GMR INFRASTRUCTURE LTD V. ASSISTANT DIRECTOR OF INCOME TAX

WP/4876/2022

AI Insights

GMR Infrastructure Ltd. filed a writ petition against the Assistant Director of Income Tax and the Principal Commissioner of Income Tax, challenging the adjustment of a tax refund for the Assessment Year 2017-18 against a disputed demand for Assessment Year 2014-15. The petitioner argued that this adjustment was contrary to the mandates of the CBDT's Office Memorandums dated 29th February 2016 and 31st July 2017, which stipulate that such adjustments should not exceed 20% of the disputed demand without prior intimation under Section 245 of the Income Tax Act, 1961. The court referenced a similar case, GMR Airports Ltd. Vs. Assistant Director of Income-Tax, where it was held that such adjustments without prior intimation are illegal.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 753980 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 09-09-2022
• Assessment Year: misc
• Other Referred Cases: GMR Airports Ltd. Vs. Assistant Director of Income-Tax and another \\ W.P.No.860/2022 (D.D.09.02.2022)
• Laws Referred To: Constitution of India, Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: BALRAM RAO
• Keywords: Disputed Demand; Income Tax; Tax refund adjustment; CBDT Office Memorandums
• Section: 154; 244A; 226; 245; 227

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 9TH DAY OF SEPTEMBER, 2022 BEFORE THE HON'BLE MR.JUSTICE S.R.KRISHNA KUMAR WRIT PETITION No.4876 OF 2022 (T-IT) BETWEEN: GMR INFRASTRUCTURE LTD., HAVING ITS ADDRESS AT NO.25/1 SKIP HOUSE, MUSEUM ROAD BENGALURU 560 025, REP. BY ITS DIRECTOR MR. B.V. NAGESWARA RAO, AGED ABOUT 67 YEARS …PETITIONER (BY SRI. BALRAM R. RAO, ADVOCATE) AND: 1. ASSISTANT DIRECTOR OF INCOME TAX CENTRALISED PROCESSING CENTER (CPC) INCOME TAX DEPARTMENT POST BAG NO.1 ELECTRONIC CITY POST OFFICE BANGALORE 560 500. 2. PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL CENTRAL REVENUE BUILDING, 3RD FLOOR QUEENS ROAD BENGALURU – 560 001. …RESPONDENTS (BY SRI. K.V. ARAVIND, ADVOCATE) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE TAX REFUND ADJUSTMENT ADVICE / CHALLAN NO.04429 DATED AUGUST 13TH 2021 VIDE ANNEXURE-F IN DOCUMENT IDENTIFICATION ADJUSTING THE ENTIRE REFUND FOR ASSESSMENT YEAR 2017-18 AGAINST THE DISPUTED DEMAND FOR ASSESSMENT YEAR 2014-15 CONTRARY TO THE MANDATE OF OFFICE MEMORANDUMS DATED 29TH FEBRUARY 2016 AS AMENDED BY THE OFFICE MEMORANDUM DATED 31ST JULY 2017 ISSUED BY CBDT (ANNEXURE-S AND T) AND ETC. 2 THIS W.P. COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP, THIS DAY, THE COURT MADE THE FOLLOWING:- ORDER In this petition, petitioner has sought for the following reliefs: a. Issue a writ of certiorari quashing the tax refund adjustment advice / challan No.04429 dated August 13th 2021 vide Annexure-F in Document Identification No.ITBA / REC / S / S154_1/ 2021-22 / 1034393704(1) (Annexure – F) adjusting the entire refund for Assessment Year 2017-18 against the disputed demand for Assessment Year 2014-15 contrary to the mandate of Office Memorandums dated 29th February 2016 as amended by the Office Memorandum dated 31st July 2017 issued by CBDT (Annexure-S and T) b. A writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India, ordering and directing respondent No.1 to refund the amount wrongfully adjusted in excess of 20% of the disputed demand for Assessment Year 2014-15 as detailed in Para 6 above in view of Office Memorandums dated 29th February 2016 as amended by the Office Memorandum dated 31st July 2017 issued by CBDT marked as Annexure-S and T and c. A writ of mandamus or a writ in the nature of mandamus, or any other appropriate writ, order or direction under Article 226 of the Constitution of India directing the respondents to release the refund along with the interest thereon under Section 244A of the Act, 3 within a period of 4 weeks from the disposal of this petition by the Hon’ble Court to the petitioner due as a result of - 1. Adjustment in excess of 20% of the demand for Assessment Year 2014-15 in view of Office Memorandums dated 29th February 2016 as amended by the Office Memorandum dated 