AI Insights
The case involves TSI Business Parks (Hyderabad) Pvt. Ltd., the petitioner, who challenged the actions of the Income Tax Department in adjusting excessive refunds against outstanding tax demands for various assessment years. The petitioner argued that the adjustments were arbitrary and illegal, particularly highlighting that the adjustments were made without proper notice under Section 245 of the Income Tax Act, 1961, and despite a stay on the demand for Assessment Year 2017-18. The court examined the procedural adherence of the Income Tax Department in making these adjustments and found them lacking, leading to the decision in favor of the petitioner.
Appeal Details
Counselvise Citation
[2021] 140 COUNSELVISE.COM (IT) 753487 (HC-TELANGANA)
Assessee PAN
Bench
Appeal Number
CRN Number
Appellant
Respondent
Appeal Type
Others
Pronouncement Date
22-01-2021
Assessment Year
misc
Judgement Text
"HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE TWENTY SECOND DAY OF JANUARY TWO THOUSAND AND TWENTY ONE PRESENT THE HON'BLE SRI JUSTICE M. S. RAMACHANDRA RAO AND THE HON'BLE SRI JUSTICE T. AMARNATH GOUD ad) Pvt., Ltd, Sy.No. 115 (part), waverock Hyderabad-SOO 008 Telangana, rep. by its rdwaj ...PETITIONER AND 1. The Assistant Commissioner of Income Tax, Circle -2 (1), sth Floor, Signature Towers, Opp. Botanical Garden, Kondapur, Hyderabad-SO0 084. 2. The Assistant Director of lncome Tax CPC, Centralized processing Centre prestige Alpha No. 4811 , 4812, Beratenagrahara Begur Hobli, Hosur Road, Bengaluru, Karnataka-560 1 00. 3. Union of lndia, through Secretary, Ivlinistry of Finance, Department of Revenue, North Block' New Delhi-1 10001 ...REspoNDENrs Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ order or direction more particularly one in the nature of writ of Ivlandamus, declaring the action of the respondents in adjusting excessive refunds as arbitrary, illegal, set aside the same and consequently direct the respondents to refund the excessive amount to the tune of INR 1,06,06,740 with interest Counsel for the Petitioner: SRI DEEPK CHOPRA, SENIOR COUNSEL FOR SRI G. NARENDRA CHETTY Counsel for Respondent Nos.1&2: Ms. K MAMATA CHOUDARY, SENIOR COUNSEL FOR INCOME TAX Counsel for Respondent No.3: SRI NAMAVARAPU RAJESHWAR RAO, ASSISTANT SOLICITOR GENERAL Between: AND It//s. TSI Business parks (Hyderab Building, Nanakaramguda Village, authorized signatory A/r. Sanjay Bha It//s. TSI Business parks (Hyderabad) Pvt., Ltd., Sy.No. 1 15 (part), waverock Building, Nanakaramguda Village, Hyderabad-500 008, Telangana, Rep. by its authorized signatory tvl r. Sanjay Bhardwai. ...pE,,oNER WRIT PETITION NOS: 19243 AND 19259 OF 2020 wP NO.19243 0F 2020: Between: WP NO: 19259 OF 2020 1. Assistant Director of lncome Tax, CPC Centraalized processing Centre prestige Alpha No. 4811,4812, Beratenagrahara Begur Hobli, Hosur Road, Bengaluru, Karnataka-560100. 2. Assistant Commissioner of lncome Tax, Circle -2 (1), sth Floor, Signature Towers, Opp. Botanical Garden, Kondapur, Hyderabad-500 084. 3. Union of lndia, through secretary tt/inister of Finance Department of Revenue, North Block New Delhi-1 10001. ...RES'.NDENTS Petition under Article 226 of the constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a writ order or direction more particularly one in the nature of writ of Mandamus, declaring, the action of the respondents in adjusting the refunds due for AY 2O1g-20 as arbitrary, illegal, set aside the same and consequently direct the respondents to refund the amount to the tune of INR 6,25,70,390 with interest Counsel for the Petitioner: SRI DEEPK CHOPRA, SENIOR COUNSEL FOR SRI G. NARENDRA CHETTY Counsel for Respondent Nos. 1&2: Ms. K MAMATA CHOUDARY, SENIOR COUNSEL FOR INCOME TAX Counsel for Respondent No.3: SRI NAMAVARAPU RAJESHWAR RAO' ASSISTANT SOLICITOR GENERAL The