M/S SAMBANDH FINSERVE PVT. LTD., ROURKELA V. ASST. DIRECTOR OF INCOME TAX, CPC, BENGALURU

WP(C)/7217/2023

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M/s. Sambandh Finserve Pvt. Ltd. challenged the adjustment of their tax refund against outstanding demands for the assessment years 2021-22 and 2022-23. The petitioner argued that the demands were not final or sustainable, and some were under appeal or stayed. The Income Tax Department admitted to a mistake in adjusting the refund without considering the petitioner's objections. The court ruled in favor of the petitioner, directing the immediate refund of the adjusted amount with interest, emphasizing that it was the Revenue's responsibility to correct their mistake.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 764955 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 11-05-2023
• Assessment Year: misc
• Other Referred Cases: Assistant Commissioner of Income Tax vs. Greater Noida Industrial Development Authority : (2015) 379 ITR 14 (Allahabad)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: S S MOHAPATRA
• Assessee Lawyers: S RAY; K K SAHOO
• Keywords: Adjustment of Refund; Income Tax Refund; Outstanding Demand; Rectification of mistake
• Section: 143(3); 154

Judgement Text

" Page 1 of 6 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No. 7217 of 2023 M/s. Sambandh Finserve Pvt. Ltd., Rourkela ….. Petitioner Mr. S. Ray, Sr. Adv. assisted by Mr. K.K. Sahoo, Adv. Vs. Asst. Director of Income Tax, CPC, Bengaluru & Others ….. Opp. Parties Mr. S.S. Mohapatra, Senior Standing Counsel (IT) CORAM: JUSTICE S.TALAPATRA JUSTICE SAVITRI RATHO ORDER 11.05.2023 Order No. 04. 1. This matter is taken up through hybrid mode. 2. Heard Mr. S. Ray, learned Senior Counsel, assisted by Mr. K.K. Sahoo, learned counsel appearing for the Petitioner and also Mr. S.S. Mohapatra, learned Senior Standing Counsel, Income Tax Department appearing for the Revenue. 3. By means of this application, the Petitioner has challenged the proposal of adjustment as reflected in the communication dated 29.03.2022 for the assessment year 2021-22 and 2022-23. It has been further urged that the refundable amount shall be released to the Petitioner forthwith. 4. Mr. S. Ray, learned Senior Counsel for the Petitioner has SUKANTA KUMAR BEHERA Digitally signed by SUKANTA KUMAR BEHERA Date: 2023.05.13 16:13:43 +05'30' Page 2 of 6 referred to the status report of tax refund in which the amount that the Petitioner is entitled to receive has been shown. It transpires that the amount of refund is shown adjusted against several demands. The said status report is reproduced below: Status of Income Tax Refund PAN AACCM1716A Assessment Year 2021-22 Mode of Payment Reference Number Status Account Number (masked) Date* NECS 000000000 Adjusted against outstanding demand, (CIN-BSR code 0004329 Challan deposit date-21012023 Challan Sequence no-08365) Jan 21, 2023 NECS 000000000 Adjusted against outstanding demand, (CIN-BSR code 0004329 Challan deposit date-19012023 Challan Sequence no.-04082) Jan 21, 2023 NECS 000000000 Adjusted against outstanding demand, (CIN-BSR code 0004329 Challan deposit date-19012023 Challan Sequence no.-04079) Jan 21, 2023 NECS 000000000 Adjusted against outstanding demand, (CIN-BSR code 0004329 Challan deposit date-21012023 Challan Sequence no.-05521) Jan 21, 2023 NECS 000000000 Adjusted against outstanding demand, (CIN-BSR code 0004329 Challan deposit date-19012023 Challan Sequence no.-03621) Jan 21, 2023 Page 3 of 6 Mr. Ray, learned Senior Counsel has further contended that by the communication dated 29.03.2022 the refund had been sought to be adjusted against the demands which were not final or sustainable. The petitioner raised the objection by his communication dated 01.05.2022 (Annexure-7 to the writ petition). In that communication, the Petitioner has stated that arbitrary demands have been raised against the Petitioner for the assessment years 2017- 18 and 2018- 19. So far the demand relating to the assessment years 2016-17 is concerned, the petitioner had preferred an appeal (relating to the same demand under Section 143(3) of the IT Act). During pendency of the appeal, 25% of the said demand had been deposited by the petitioner and so far as the balance demand for the said assessment year 2016-17 is concerned, there had been a stay order from the CBDT in terms of the CBDT Memorandum dated 31.07.2017. Accordingly, the Petitioner had seriously opposed the proposal for adjustment of the refund, as according to the assessee, there is no demand. The petitioner had earlier approached this Court by filing the writ petition being W.P.