting off his amount of refund due. In the light of the above observations, we found no infirmity in the impugned order of the learned single judge dated January (?) 28, 1999 (see [1999] 238 ITR 820). In the result, the appeal is dismissed. Let a xerox copy of this judgment, duly countersigned by the Assistant Registrar of this court be given to the parties upon their undertaking to apply for and obtain. certified copy of the same upon usual undertaking. G. A. No. 2150 of 2000--(July 7, 2000). Heard learned counsel on this review application. The applicant prays that the judgment dated March 14, 2000, be recalled, as written submission filed after delivery of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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