Court made the following: COMMON ORDER HONOURABLE SRI JUSTICE M.S. RAMACHANDRA RAO AND HONOURABLE SRI JUSTICE T. AMARNATH GOUD WRIT PE,TITION Nos.I9 243 and 19259 of 2020 COMMON ORDER: (Per Hon'ble Sri Justic:e lt,l.S. Ramachanclra Rao) Since common issues of law and fact arise for consideration and since both cases are filed by the same petitioner against the Income Tax Department of the Union of lndia, they disposed of by this Common Order. are being 2. Heard Sri Deepak Chopra, Senior Counsel appearing for G. Narendra Chetty, counsel for petitioner, and Ms. Mamta Choudhary, Senior Standing Counsel for the Income Tax Department, for respondent nos.1 and 2 in both the Writ petitions. 3. The petitioner is a limited Company and is engaged in the business of developing LT. Parks in Hyderabad. It is an assessee under the Income Tax Act, 196 I , (for short, othe Act,), Writ Petition No. 19243 af 2020 4. The petitioner had filed its Return of Income for the Assessment Year 2017-18 on 31.10.2017 by declar.ing an income of I{s.2,75,64,380/- under normal provisions and Rs. 16,00,17,5I 4/- under MAT provision and had paid a tax on MAT of Rs.3,41,50,298/-. 5. An Assessment Order dt.23.12.2019 was passed by the Assistant Commissioner of Income Tax, Circle - 2(2), t.Iyderabad ./2nd respondent) making a total addition of Rs.36,34 ,89,721- to the MSR.J & TA.J Np 19243]020 & i,p_19259_2020 income retumed by the petitioner under the MAT provisions and raising a demand for tax of Rs.8,01,57,967 under Section 156 of the Act. 6. Petitioner preferred an Appeal against it before the Commissioner of Income Tax (Appeals) and also filed an application seeking stay ofthe demand before the 2nd respondent. 7. On 29.01.2020, the 2nd respondent disposed of the stay application following CBDT Instruction No.1914 dt.02.02.1993 directing the petitioner to pay 20o/o of the disputed demand for grant of stay. The 2'd respondent stated that stay will be granted on submission of challan for 20Yo of the demand raised for the Assessment Year 20 17- I 8. 8. According to petitioner, oral discussions took place with the 2nd respondent wherein the latter directed petitioner to deposit a sum equivalent to 10% ofthe outstanding demand and the remainder l0% was agreed to be adjusted against the determined refunds due to the petitioner for Assessment Year 2018-19; and in compliance thereof, petitioner deposited Rs.80,00,000/- on 31.01.2020. Copy of the said challan is enclosed as Amexure A.4. g, Thereafter, through a letter Annexure A.5 dt.lO.O2.2O2O, petitioner apprised the 2nd respondent regarding the deposit of the money as directed and further requested 2nd respondent to adjust the balance of Rs.80,31,5931 [Rs.1,60,31,5931- (being 20% of the ) MSR,J & IA.J wp_19243 2020 & wp_19259 2020 outstanding demand) less Rs.80,00,000/-l against the determined refund of Assessment Year 20 I 8- I 9. 10. But, on 15.04.2020, without any prior intimation under Sec.245 of the Act, the Assistant Director of Income Tax, Centralized Processing Center, Bangalore (1't 'respondent) adjusted the entire refund due to the petitioner for Assessment Year 2018-19, i.e., Rs.1,86,38,333i- i,e Rs. I,30,45,8131- against the outstanding demand for Assessment Year 2017-18 (as opposed to the agreed sum of Rs.80,3 1,593/-) and Rs.55,92,520 against an alleged outsranding demand for Assessment Year 2008-09. Petitioner has annexed as Annexure ,4'.6, copy of the refund status for Assessment Year 201 8- I 9 evidencing adjustment of refund on 15.04.2020. ll. Thereafter, on 09.05.2020, the l't respondent issued a notice under Section 245 of the Act proposing to adjust the determined refund of Assessment Year 2019-20 against the outstanding demand for Assessment Year 201 7- I 8 and Assessment Year 2008-09. 12. This notice is subject matter of Writ Petition No.19259 of 2020. 