Greatship (India) Limited v. Assistant Commissioner Of Income Tax -5(1)(1), Mumbai & Ors.

1. Assistant Commissioner Of Income Tax -5(1)(1), Mumbai, Room No. 568, 5th foor, Aayakar Bhavan, M.K. Road, Mumbai-400 001.

2. Centralised Processin, Centre, Income Tax Department, Ben,aluru, Karnataka – 560 500

3. The Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, Government of India, North Block, New Delhi – 110 001.

4. Union of India, Throu,h the Joint Secretary & Le,al Adviser, Branch Secretariat, Department of Le,al Affairs, Ministry of Law and Justice, 2nd Floor, Aayakar Bhavan, M.K. Mar,, New Marine Lines, Mumbai-400 020....Respondents *** Mr. Jeet Kamdar i/b Mr.Atul K Jasani for petitioner. Mr Akhileshwar Sharma for the respondents-revenue Shraddha Talekar, PS 1/6 **** CORAM: DHIRAJ SINGH THAKUR AND ABHAY AHUJA, JJ. Jud,ment reserved on: 20th June 2022 Jud,ment pronounced on: 18th July 2022 PER DHIRAJ SINGH THAKUR, J.:

1. By this petition, the petitioner challen,es the action of respondent No.2 of adjustin, the refund of Rs.2,22,89,942/- for the assessment year 2008-09 arisin, as consequence and effect of the order of the Income Tax Appellate Tribunal (‘The Tribunal’) a,ainst the alle,ed outstandin, demands for assessment years 2014-15 and 2015-16.

2. The case set up is that an amount of Rs.61,64,649/- as refund for assessment year 2008-09 came to be adjusted for assessment year 2014-15 which came to the knowled,e of the petitioner on November 17, 2021, when the petitioner downloaded the Form 26AS for the assessment year 2014-15, where ‘Part C’ of Form No.26AS provided details of tax paid (other than TDS or TCS).

3. The petitioner’s case further is that an amount of Shraddha Talekar, PS 2/6 Rs.1,61,25,293/- came to be adjusted ille,ally by the respondent No.2 from the refund determined in favour of the petitioner upon,ivin, effect to the tribunal’s order for assessment year 2008-09 a,ainst the alle,ed outstandin, demand for the assessment year 2015-16. Knowled,e of this ille,al adjustment was also stated to have been acquired by the petitioner on November 17, 2021 when the petitioner downloaded the Form No.26AS.

4. Learned counsel for the petitioner ur,ed that the action of respondent No.2 in makin, adjustments of refund due was ille,al inasmuch as no intimation was,iven to the petitioner as was the requirement in terms of section 245 of the Income Tax Act, 1961 (‘the Act, 1961’).

5. Reliance was placed upon the jud,ments of this Court in the case of A.N. Shaikh, Sixteen Income-Tax Offcer Vs. Suresh B. and Hindustan Unilever Ltd. Vs. Deputy Commissioner of Income-Tax and Others 2 and a jud,ment of Delhi Hi,h Court in the case of Maruti Suzuki India Limited Vs. Deputy Commissioner of Income Tax & Ors. 3. 1 [1987] 165 ITR 86 (Bom.) 2 [2015] 377 ITR 281 (Bom.) 3 [2012] 347 ITR 43, Delhi Shraddha Talekar, PS 3/6

6. Reply affdavit has been fled in which a,eneral statement has been made that the requirements of section 245 of the Act, 1961 have been complied with. However, the reply affdavit does not specifcally state as to whether before makin, such an adjustment, the petitioner had been,iven prior intimation about the proposed adjustment in terms of section 245 of the Act, 1961.

7. Section 245 of the Act, 1961 envisa,es that when a refund is found to be due to any person under any of the provisions of the Act, 1961, the Revenue can set off/adjust the amount to be refunded or any part of that amount, a,ainst the sum which remains payable under the Act, 1961 by the person to whom the refund is due, after,ivin, an intimation in writin, to such person of the action proposed to be taken under this section.

8. This Court in Suresh B. Jain (supra) held that,ivin, of prior intimation under section 245 of the Act was mandatory. In Hindustan Unilever Ltd. (supra), it was held that the the purpose of,ivin, prior intimation under section 245 of the Act, 1961 was to enable a party to point out factual errors or some further developments for example that there was a stay of the demand, or Shraddha Talekar, PS 4/6 that there was a Supreme Court’s decision coverin, the demand, which is the subject matter of a pendin, appeal which would not warrant an adjustment of the refund a,ainst the pendin, demand. It was also held that where a party raises such issues in response to the intimation, the offcer of the Revenue exercisin, powers under section 245 of the Act, 1961 must record reasons why the objection was not sustainable and also communicate it to the said party and that this would ensure that the power of adjustment under section 245 of the Act is not exercised arbitrarily.

9. In the present case, it can be seen that the alle,ation that there was no prior intimation under section 245 of the Act has remained unrebutted as no proof of any such prior intimation was placed on record by the Revenue. Followin, the decisions (supra), we have no hesitation in holdin, that the impu,ned action of respondent No.2 in makin, adjustments of the amount of Rs.61,64,649/- and Rs.2,22,89,942/- for assessment year 2008-09 a,ainst the alle,ed outstandin, demands for assessment years 2014-15 and 2015-16 is bad and ille,al and is accordin,ly quashed.

10. Notwithstandin, what has been observed hereinabove, it would be open to respondent No.2 to exercise its discretion of Shraddha Talekar, PS 5/6 makin, an adjustment in terms of section 245 of the Act, after,ivin, prior intimation and considerin, all the issues and objections which the petitioner may raise pursuant to such an intimation. Needful may be done in ei,ht weeks failin,, which the case of the petitioner will be processed for,rant of refund as determined for the assessment year 2008-09.

11. With these observations, the petition stands disposed of. [ABHAY AHUJA, J.] [DHIRAJ SINGH THAKUR, J.] Shraddha Talekar, PS 6/6