31st July 2017 issued by CBDT marked as Annexures-S and T. d. A writ of mandamus or a writ in the nature of mandamus, or any other appropriate writ, order or direction under Article 226 of the Constitution of India, restraining the respondent from further recovery of outstanding tax demand for any year in excess of 20% of the disputed demand in view of office Memorandums dated 29th February 2016 as amended by the Office Memorandum dated 31st July 2017 issued by CBDT marked as Annexures-S and T. e. Issue such other order, writ or direction as this Hon’ble Court deems fit; and f. Direct the respondents to pay the costs of this writ petition. 2. Heard learned counsel for the petitioner and learned counsel for the respondents and perused the material on record. 3. In addition to reiterating the various contentions urged in the memorandum of petition and 4 referring to the material on record, learned counsel for the petitioner invites my attention to the Refund adjustment Challan dated 13.08.2021 in order to point out that the said Challan as well as the refund status produced by the petitioner along with the Memo dated 07.09.2021 will clearly indicate that the respondents have adjusted the refund payable to the petitioner as against the tax dues for the Assessment Year 2014-2015 without prior intimation to the petitioner as required under Section 245 of the Income Tax Act, 1961 (for short, ‘the IT Act’) and consequently, the said order and adjustment passed under Section 154 of the IT Act without prior intimation as mandatorily required under Section 245 of the IT Act is illegal, arbitrary and the same deserves to be set aside and request of the petitioner to refund the amount has to be reconsidered in the light of the aforesaid statutory provisions and in accordance with law. In this regard, learned counsel places reliance on the decision of the Co-ordinate Bench of this Court in the case of GMR Airports Ltd., Vs. Assistant Director of Income- Tax and another – W.P.No.860/2022 (D.D.09.02.2022). 5 4. Per contra, learned counsel for the respondents submits that there is no merit in the petition and that the same is liable to be dismissed. 5. As rightly contended by the learned counsel for the petitioner in GMR Airpor’s’ case supra, this Court has come to the conclusion that the adjustment made by the respondents under Section 154 of the IT Act without prior intimation under Section 245 of the IT Act, is bad in law and consequently, this Court set aside the said adjustment and directed the respondents to reconsider the claim of the petitioner for refund in accordance with law. 6. A perusal of the facts and circumstances in the instant case, in particular the tax refund adjustment challan dated 13.08.2021 as well as refund status document indicating the refund status produced by the petitioner along with the memo dated 07.09.2021 will clearly indicate that before making an adjustment under Section 154 of the IT Act, the respondents have not issued prior intimation / notice to the petitioner as required under Section 245 of the IT Act, and consequently, in the light of the order passed by 6 the Co-ordinate bench of this Court in GMR Airpor’s’ case supra, I am of the considered opinion that the impugned tax refund adjustment advice / challan at Annexure – F dated 13.08.2021 deserves to be quashed and the matter remitted back to the respondents for reconsideration of the claim of the petitioner for refund of the amount in accordance with law bearing in mind the aforesaid statutory provisions contained in Section 154 and 245 of the IT Act as well as the order passed by this Court in GMR Airpor’s’ case supra. 7. In the result, I pass the following: ORDER (i) Petition is hereby allowed. (ii) Impugned tax refund adjustment advice / challan at Annexure – F dated 13.08.2021 is hereby set aside. (iii) Matter is remitted back to the respondents for reconsideration of the claim of the petitioner for refund bearing in mind Sections 154 and 7 245 of the IT Act as well as the order passed by this Court in GMR Airpor’s’ case supra and in accordance with law, as expeditiously as possible. Sd/- JUDGE SV "