13. Petitioner contends that in the notice d1.09.05.2020, the l'1 respondent acknowledged that the outstanding demand fbr Assessment Year 2017-18 as on 09.05.2020 was Rs.5,91,12,1571- [being Rs.8,01,57,967 minus (Rs.80,00,000/- + Rs.1,30,45,813/-)] indicating that the adjustment of excessive refund for Assessment J Year 201 8-1 t had occurred on | 5.04.2020. MSR,J & TAJ wp-19243 _2020 & wp_19259_2020 14. Thereafter, on 13.05.2020, another notice under Section 245 of the Act was issued by the 1't respondent proposing to adjust the refund (which had in fact already been adjusted) due to the petitioner for Assessment Year 2018-19 against the outstanding demands of Assessment Year 2008-09 and Assessment Yeat' 201 7- 1 8 (Annexure A.8). 15. Petitioner hled a letter Ex.A.9 dt'15'06'2020 with the 1\" respondent apprising the 1't respondent of these facts alld protesting against the adjustment of the excessive refund against the outstanding demand for Assessment Year 2017-18 mentioning that there was no demand outstanding for Assessment Year 2008-09 and seeking that the excess amount adjusted to the tune of Rs'1,06,06,7401- be refunded to it. The Assessment Order passed for Assessment Year 2008-0gandthechallanevidencingpaymentofdemandwerealso filed as Annexures A.10 and A'11. 16. Thereafter, the l't respondent passed the order dt'23'07'2020 (Annexure A.12) acknowledging that petitioner had deposited a sum higher than 200/o of the outstanding demand and granted stay of demand till the disposal of the Appeal by the CIT (Appeals)' 17. Petitioner filed Annexure A.13 letter dt'07'08'2020 with the 1\" respondent protesting against the entire actions of the respondents and complaining that the adjustment of refunds was unjust and contrary to law { MSR,J & TA,J )p_19243 *2020 & wp_t9259 2020 18. Petitioner therefore filed Writ petition No.19243 of 2020 challenging the action of respondents in making such alleged unjust adjustment of excess refunds to the tune of Rs.1,06,06,7401- and seeking refund of the saine with interest. Writ Petition No.l 9259 of 2020 19. For the Assessment Year 2019-20, petitioner had filed its Return oflncome on 30. 10.2019 and had declared a Book profit of Rs.41,95,09,463l- and claimed a refund of Rs.5,79,35,600/-. 20. On 09.05.2020, rhe l \" respondent issued the first notice Annexure A.8 under Section 245 of the Act proposing to adjust the determined refund of Assessment year 2}lg-20 against the outstanding demand for Assessment years 2008-09 and 20 I 7- 1 g. 21. Petitioner filed Annexure A.9 response dt.07.06,2020 with the I't respondent online contesting the said adjustment and informing the latter that the demand for Assessment Year 2017-18 had already been stayed post the deposit of the requisite 2Oyo as required by the 2\"d lespondent. 22. Petitioner also filed Annexure A.l0 letter dt. 15.06.2020 with 2nd respondent questioning how the demand for Assessment year 2008-09 (which was non-exisrent as it was already paid fully by the petitioner) could have been again recovered by adjustment of the refund for Assessment Year 2019-20: and reiterating its objection to the adjustrnent of demand for Assessment y ear 2017-18 against the 5 refund for the Assessment Year 2019-20 as already stated in the 07 .0 6.2020 on-line reply. 23. On 08.07.2020, an order Annexure A.11 under Section 143(1) of the Act was passed by the 1'1 respondent for the Assessment Year 20119-20 determining the refund due to the petitioner to the tune of Rs.6,25,70,3901-; and simultaneously 1 respondent issued the impugned notice dt.08.07.2020 (Annexure A. 1) under Section 245 of the Act proposing to again adjust the above mentioned detennined refund against the outstanding demands for Assessment Years 2008-09 and 2017-18 and asked the petitioner to file a response thereto in (30) days. 24. Even before the said period of 30 days granted to the petitioner to respond to the said notice expired, the l't respondent on 24.07 .2020 itself adjusted the entire refund for Assessment Year 2019-20 against the remainder outstanding demand for Assessment Year 2017-18 including the principal amount of Rs.5,91,12,1571- and interest of Rs.34,58,233l- which is evidenced by the sueen-sftof (Annexure A.13) and extracts of Form 264.3 of Assessment Year 2017-18 (Annexure A.14). 