Tata Cummins Private Limited V. The Union of India, through the Principal Commissioner of Income Tax, Jamshedpur and Joint Commissioner of Income Tax, Circle-1, Jamshedpur and Deputy Commissioner of Income Tax, Circle-1, Jamshedpur and Assistant Director of Income-tax, Centralised Processing Center, Bengaluru

WPC/2073/2021

AI Insights

The case involves M/s Tata Cummins Private Limited challenging the adjustments made by the Income Tax Department against their refundable amounts for various assessment years, citing non-compliance with the procedural requirements under Section 245 of the Income Tax Act, 1961. The adjustments were made against the outstanding demands for the assessment years 2014-15, 2015-16, and 2016-17. The petitioner argued that they were not given the required intimation and opportunity to respond before the adjustments were made, as mandated by the law. The court examined the procedural compliance of the Income Tax Department and referenced several judgments and circulars to conclude that the adjustments were indeed made in violation of the statutory requirements.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 677288 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 08-03-2022
• Assessment Year: misc
• Other Referred Cases: Tata Communications Ltd. Vs. Union of India & Ors, Jet Privilege Private Ltd. Vs. Deputy Commissioner of Income Tax & Ors, Andrew Telecommunications India (P.) Ltd. Vs. Principal Commissioner of Income-tax, Goa
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: AMRITA SINHA; RAHUL LAMBA
• Assessee Lawyers: NIRAJ SHETH; SUMEET GADODIA; RANJEET KHUSHWAHA
• Keywords: Assessment Year; Income tax refund adjustment; Outstanding Demand; Section 245 Intimation
• Section: 143(1); 139(1); 220(2); 245

Judgement Text

"1 IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P.(T) No. 2073 of 2021 M/s Tata Cummins Private Limited, a company deemed to be Incorporated under the Companies Act, 2013 ---Petitioner Versus 1. The Union of India, through the Principal Commissioner of Income Tax, Jamshedpur. 2. Joint Commissioner of Income Tax, Circle-1, Jamshedpur 3. Deputy Commissioner of Income Tax, Circle-1, Jamshedpur 4. Assistant Director of Income-tax, Centralised Processing Center having its office at Income Tax Department, Bengaluru, District Bengalure (Karnataka) ...Respondents With W.P.(T) No. 2851 of 2021 M/s Tata Cummins Private Limited, a company deemed to be incorporated under the Companies Act, 2013 ---Petitioner Versus 1. The Union of India, through the Principal Commissioner of Income Tax, Jamshedpur. 2. Joint Commissioner of Income Tax, Circle-1, Jamshedpur 3. Deputy Commissioner of Income Tax, Circle-1, Jamshedpur 4. Director of Income-tax, Centralised Processing Center, Income Tax Department, having its office at Bengaluru, District Bengalure (Karnataka) ...Respondents --- CORAM: Hon’ble Mr. Justice Aparesh Kumar Singh Hon’ble Mr. Justice Deepak Roshan --- For the Petitioner : Mr. Niraj D. Sheth, Advocate M/s. Sumeet Gadodia, Ranjeet Khushwaha, Advs. [in both cases] For the Respondents : Ms. Amrita Sinha, Advocate [ W.P.(T) No 2073 of 2021] Mr. Rahul Lamba, Advocate [W.P.(T) No. 2851 of 2021] ---- 08/08.03.2022 Heard learned counsel for the parties. 2. Both these writ petitions raise common legal issue i.e., whether in the absence of intimation under Section 245 of the Income Tax Act, 1961, adjustment of refund can be made against outstanding demand for different Assessment Years? Section 245 of the Income Tax Act reads as under: “245. Set off of refunds against tax remaining payable.- Where under any of the provisions of this Act, a refund is found to be due to any person, the Assessing officer, Deputy Commissioner (Appeals), Commissioner (Appeals) or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or 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 section.” 2 3. Affidavit of respondent no. 4 refers to CPC Instruction No. 1 dated 27th November, 2012 issued pursuant to the directions passed by Delhi High Court in Writ Petition (Civil) No. 2659 of 2012 dated 31st August, 2012 which was Suo Motu taken up pursuant to the letter written by Chartered Accountant, drawing attention of the Court to the problem being faced by the assessees relating to adjustment of refund contrary to mandate of Section 245 of the Income Tax Act. Para-13 of the interim order, quoted under para-6 of the counter affidavit, is extracted hereunder: “13. We issue interim direction to the respondents that they shall in future follow the procedure prescribed under Section 245 before making any adjustment of refund payable by the CPC at Bengaluru. The assesses must be given an opportunity to file response or reply and the reply will be considered and examined by the Assessing Officer before any direction for adjustment is made. The process of issue of prior