CHHATTISGARH SAKH SAHKARI SAMITI MARYADIT V. THE PRINCIPAL COMMISSIONER OF INCOME TAX-RAIPUR -2,

WPT/6/2025

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The case involves Chhattisgarh Sakh Sahkari Samiti Maryadit, a cooperative society, challenging an intimation under Section 245 of the Income Tax Act, 1961, which adjusted their refund against an outstanding demand for the Assessment Year 2022-23. The petitioner argued that the issue of interest income earned by cooperative societies, which is eligible for deduction under Section 80P, had been previously decided in their favor for earlier assessment years, and thus, the Revenue's demand for the current assessment year was unjustified. The Revenue contended that the adjustment was permissible under Section 245, having provided the necessary intimation. The court found that while the Revenue had the right to adjust the refund against the demand, the specific circumstances of the case warranted a direction to the Appellate Authority to decide on the stay application without the pre-deposit requirement.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 746737 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 25-03-2025
• Assessment Year: misc
• Other Referred Cases: Maruti Suzuki India Ltd. Vs. Deputy Commissioner of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: AJAY KUMRANI
• Assessee Lawyers: MOOL JAIN
• Keywords: Adjustment of Refund; Cooperative Society; Income Tax Refund; Interest income; Outstanding Demand; Section 80P
• Section: 143(3); 80P; 254; 245