25. As a last resort, petitioner filed its grievance before the I't respondent's on-line portal as well as by physical letters apprising the l't respondent regarding the facts of the case and questioning how refunds have been adjusted against the demand which had already been stayed by 2nd respondent. The copy of online grievance filed with the e-Nivaran pofial and the letter filed with the 1't respondent st ::6:: MSR,J & TA.J wp 19243 _2020 & wp,19259_2020 MSR.J & 14.J !vp_r9243_2020 & !vp-19259-2020 dt. I 0.09.2020 are attached herewith as Annexures A. l7 and A. I 8. respectively. 26. In response to such grievance petition, the l't respondent closed the grievance by stating that the demand details for the Assessment Year 2017-18 were uploaded by the 2'd respondent and stated their inability to assist in the matter. The e-mail dt.12.09.2020 is attached as Annexure A.19. 27. Thereafter, petitioner t-rled Writ Petition No.19259 of 2020 seeking refur.rd of Rs.6,25,70,3901- with interest. Contentions of Detitioner 28. Petitioner contends : (a) in terms of the CBDT Instruction No.1914 r/w Office Memorandum and the 2nd respondent's order dt.29.01.2020, the petitioner was mandated to only deposit a surn of ?lYo of the outstanding demand and therefore, the respondents could not have recovered a higher sum; (b) issuance of Notice under Section 245 of the Act is a necessary pre-requisite so as to enable the petitioner to file objections against orders of adjustment and the adjustment of ret-unds even prior to issuance of such notice is patently illegat. Petitioner places reliance on the decision of the A.P. High Court in Japson Estates (P) Ltd. vs. Dy. Commissioner of . Income Taxr and also a decision of the Delhi High Court in 7 '12oo6y 2es r.r.R.40 (A.P.) (D.8.) a MSR,J & TA,J wp _19243 _2020 & wp .19259 _2020 Glaxo Smith Kline Asia (P) Ltd. vs. Commissioner of Income Tax2; (c) recovery of demands which have been stayed by the Revenue Authorities has no legal sanction as held in Maruti Suzuki India Ltd. vs. D.C.I.T.3; (d) the action of the 1't respondent purportedly under Section 245 of the Act in adjusting the refunds due to it for the Assessment Year 2018-19 against the outstanding dernand for Assessment Year 2017-18 when the 2nd respondent had granted a stay of the outstanding demand on29.01.2020 for Assessment Year 2017-18 subject to the petitioner depositing 20% of such demand, is patently illegal; that in terms of Circulars issued by the CBDT, adjustment of refunds only to the extent of 20,,/o is permitted, and the 1't respondent had acted contrary to binding Circulars of the CBDT; that the said adjustment was made without issuing any notice under Section 245 prior to such adjustment, and a notice under Section 245 issued after such adjustment of refund, is also illegal; and consequently, the respondents ought to refund Rs.i,06,06,7401- with interest in Writ Petition No.19243 of 2020; (e) the notice dt.08.07.2020 issued by the 1't respondent under Section 245 of the Act and the consequential adjustment of refunds due to the petitioner for Assessment yeat 2019_20 ' r2oo:1 206 1.1.p.35 (DELHI) '(2011 347 I.T.R. 43 (DELHt) MSR.] & TA,J wp_l9243_2020 & wp_19259 2020 against the outstanding demand for Assessmentyear 2017-lg, is illegal since recovery had already been stayed by the 2,d respondent post compliance of the 20% deposit as requir.ed; in any event there could not have been any adjustment even before the expiry ofthe 30 days period granted to petitioner to respond to tlre intimation under Section 245; and consequently, the respondents ought to refund Rs.6,25,70,390/- with interest in Writ Petition No.19259 of 2020: 29. The respondent nos.l and 2 filed counter_affidavits in both Writ Petitions. 