intimation and service thereof on the assessee will be as per the law. The assessees will be entitled to file their response before the Assessing Officer mentioned in the prior intimation. The Assessing Officer will thereafter examine the reply and communicate his findings to the CPC, Bengaluru, who will then process the refund and adjust the demand, if any payable. CBTD can fix a time limit for communication of findings by the Assessing Officer. The final adjustment will also be communicated to the assesses” The following points emerge from the above quoted para: (i) The process of issue of prior intimation and service thereof on the assesse is as per the law. (ii) The assessee must be given an opportunity to file reply/response. (iii) The reply will be considered/examined by the Assessing Officer before any direction for adjustment is made. (iv) The Assessing Officer will therefore examine the reply and communicate his finding to CPC, Bengaluru who will process the refund and adjust the demand, if any payable. (v) The final adjustment will be communicated to the assesse. 4. The S.O.P prescribed under CPC Instruction No. 1 dated 27th November, 2012 also quoted at para-7 of the counter affidavit of respondent no. 4 is extracted hereunder: (i) Physical verification of demands from all sources-Arrear demand from IRLA, TMS and Manual demands prior to 3 01.04.2010 and demand from AST,TMS,Manual and CPC. (ii) The Assessing Officer have to communicate the legitimate actionable demands to the assessees and provide an opportunity of being heard to the assessees for verification and confirmation of the genuineness of the demands. Modification of the demands to be made by the Assessing Officer following verification of documents submitted by the assessee. (iii) The assessing officer and the range head to certify the correctness and genuineness of the actionable demands. (iv) The assessing officer to upload the above genuine demands on the CPC-FAS. (v) The demands are also uploaded by system in the “My account” of the assessee on the www.incometaxefiling.gov.in website. (vi) In case of refund due on the basis of the demand so uploaded on CPC-FAS, CPC shall issue a prior intimation u/s 245 of the I.T.Act to the assessee to adjust the refund against the correct and legitimate actionable demands due. Simultaneously CPC will inform the Chief Commissioner of Income Tax concerned regarding the intimation sent for his charge fortnightly. The assessee can approach Assessing officer regarding grievance relating to demand, if any within 15 days of receipt of intimation. (vii) The assessing officer within 30 days of receipt of grievance in response to notice u/s 245 shall either rectify or confirm the demand. The demand so crystallized shall be communicated back to the CPC in reference to the same communication vide which the assessing officer was initially communicated regarding the demand. Functionality will be developed within the next six months to intimate CPC online by Assessing officer. In the interim period, assessing officer will intimate the CPC within 30 days from the date, the assessee approaches the assessing officer. (viii) CPC to hold the refund (refund may be determined but kept on hold) in the interim period and following confirmation from the assessing officer carry out adjustment of refund against the demands. 5. As per Department’s Standard Operating Procedure quoted above, CPC is required to issue prior intimation under Section 245 of the I.T Act to the assessee to adjust the refund against the correct and legitimate actionable demands due. Simultaneously, CPC will inform the Chief Commissioner of Income Tax concerned regarding the intimation sent for his charge fortnightly. The assessee can approach the Assessing Officer regarding grievance relating to 4 demand, if any, within 15 days of receipt of intimation. The Assessing Officer within 30 days of receipt of grievance in response to notice under Section 245, shall either rectify or confirm the demand. The demand so crystallized, shall be communicated back to the CPC in reference to the same communication by which the Assessing Officer was initially communicated regarding the demand. As per the SOP, CPC was required to develop the functionality for executing the guidelines contained in the SOP within six months. The interim order of Delhi High Court was later on confirmed on 14th March, 2013, whereafter the department has taken remedial steps to ensure compliance of section 245 of the I.T. Act by giving option to the assessee to approach the jurisdictional assessee. In this background, it is necessary to refer to the facts of the individual writ petitions. 