(C) No 32805 of 2021 titled as M/s. Sambandh Finserve Pvt. Ltd. vs. National Faceless e-Assessment Centre, New Delhi & Others. On 15.10.2021, Notice was issued by this Court. While issuing the notice, it had been noted that the assessee had placed reliance on the decision in Assistant Page 4 of 6 Commissioner of Income Tax vs. Greater Noida Industrial Development Authority : (2015) 379 ITR 14 (Allahabad). The petitioner had contended that there had been no notice under Section 143(2) of the Income Tax Act, 1961 preceding the assessment by the National Faceless e-Assessment Centre on 21st April, 2021. Finally, by the order dated 20.02.2023 (Annexure-10 to the writ petition), the impugned assessment order and the consequential demand notice were set aside. However, it was also observed that the said order will not prevent the Department from proceeding in accordance with law. 5. Now, on the face of the challenge against the adjustment of refund, the revenue-Opposite Parties have filed their preliminary counter affidavit where in para-5, they have equivocally admitted as follows: “Subsequently, in this case, the assessee was also intimated u/s.245 of the Act, when the refund for the A.Y. 2021-22 and 2022-23 is found to be due for adjustment against the sum of demands mentioned above. But the CPC Bengaluru did not consider the reply of the Petitioner inadvertently as submitted under Annexure-7 of the above writ petition, with respect to the intimation issued u/s.245 of the Act. Therefore the CPC, Bengaluru adjusted the refund for the Assessment Year 2021-22 and 2022-23 with the outstanding demands is a mistake and the same is rectifiable under the provision of section 154 of the Act. Hence, after receiving the rectification petition Page 5 of 6 u/s 154 of the Act from the end of the assessee, the amount will be refunded after proper verification.” [Emphasis added] 6. Mr. S.S. Mohapatra, learned Senior Standing Counsel, Income Tax Department appearing for the Revenue has stated that it is a rectifiable mistake. The said mistake could take place as the order of the High Court was not placed before the authorities for consideration when the grievance was raised by the communication available at Annexure -8 to this writ petition. Be that as it may, we are not inclined to accept the plea that as the mistake is rectifiable, the petitioner shall file an application for correction of mistake under Section 154 of the Income Tax Act, 1961. Section 154 is the provision which authorizes the Income Tax Authority to rectify their mistake apparent on the face of the records. We may reproduce gainfully Section 154(1), which is relevant in the context: “154(1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in section 116 may,- (a) amend any order passed by it under the provisions of this Act; (b) amend any intimation or deemed intimation under sub-section (1) of section 143; (c) amend any intimation under sub-section (1) of section Page 6 of 6 200A; and (d) amend any intimation under sub-section (1) of section 206-CB” The case in hand does not relate to any proceeding and as such, Sub-section 1(a) of Section 154 of the Income Tax Act has no application in the context. It was the duty of the Revenue to correct their own mistake and refund the said amount. But, it has not happened. 7. In the circumstances, we direct the Opposite Parties to refund the said amount as reflected in the Status of Income Tax Refund [see the table above] within a period of 30 days from today with interest at the rate of 5% from the date of adjustment till the refund is actually made. 8. In terms of the above, this application stands allowed and disposed of. Urgent certified copy of this order be granted as per rules. Sukanta (S.Talapatra) Judge (Savitri Ratho) Judge "