30. They admit that intimation orgt,t to be given to the assessee before making an adj ustment of refund towards pending tax dues under Section 245 of the Act. 31. As regards Writ petition No.19243 of 2020 is concerned, both respondents state that fbr Assessmentyear 2017-lg, the demand was collectible on 23.01.2020, and for Assessment year 200g_09. it was collectible on 29.01.2020. 32. It is conrended that the letter dt.zg.Ol.2020 merely cornmunicated the condition for consideration of the stay application for staying the demand for Assessmen tyear Zll7_lgpending Appeal before the CIT (Appeals), but it is contended that the stay was granted lonly on 23.07.2020 and in the meantime the refund due to the petitioner for 201 8- 1 9 was adj usted against the demands for ::9:: The stand of resnondent nos.l and 2: :: l0:: ] ,ISR,J & TA..I vtp_19243 2020 & wp 19259 2020 Assessment Years 2008-09 and Assessment Year 2017-18 on 18.03.2020 and 22.07 .2020, i.e., prior to the order of stay as they were marked as collectible in January, 2020 itself. 33. It is also stated that the petitioner had raised an objection in regard to demand for Assessment Year 2008-09 on 06.09.2017 itself contending that the demand had already been paid, and the Assessing Officer had taken action to resoive this error and initiated a refund for Assessment Year 2008-09 on 22.06.2020 which was then processed and issued on 09.12.2020. 34. It is however stated that intimation under Section 245 prior to the adjustment was not issued by oversight and it was issued subsequently after the l't respondent became aware of the lacuna. 35. In the counter affidavits, there is no answer to the question why prior intimation was not given to the petitioner as required under Section 245 of the Act before adjusting the refunds due to the petitioner for Assessment Year 20 I 8- l9 against the outstanding demand for Assessment Year 2017- 18. 36. Coming to Writ Petition No.19259 of 2020, it is contended that intimation under Section 245 was given by the l't respondent proposing to adjust the determined refund of Assessment year 2019- 20 against the outstanding demand for Assessment years 2008-09 and 2017-18, and it is contended that this was not objected to by the petitioner. ::ll:: MSR,J & TA,J vtp_t 9243 _2020 &. w 19259_2020 37. It is stated that intimation under Section 143(l) was passed on 08.07.2020 determining the refund for Assessment year 2)i.g_20 along with intimation under Section 245 of adjustment of such refund against the demand outstanding for Assessment year 2017- 1g and the adjustment was made on22.07.2020. 38. We have noted the contentions of the respective parties. 39. Section 245 of the Income Tax Act states : \"245. lVhere undcr any of the provisions of this Act, a refund is found to be due to any person, the Assessing Ofiicer, Deputy Commissioner (Appeals), Commissioner (Appeals), or principal Chief Commissioner or Chief Commissioner or principal Commissioner or Commissioner, as the cose may be, may, in tieu of payment of the refund, set off the omounl to be refunded or any port of that amounr, agqinst the sum, iJ' any, rcmaining payable under this Act by the person to v,hom the refund is due, after sivins an inlimalion in writins lo such oerson o/' the aclion orooosed Io be taken un r this section. \" (emphdsis supplied) 40. It is admitted in para no.8 of the counter-affidavit filed by l'1 respondent in Writ Petition No.19243 of Z02O that intimation under Section 245 of the Act was not issued by oversight by the l't respondent before adjusting on 15.04.2020 the refund due to the petitioner for Assessment Year 2018-19 of Rs.1,g6,3g,333/- against the outstanding demand for Rs.1,30,45,813/- for Assessment year 2017-18 and for Rs.55,92,520/-, the alleged outstanding demand for Assessment year 2008-09. Only thereafter under Annexure A.g dt.13.05.2020, after such adjustmenr was rnade, intimation under Section 245 of the Act was issued to the petitioner. 