6. In W.P. (T) No. 2073 of 2021, petitioner is aggrieved by adjustment of the amount refundable for the Assessment Year 2020-21 amounting to Rs. 22,85,16,240/- against the outstanding liability for the Assessment Years 2014-15, 2015-16 and 2016-17 in purported exercise of the power under Section 245 of Act. Petitioner has also asked for refund of the amount along with statutory interest to the petitioner as refundable for the Assessment Year 2020-21 in view of the order dated 30th March, 2021 passed under Section 143(1) of I.T. Act (Annexure-4). Annexure-1 is Income Tax Return for the Assessment Year 2020-21 filed under Section 139(1) of the Act, in which the petitioner claimed an amount of Rs. 23,78,631,80/- as refund. Annexure-2 is the intimation under Section 245 of I.T. Act dated 31st March, 2021 by Central Processing Centre giving details of outstanding demand and interest payable under Section 220(2) of the I.T. Act, which are proposed to be adjusted against the refund due for the Assessment Year 2016 being Rs. 12,41,45,840/-. Petitioner has submitted his online reply on 14th April, 2021 (Annexure-3) stating that rectification has been filed online with CPC and it would be filed with jurisdictional Assessing Officer. By Annexure-4, petitioner was intimated under Section 143(1) of the Act with respect to the return of income filed for the Assessment Year 2020-21 at page-77 of the writ petition. Annexure-4/1 intimation shows that the amount of refund of Rs. 22,85,16,240/- is due, which has been adjusted against the outstanding demand for the Assessment Years 2014-15; 2015-16 and 2016-17. This has aggrieved the petitioner to approach this Court. 5 7. According to learned counsel for the petitioner, there was no intimation for adjustment against outstanding demand for the Assessment Years 2014-15 and 2015-16. Even as per intimation for adjustment against outstanding demand for the Assessment Year 2016-17, petitioner was entitled to get 30 days period to pay the outstanding demand before which such adjustment could not have been made. In respect of adjustment made for the demands of Assessment Year 2014-15, according to the petitioner, approximately Rs. 11.83 Crore i.e. 31.28% of the outstanding demand have already been discharged pending disposal of the appeal before the Commissioner of Income Tax (Appeal). The rest of the amount could not have been adjusted pending disposal of the appeal before CIT (Appeal). In respect of Assessment Year 2015-16, learned counsel for the petitioner has submitted that after rejection of the prayer for stay by the Assessing Officer, he has applied before the respondent nos. 1 and 2 on 6th December 2019, on which response is awaited. For the Assessment Year 2016- 17, according to the petitioner, he has filed online response on 14th April, 2021 disagreeing with the demand raised for the said Assessment Year and consequential proposed adjustment. Petitioner has taken steps for filing the appeal before ITAT, Ranchi. On 27th April, 2021 he has filed an application before respondent no 3 online with a prayer for stay of demand for the Assessment Year 2016-17, which is pending. Learned counsel for the petitioner has drawn attention of this Court to Annexures-25/1 and 25/2 being circulars dated 29th February, 2016 and 31st July, 2017, whereunder in case the outstanding demand is disputed before CIT(A), the Assessing Officer should grant stay of demand till disposal of appeal on payment of 20%, as per Circular dated 31st July, 2017, unless the case falls in the category under Para-B thereunder. These Circulars have been placed in support of plea taken for the Assessment Year 2014-15. Learned counsel for the petitioner has, in particular, placed reliance upon the decision of Bombay High Court in the case of Tata Communications Ltd. Vs. Union of India & Ors reported in [2021] 128 taxmann.com 196(Bombay), where similar issue was involved. No separate intimation was sent to the assessee for the other Assessment Years 2007-08 and 2008-09 against which adjustments have been made from the refund due in that case for the Assessment Year 2019-20. Therefore, the Hon’ble Court had set aside the impugned order of adjustment. The recent judgment of Bombay High Court in the case of Jet Privilege Private Ltd. Vs. Deputy Commissioner of Income Tax & Ors reported in 2021 SCC OnLine Bom 1799 is also on the 6 same line. According to learned counsel for the petitioner, any adjustment beyond 20% amount required to be deposited for keeping the demand in abeyance pending disposal of the appeal, cannot be made in view of the opinion rendered by Bombay High Court in the case of Andrew Telecommunications India (P.) Ltd. Vs. Principal Commissioner of Income-tax, Goa. reported in [2017] 77 taxmann.com 312 (Bombay). 