Judgement Text

"1 2025:CGHC:14045 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPT No. 6 of 2025 1 - Chhattisgarh Sakh Sahkari Samiti Maryadit, Sector - 1, Bhilai, A Co-operative Society Regd. Under the C.G. Co-operative Societies Act, Through Its Manager Jagnik Kumar, Yadav, S/o Budhram Yadav, Aged About 59 Years, Resident Of Dahaliya 661, Block ‘B’ C.G.H.B., Talpuri, Ruabandha, Bhilai, District Durg Chhattisgarh. ... Petitioner(s) versus 1 - The Principal Commissioner Of Income Tax-Raipur -2, Central Revenue Building Civil Lines, Raipur Chhattisgarh. 2 - Assistant Director of Income Tax, Central Processing Centre (CPC), Post Bang. No. 1, Electronic City Post Office, Bangluru 560500 (Karnataka). 3 - The Income Tax Officer, Ward - 1(3), Aaykar Bhawan, New Civic Centre, Bhilai Chhattisgarh. ... Respondent(s) For Petitioner(s) : Mr. Mool Chand Jain, Advocate For Respondent(s) : Mr. Ajay Kumrani, Advocate on behalf of Mr. Amit Choudhari, Advocate SB.: Hon'ble Mr. Justice Deepak Kumar Tiwari Order On Board SHYNA AJAY Digitally signed by SHYNA AJAY Date: 2025.03.25 15:14:49 +0530 2 24/03/2025 1. Challenge in the present Writ Petition is to the Intimation dated 18.6.2024 issued under Section 245 of the Income Tax Act, 1961 (in short “the Act”) regarding adjustment of the refund(s) due against the outstanding demand for the Assessment Year 2022-23. In this regard, an appeal before the CIT (Appeals), NFAC, Delhi, is pending for adjudication. By way of this petition, a prayer has also been made for quashing the aforesaid intimation. 2. Necessary facts of the case are that after passing of the order under Section 254 of the Act by the Income Tax Appellate Tribunal, Raipur for the Assessment Years 2013-14, 2018-19 and 2020-21, an amount of Rs.1,16,25,991/- was determined towards refund. The Revenue sent a proposal for necessary approval, which has also been accorded. Further, an outstanding demand to the tune of Rs.1,54,80,300/- was raised for the Financial Year 2022-23 under Section 143(3) of the Act. The petitioner challenged the aforesaid outstanding demand on the ground that for the Assessment Year 2022-23, similar dis-allowance has been made by the Revenue though it is a covered issue that a Credit Cooperative Society is eligible for deduction of the entire interest income under Section 80P of the Income Tax Act, for which, the Income Tax Appellate Tribunal has allowed the refund. When the petitioner approached the authority for refund of the whole amount, the petitioner was advised to pre-deposit 20% of the demand raised for the Financial Year 2022-23. The petitioner prayed to adjust 20% of the demand and release the balance amount of the refund, however, the same was 3 also not accepted by the Revenue. Hence, this Petition. 3. Learned counsel for the petitioner would submit that the issue as to the interest income received/earned by the Cooperative Societies on amounts deposited by the assessee Society in commercial/nationalised banks, which was eligible for deduction under Section 80(P) (2)(a)(i) of the Act, has already been determined and the Income Tax Appellate Tribunal has also allowed the Appeal in respect of the earlier Assessment Years i.e. 2013-14, 2018-19 and 2020-21 and ordered for refund of Rs.1,16,25,991/-. He would further submit that regarding the similar income accumulated from the interest for the deposit in the Commercial Bank, a demand of Rs.1,54,80,300/- has been raised. Since the issue has already been decided, the Revenue has no jurisdiction to raise such demand. He would further submit that even as per the Office Memorandum dated 29.2.2016 (as amended by OM dated 31.7.2017), the Assessing Officers should have ordinarily, in terms of para 4(A) adjusted not more than 20% of the disputed demand considering the fact that an appeal concerning the disputed demand was pending before the CIT(A). He submits that though the petitioner made a concession for refund of the balance amount after deducting 20% of the outstanding demand, but the same was not accepted by the authorities. He would submit that in the matter of Maruti Suzuki India Ltd. Vs. Deputy Commissioner of Income Tax, reported in (2012) 347 ITR 43 (Delhi) (judgment passed by the Delhi High Court), in the similar circumstances, an identical ground had been set- aside by the Tribunal with regard to the previous assessment years. It has been further observed that this is not a valid or good ground to ignore the decisions of the appellate authorities and is also not a good 4 ground to not to stay demand or to allow adjustment under Section 245 of the Act. It has been further observed in para 26 that the Revenue has not not able to show a good cause or reason as to why adjustment should be allowed to recover demand on issues that have been decided in favour of the petitioner therein for other years. 4. Replying the aforesaid submissions, learned counsel for the Revenue would submit that Section 245 of the Act permits the Revenue to set off any demand from the amount to be refunded but the only condition is of intimation in writing to such person against whom action is proposed to be taken. He would further submit that in the present case, intimation has already been sent, therefore, the mandate under Section 245 of the Act was satisfied by the Revenue before making adjustment. However, on instructions, he would submit that if the petitioner deposits 20% of the disputed amount , Revenue shall return the whole refunded amount as demanded by the petitioner. Further, counsel for the Revenue would submit that against the order of the Income Tax Appellate Tribunal with regard to the earlier Assessment Year(s), a Tax Appeal has been filed and the same has been disposed of in view of the CBDT Circular No.5/2024, wherein, it has been observed that no appeal would lie if the tax effect is below Rs.2 crores. Therefore, learned counsel would submit that the said issue has not attained the finality. 5. Heard learned counsel for the parties and also perused the documents annexed with the petition. 6. Section 245 of the Act deals with the set off and withholding of refunds in certain cases. For the sake of brevity, the said Section is reproduced hereunder : 5 245. Set off and withholding of refunds in certain cases – (1) Where under any of the provisions of this Act, a refund becomes due or is found to be due to any person, the Assessing Officer or Commissioner or Principal Commissioner or Chief Commissioner or Principal Chief Commissioner, as the case may be, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this sub-section. (2) Where a part of the refund is set off under the provisions of sub-section (1), or where no such amount is set off, and refund becomes due to a person, and the Assessing Officer, having regard to the fact that proceedings for assessment or reassessment are pending in the case of such person, 51[***] he may, for reasons to be recorded in writing and with the previous approval of the Principal Commissioner or the Commissioner, as the case may be, withhold the refund up to 52[sixty days from] the date on which such assessment or reassessment is made.] 7. On reading of the aforesaid provision, it is explicit that this provision permits the Revenue to set off any demand from the amount to be refunded subject to the only condition of intimation in writing to such person against whom action is proposed to be taken. In the present case, the Revenue has complied with the said provision. 8. For the foregoing, this Court does not find any jurisdictional error in issuing the subject intimation or taking action by the Revenue under Section 245 of the Act. However, considering the fact that an appeal has been preferred against the outstanding amount and disallowance 6 has been accepted for the relevant Assessment Years in an identical issue, as submitted by learned counsel for the petitioner, this Court is of the view that a good case is made out in favour of the assessee for issuance of a direction to the Appellate Authority that till adjudication of stay application, pre-deposit of 20% of the disputed amount be not insisted upon. 9. Considering the facts and circumstances of the case and in light of the aforesaid discussion, this Court deems it appropriate to direct the Appellate Authority to decide the stay application without insisting upon pre-deposit of 20% of the outstanding demand. The petitioner is also directed to demonstrate before the Appellate Authority that the identical issue has already been covered up in the earlier Assessment Years. Ordered accordingly. 10. It is made clear that if the said issue is not covered up, the Appellate Authority shall decide the subject appeal in an expeditious manner, preferably within a period of 90 days, from the date of receipt of a copy of this order. 11. With the aforesaid observations/directions, this Petition is disposed of . Sd/- (Deepak Kumar Tiwari) Judge Shyna "