'fhe consideration bv the Court: ..1t.. MSR,.I & TA.J ,tp_t9243 _2020 & wp_I9259 2020 41, A Division Bench of the,Andhra pradesh High Court in Japson Estates (P) Ltd. (i supra) held that absence of prior intimation in tems of section 245 of the Act deprives an assessee of the right to raise objections to the order of adjustment. It held that intimation allegedly given under sec.143(r) ofthe Act that there has been an adjustment of refund cannot be valid because there ought to be an intimation of a proposed adjustment and not post_facto and that the assessee had no occasion to , dispute it. It therefore quashed the intimation to the extent of adjusting the refund. 42. The Delhi High Court in Glaxo Smith Ktine Asia p. Ltd. (2 supra) held that the pre-requisite for invoking Section 245 of the Act is giving of prior intimation in writing about the proposed adjustment of refund and that the revenue must also be satisfied that the assessee would not be in a position to satisfy the demand of tax and that but for the set ofi the outstanding tax cannot be recovered at all. It observed that a mechanical invocation of the power under section 245 irrespective of the fact situation can lead to misuse of power by the Revenue in order to delay the refund tilr such time a fresh demand for the subsequent assessment years is finalized. 43. Therefore, we are of the opinion that the adjustment made on 15.04.2020 by the l,t respondent of the entire refund due to the petitioner for the assessment year 2OIg-1g towards the outstanding tax demands for the Assessment years 2017_ l g and 200g-09 is per se illegal, as it was done without issuing a prior intination under Sec.245 of the Act; more so, when the demand for tax for the : : l3:: MSR,J & TA,J wp _t9243 '2020 & wp _19259 -2020 Assessment Year 2017-18 vide the Assessment Order dt.23.12.2019 is under cl.rallenge before the C.I.T. (Appeals) and the 2nd respondent through an order dt.29.01.2020 granted stay subject to deposit of 20Yo of the outstanding demand, and the petitioner deposited on 3 I .01 .2020 Rs.80,00,000/- and requested the 2nd respondent to adjust the remainder of Rs.80,3 1,593/- against the determined refund for Assessment Year20l8-19 vide letter dt.10.02.2020 (Annexure A.5). 44. Even according to the respondents, there was no liability due 06.09.2017 itself stating that the demand for the said Assessment Year had already been paid and proceedings were initiated for refund for Assessment Year 2008-09 on 22.06.2020 which was processed and allegedly issued on 09.12.2020. 45. We nray also point out that as per Office memorandum F.No.404172193-1TCC dt.29.2.2016 issued by the CBDT clarifying it's granting stay of the demand, reserye the right to adjust refunds arising, if any, ctgainst the demand, to lhe extent of amount required for grant ing stay subject to provisions ofSec.245. There is no dispute that the Office Mernorandurn is binding on both the respondents. 