8. Respondent nos. 1, 2 and 3 have filed counter affidavit while respondent no. 4 has filed separate counter affidavit. As per respondent nos. 1 to 3, intimation under Section 245 of the Act was sent on 31st March, 2021 to the petitioner and adjustment of refund against the outstanding demands were raised on 23rd April, 2021 by CPC, Bengaluru. The petitioner has submitted his response online to CPC, Bengaluru on 14th April, 2021 but not before jurisdictional officer- respondent no. 3. The contention of the petitioner relating to adjustment against the demand due for different Assessment Years 2014-15, 2015-16 and 2016-17 against the intimation dated 31st March, 2021 are dealt with under Para-22 of the counter affidavit. As regards, the Assessment Year 2016-17, it is the case of respondent nos. 1 to 3 that no rectification petition is pending at the time of making such adjustment against demand of Rs. 12,41,45,840/- i.e. 23rd April, 2021. Since 30 days period had not expired by that date from the date of intimation, no interest under Section 220(2) of the Income Tax Act was levied and adjusted. For the Assessment Year 2015-16, petitioner has preferred an appeal after adjustment before learned ITAT, which is pending adjudication. Learned counsel for the respondent nos. 1 to 3 has also pointed out that against the outstanding demand of Rs. 12,41,45,840/-, an amount of Rs. 4,63,65,389/- for the Assessment Year 2016-17 has been adjusted. 9. Petitioner’s application for rectification was meanwhile allowed on 19th December, 2019 and the demand was reduced to Rs. 33,30,559/- from Rs. 8,77,72,805/- for the Assessment Year 2014-15. It has been stated that the period of stay has been extended upon deposit of 20% of the outstanding demand again and again and lastly till 31st December, 2020. Learned counsel for the respondent has pointed to the letter dated 16th November, 2020 (Annexure- 24/2) on the subject of stay of recovery proceeding against the outstanding demand for the Assessment Year 2014-15. It is stated that the Assessee was requested to cooperate in early disposal of appeal and intimated that any refund arising for other assessment years will be adjusted against the outstanding 7 demand as per Section 245 of the Act. According to learned counsel for the respondent, this was in the nature of intimation under Section 245 of the Act. 10. Respondent no. 4 has also filed an affidavit. The proposition in law as to the requirement of an intimation under Section 245 of the I.T. Act has been noted in the foregoing paragraphs of this order. It is accepted at paragraph 11 (iii) that intimation under Section 143(1) of the IT Act was issued on 30th March, 2021 indicating the proposed adjustment against the refund determined in the intimation for which a separate notice/intimation under Section 245 of the I.T Act was sent on 31st March, 2021 via mail. At para –11(iv), the respondent admits that the language used in the intimation under Section 143(1) dated 31st March, 2021 that the refund is adjusted against the demand of outstanding is incorrect as the demands were actually adjusted on 23rd April, 2021 after following the due procedure. As regards the intimation for the Assessment Years 2014-15 and 2015-16 is concerned, it is stated at Para-11(iv) that earlier intimation was issued on 8th January, 2020 and 17th January, 2020 proposing the adjustment against the outstanding demand for the said Assessment Year. However, this statement under sub para-6 has been clarified at para 26 of the counter affidavit that intimation under Section 245 of I.T. Act had earlier been issued for adjustment against the demand due for the assessment year 2014-15 and 2015-16 although pertaining to the Assessment Years 2002-03; 2003-04 and 2004-05. 11. It needs to be mentioned here that these intimations dated 8th January, 2020 and 17th January, 2020 do not relate to the subject matter of the present writ petition. Petitioner has filed rejoinder affidavit to both counter affidavits and also rejoinder to the supplementary counter affidavit of respondent nos. 1 to 3, wherein the respondents have brought on record the screen shots showing refund status adjusted on 23rd April, 2021. This concludes the narration of facts so far as W.P.(T) No. 2073 of 2011 is concerned. W.P. (T) No. 2851 of 2021 12. The grievance of the writ petitioner in the instant writ petition relates to adjustment of outstanding liability for the Assessment Year 2014-15 against admitted refund amount due to the petitioner for Assessment Years 2005-06, 2006-07 and 2007-08 of Rs. 5,32,81,263/-, Rs.3,50,94,902/- and Rs. 5,52,51,280/- respectively in purported exercise of power under Section 245 of the I.T. Act. Petitioner has also sought declaration that the action of the respondent-authorities in adjusting over and above 20% of the alleged 8 outstanding liability for the Assessment Year 2014-15 against the admitted refund amount due to the petitioner for the aforesaid Assessment Years is contrary to the Instructions issued by Central Board of Direct Taxes dated 21st March, 1996 (Annexure-14) and other two Office Memorandum dated 29th February 2016 and 31st July, 2017, referred to earlier, which are Annexure-14/1 and 14/2 of the present writ petition. In this context, learned counsel for the petitioner has once again referred to the judgment of Bombay High Court in the case of Andrew Telecommunications India (P.) Ltd.