46. So at best the l'r respondent could have adjusted a portion of tl.re total refund due to the petitioner for the Assessment Year 201 8- 1 9 i.e., Rs.80,3 1,593/- only sought by the petitioner, since the petitioner had already deposited Rs.80,00,000/- towards the dues on 31. .2020 in part compliance of the condition of 20% deposit of the for the Assessment Year 2008-09 since the assessee had objected on Instruction No.l9l4 dt.21.3.1996, the Assessing Officer can, while MS&J & TA.J fp .19243 _2020 & wp 19259 2020 tax liability for Assessment Year 2017-18 (20% comes to Rs.1,60,3 1,593/-); and the I't respondent could not have adjusted Rs.1,30,45,813/- out of total refund determined for Assessment year 2018-19 of Rs.1,86,38,333/- towards the outstanding demand for Assessment Year 2017-18 (as opposed to the agreed sum of Rs.80,31,593/-) and Rs.55,92,520/- against an alleged outstanding demand for Assessment Year 2008-09. 47. We reject the plea of the respondents that demands for Assessment Year 2017-18 were collectible on 23.01 .2020 and for Assessment Year 2008-09 was collectible on 29.01 .2020, that the stay of collection of the demand for Assessment year 2Ol7 - l g was granted only on 23.07.2020, and therefore, the adjustment made against the demands for Assessment Year 2008-09 and Assessment Year 2017-18 on 18.03.2020 and.22.07.2020 was prior to the order of grant of stay and so the adjustment was valid. 48. The dates of adjustments mentioned above i.e. 18.03.2020 and 22.07.2020 are factually incorrect and no documentary evidence in support thereof has been filed by the respondents. We may point out that Annexure ,4-6, 'Refund Status' downloaded from the website of the Income Tax Department TIN NSDL filed by the petitioner shows that the date of adjustment is in fact 15.04.2020. 49. The date 18.03.2020 referred to by the respondenrs in the counter-affidavit is the date of raising of demand for Assessment year 2008-09 as can be seen from Intimation d1.09.05.2020 issued under Section 245 of the Act and it is not the adjustment date. ::14l.: :: l5:: MSR,J & TA,J wp 19241 2020 & wp_19259_2020 50. Even 22.07 .2020 given by respondents as date of adjustrnent of refund of Assessment Year 2019-20 is incorrect and the correct date is 24.07.2020 as can be seen frorn Form 26-45 of the petitioner for the Assessment Year 2017-18 (Annexure A-14 in W.P.No.19259 of 2020). 51. Admittedly, the respondents have adjusted an amount of Rs.55.92 lakhs towards dernand for Assessment Year 2008-09 out of the refund deterurined for Assessment Year 201 8- 19 without issuir.rg any Section 245 Intimation. They also admit that they have realized the error and have issued a refund of only Rs.54.78 lakhs which is shorl by Rs. I .13 lakhs of the actual adjustment amount of Rs.55.92 lakhs. The respondents have to therefore release the balance refund of was granted. 52. The respondents defence for not issuing Section 245 Intimation befole making adjustment was that subsequently on 13.05.2020 such intimation was issued under Section 143( 1 ) of the Act, but the said Intimation is not valid in law as held in Japson Estates Private Limited ( 1 supra), 53. The letter dt.29.01.2020 issued by the 2nd respondent stated that in respect of Assessment Year 20 1 7- I 8 petitioner was required to deposit 20o/o of the disputed demand in terms of CBDT instructions. In para-6 of the counter, the respondents state that this is only a communication and the actual stay was granted on23.07.2020. Rs.l.13 lakhs also because there is no valid reason why a short refund :: l6:: MSR.J & TN.J wp _t9243 ]020 & wp_19259 2020 of Rs.80.31 lakhs from the deterrnined refunds of Assessment Year 201 8- 19. 54. So the 1't respondent ought to have held that the petitioner complied with the 20% deposit as dilected in the order dt.29.01.2020 on 10.02.2020 itself and ought to have refrained from proceeding with the adjustment on 22.07.2020 for the demand for Assessment Year' 2017-I8. Also admittedly, there was no tax payable for Assessment Year 2008-09. the refund detennined for Assessment Year 201 8- 1 9 and consequently we are of the opinion that out of the sum of Rs.1,86,38,333/- which is the refund determined for that Assessment Year, after deducting Rs.80,31,593/- (the 20% of Rs.8,01,57,967 : Rs.1,60,3 1,593/- less Rs.80,00,000/-), a sum of Rs.1,06,06,7401- is refundable to the petitioner with interest at l5o/o per annum fron.r the date on which it was determined, i.e., 02.10.2019 till the date of payment of the same to the petitioner. 