(Supra). Petitioner has also sought refund of the total amount of Rs. 14,36,27,445/- along with statutory interest for the aforesaid assessment years. The relevant facts necessary to be taken note of in the present writ petitions are being narrated hereinafter. 13. Petitioner in the present writ petition claims to have deposited Rs.11.83 crores, which approximately comes to 31.28% of the outstanding demand of Rs. 37,82,25,500/- (page -58 of the petition) payable for the Assessment Year 2014-15. One of the arguments of learned counsel for the petitioner in the present case is that any adjustment beyond 20% of the amount liable to be deposited for seeking stay of the impugned demand pending disposal of appeal before CIT(Appeal) could not have been adjusted against the refund due for the relevant assessment year. The other argument is common to the first writ petition. According to the petitioner, in the present case, no intimation under Section 245 of the I.T. Act for adjustment against outstanding demand was given for refund due for the Assessment Years 2005-06, 2006-07 and 2007- 08. Though, adjustment were made for the Assessment Years 2002-03, 2003-04 and 2004-05 upon due intimation but adjustments were also made against refund due for subsequent Assessment Years 2005-06, 2006-07 and 2007-08 without any intimation under Section 245 of the Act. The tabular chart furnished by the petitioner showing the amount of refund adjusted against outstanding demand for the Assessment Year 2014- 15 is as under: Particulars Amount (in Rs.) Refund for Assessment Year 2002-03 adjusted 24,29,496 Refund for Assessment Year 2003-04 adjusted 35,34,072 Refund for Assessment Year 2004-05 adjusted 10,88,259 Refund for Assessment Year 2005-06 adjusted 5,32,81,263 Refund for Assessment Year 2006-07 adjusted 3,50,94,902 Refund for Assessment Year 2007-08 adjusted 5,52,51,780 Total: 15,06,79,772 9 14. The fact that no intimation for adjustment of the refund due against Assessment Years 2005-06, 2006-07 and 2007-08 was given to the petitioner, is not in dispute by the respondent. Learned counsel for the respondent Mr. Rahul Lamba has, however, submitted that petitioner was under intimation for the Assessment Years 2002-03, 2003-04 and 2004-05 against the outstanding demand for the Assessment Year 2014-15 which had crystalized. As such, any adjustment made against the refund due for the subsequent assessment years could not cause any prejudice to the petitioner. However, learned counsel for the respondent does not dispute on facts that there was no intimation for adjustment of refund due in terms of Section 245 of the Act for the Assessment Years 2005- 06, 2006-07 and 2007-08. According to him, though intimation may not have been in the same format, but they were under intimation as per para-6.3 of the counter affidavit of respondent nos. 1, 2 and 3. Counter affidavit has separately been filed by respondent no. 4 as well. Petitioner has filed rejoinder to the affidavit of both sets of respondent. Discussions and Analysis 15. We have taken note of the relevant materials placed from the pleadings on record as also the submission of learned counsel for the parties. The legal issue involved is in a narrow compass pertaining to issuance of statutory intimation required under Section 245 of I.T Act. The contention of the parties as to whether adjustment for those refunds due to the petitioner could be made against the relevant years on merits need not be commented upon. In both the writ petitions, it is not in dispute that adjustments have been made for the assessment years regarding which no intimation was issued. In W.P.(T) No. 2073 of 2021 intimation at Annexure-2 specifically relates to Assessment Year 2016-17 against the refund due to the petitioner for the Assessment Year 2020- 21, whereas adjustments have been made from the refund due to the petitioner against the outstanding demand for the Assessment Years 2014-15 and 2015-16 also. As regards W.P (T) No. 2851 of 2021, petitioner did not get any intimation for adjustment against the refund due for the Assessment Years 2005-06, 2006- 07 and 2007-08 against the outstanding demand for the year 2014-15. Though respondent in the second writ petition have contended that the petitioner was under intimation for adjustment for the Assessment Years 2002-03, 2003-04 and 2004-05, but that does not fulfil the requirement of Section 245 of the Act. The legal issue at hand is no longer res integra in view of the judgments rendered by 10 other jurisdictional High Court such as Bombay High Court in the case of Tata Communications Ltd. (Supra); Jet Privilege Private Ltd. (Supra) and Andrew Telecommunications India (P.) Ltd (Supra). In the case of Jet Privilege Private Ltd. (Supra) the Bombay High Court dealing with the same issue has held as under: “11. For ease of reference, we shall quote Section 245 of the Act, which read as under: “245. Set off of refunds against tax remaining payable.- Where under any of the provisions of this Act, a refund is found to be due to any person, the Assessing officer, Deputy Commissioner (Appeals), Commissioner (Appeals) or Chief Commissioner or 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 section.” 12. Mere perusal of the section makes it clear that the officers mentioned in the section, 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 the Act by the assessee to whom the refund is due. The officer may set off the amount to be refunded or any part of that amount only after giving an intimation in writing to the assessee of the action that he proposed to take under this section. Therefore it clearly requires the intimation to be given prior to the officer sets off the amount payable against the amount to be refunded. It can be neither simultaneous nor subsequent. 13. We find support for this view in Suresh B. Jain v. A.N.Sheaikh, Sixteenth Income-tax Officer, confirmed by the Division Bench of this court in A.N.Shaikh, Sixteenth Income-tax Officer v. Suresh B. Jain and in Hindustan Unilever Limited v. Deputy Commissioner of Income-tax-1 (1) relied upon by Mr. Pardiwalla. 14. The fact that respondent has not followed the mandatory prior requirement of intimation under Section 245 o the Act would make the adjustment wholly illegal and therefore, respondent was clearly in error in not refunding the amount. 15. As per the Office Memorandum [F.No. 404/72/93- ITCC] issued dated 29th February, 2016, amended by another Office Memorandum dated 25th August, 2017 the assessing officer shall grant stay of demand where the outstanding demand is disputed on assesse paying 20% of the disputed demand. Admittedly, petitioner has filed an appeal disputing the outstanding demand for A.Y 2015-16 and A.Y 2016-17 and have deposited 20% of the amount demanded. Therefore, there is a stay of demand in force. The effect of this deposit would mean that the time to make the payment stands extended and petitioner is not deemed to be an assessee in default for the recovery provisions to 11 be set in motion [Hindustan Unilever (supra).” 16. In the case of Andrew Telecommunications India (P.) Ltd (Supra), the issue before the learned court was, whether the entire amount of refund could be adjusted against the impugned demand as a condition prescribed, whereas the assessee’s contention was that only 15% of the impugned demand could be adjusted out of total amount of refund due. Such contention of the petitioner was upheld by relying upon office memorandum dated 29th February, 2016, as under: “8. We have carefully considered the rival circumstances and the submissions made. The impugned demand is for Rs. 16,90,79,380/-. Admittedly, the petitioner has challenged the said demand in an appeal, which is pending before the CIT(A). According to the respondents, the impugned order refusing to grant stay is passed on the administrative side. Be that as it may, the O.M. dated 29.02.2016, to the extent relevant, reads thus. 4. In order to streamline the process of grant of stay and standardize the quantum of lump sum payment required to be made by the assesse as a pre-condition for stay of demand disputed before CIT (A), the following modified guidelines are being issued in partial modification of Instruction No. 1914: (A) In a case where the outstanding demand is disputed before CIT (A), the assessing officer shall grant stay of demand till disposal of first appeal on payment of 15% of the disputed demand, unless the case falls in the category discussed in para (B) hereunder (B) to (D) ** E. In granting stay, the Assessing Officer may impose such conditions as he may think fit. He may, inter alia,: (i) require an undertaking from the assesse that he will cooperate in the early disposal of appeal failing which the stay order will be cancelled; (ii) reserve the right to review the order passed after expiry of reasonable period (say 6 months) or if the assesse has not cooperated in the early disposal of appeal or where a subsequent pronouncement by a higher appellate authority or court alters the above situations; (iii) reserve the right to adjust refunds arising, if any, against the demand, to the extent of the amount required for granting stay and subject to the provisions of Section 245. 9. It can thus be seen that under para 4(A) of the O.M., a case where outstanding demand is disputed before the CIT(A) (as in the present case), the assessing officer shall grant stay of demand, till the disposal of the first appeal on payment of 15% of the disputed demand, unless the case falls in category discussed in para 4(B). It is not in dispute that the present case would not fall in the category as provided in para 4(B) of the O.M. and thus, would be governed by para 4(A) 12 10. It is further not in dispute that a refund for Rs. 12,25,45,340/ is pending before the Principal CIT for the Assessment Years 2006-07 and 2007-08. It is further undisputed that the said refund is pending since 20.01.2016 (Assessment Year 2006-07) and since 20.04.2016 (Assessment Year 2007-08) 11. It would further appear that para 4 (E) contemplates some additional conditions, which may be imposed by the assessing officer, while granting stay, which includes a right to adjust the refund, if any, to the extent of demand required for granting stay and subject to the provisions of Section 245. It was not disputed during the course of the arguments at bar that such a demand can be adjusted against the pending refund for the previous year, if any. The dispute is really about the extent of such adjustment. While it is claimed by the respondents that the entire amount of the refund shall be adjusted as against the impugned demand as a condition for stay, on behalf of the petitioner, it is contended that 15% of the impugned demand may be adjusted, out of the total amount due, which is in excess of Rs. 12 crores. Presently, we are only concerned with the issue of grant of stay of the impugned demand. Considering the overall circumstances and para 4(A) of the O.M., we find that the impugned order can be stayed, subject to an amount of Rs. 2,53,61,907/- (15% of the total demand of Rs. 16,90,79,380/-) being adjusted out of the refund, which is due for the Assessment Years 2006-07 and 2007-08.” 17. Learned counsel for the respondents are not right in saying that communication at Annexure-24/2 dated 16.11.2020 in the first writ petition or communication at Annexure-10/2 in the second writ petition of the same date were in the nature of intimation under Section 245 of I.T. Act as to the proposed adjustment against the outstanding demand from the refund due for the relevant assessment years. It is to be mentioned here that while the intimations dated 8th January, 2020, 17th January, 2020 or 31st January 2020, referred to above in the respective writ petitions, are in a proper format, as required under Section 245 of I.T. Act, the letters at Annexure-22 or 10/2 are in fact communication on the subject of stay of recovery proceedings against the outstanding demand for the assessment year, whereunder the department has reserved its right to adjust the refund due against the demand for relevant assessment year. Department cannot follow different practices or format for compliance of the statutory mandate of the act. 18. It needs to be pointed out at this stage that learned counsel for the respondents during course of their submissions on instruction from CPC, Bangalure, have stated that revised intimation under Section 245 can be issued from CPC portal incorporating all the demands which were adjusted out of 13 refund due if liberty is allowed to the respondents to do so, in accordance with law. 19. We have given anxious consideration to the legal question raised at the outset in the factual canvass of the case, discussed hereinabove. As an off- shoot of the aforesaid discussions, it is clear that adjustments have been made by the department for assessment years 2014-15, 2015-16 in W.P.(T) No. 2073 of 2021 without any intimation and that too within 30 days of the intimation for the assessment year 2016-17. In W.P.(T) No. 2851 of 2021 indeed there has been no intimation for adjustment of refund due for the assessment year 2005-06, 2006- 07 and 2007-08 against outstanding demand of the year 2014-15. We have consciously refrained from commenting upon merits of the case of the parties as regards to what extent such adjustments would be made even after intimation. The case is being decided only on the narrow point of lack of intimation under Section 245 of the I.T.Act. The respondents are not empowered to adjust the refund amount automatically without complying the provisions of Section 245 of the Act. Adjustment made against the refund due to the petitioner for the relevant year therefore have to be set aside. Accordingly, they are set aside. However, department is at liberty to act in accordance with law after due intimation and opportunity to file response, as contemplated under Section 245 of the I.T. Act for undertaking adjustment against any refund admissible to the petitioner for any assessment year against the outstanding demand for relevant assessment years. Accordingly, the writ petitions are allowed in the manner and to the extent indicated hereinabove. (Aparesh Kumar Singh, J) (Deepak Roshan,J) jk/ "