56. As regards W.P.No.19259 of 2020, the issue pefiains to We do not agree with the said plea because the said communication specifically states that the stay will be granted on payment of 20%o, and on 30.01.2020 itseif part payment was made of Rs.80.00 lakhs with a request letter dt.10.2.2020 to adjust the balance 55. There was thus no occasion for uraking any such adjustment of Assessment Year 20 9-20 and is regarding the illegal adjustment of refunds arising for the said Assessment Year against the demands for ,,t1.. MSR,J & I'A.J rp 19243_2020 & wp_19259 2A2O Assessment year 2017_1g when there was in subsistence a stay order of recovery granted by 2nd respond enton23.07.2020. 57. In para-6 of the counter_affidavit of the l,t respondent and in para-7 of the counter_affidavit of 2nd respondent, it was wongly stated that the adjustment of refunds of Assessment year 2019_20was done on 22.07.2020, but the said date is incorrect as seen fiom Annexures A-13 and A-14 filed in the Writ petition. The correct date of adjustment is 24.07.2020 afrer thestay was granted on 23.07 .2020. 58. In Maruthi Suzuki India Limited (3 supra), the Delhi High Court had held that once an absolute stay of recovery of demand of tax was granted to the assessee, it is improper and inappropriate for the Revenue to recover the money through adjustment of refunds. It declared that a stay order passed by an appellate/higher authority must be respected and no deviancy or breach should be made. 59. It is conrended by respondents that intimation dt.Og.O5.20ZO under Section 245 was given by the I,,respondent proposing to adjust the determined refund of Assessment year 2llg_20 against the outstanding demand for Assessment years 200g_09 and 2017_lg, but this was not objected to by the petitioner. 60. The online reply dt.07.06.2020 filed as Annexure A.9 and the letter dt. 15.06.2020 filed as Annexure A. l0 belie this stand of the respondents. Ihe respondents therefore cannot contend that petitioner had not objected to the proposed adjustment indicated in the notice dt.09.05.2020 issued under Sec.245 to the petitione ,. l, ::18:: MSR.J & TA.J p_)9243 _2020 & wp_19259_2020 61. There is also no explanation forthcoming from the respondents why on 24.7.2020, even before the expiry of 30 days fixed under the second notice of intimation under Section 245 dt'8'7 '2020' the adjustment was made without adverting to the objections filed on 7.6.2020 and 15.6.2020. In fact, petitioner filed his objection under AnnexureA-l5on2g.oT.2020withinthe30dayperiodrequiredby theintimationdt.0s.0T.2020.Thereforethepetitionercannotbe deniedrefundofRs.6,25,70,390/-fortheAssessmentYear2019-20 with 15% interest thereon either. 62,Accordingiy,boththeWritPetitionsareallowedwithcostsof Rs.5,000/- each to be paid by respondents to petitioner; and the respondents are directed to refund a sum of Rs'1,06,06,740l- and Rs.6,25,70,390/-, after deducting a srLm of Rs'54'78 lakhs which is refundedalreadytothepetitioner,withinterestatl5yop'a'fromthe dates of adjustment of the said amounts till the date of payment within four (04) weeks from the date ofreceipt ofcopy ofthe order' Consequently, miscellaneous petitions, pending if any, shall stand closed. MEMORANDUM OF COSTS Writ Petition Nos: 19243 And 19259 Ol 2020 Rs. Ps. 10,000-00 10,000.00 SD/- I.NAGALAKSHMI ASSISTANT EGI AR SEC OFFICER Costs Quantified by Hon'ble Court (That the ResDondents in both the Writ Petitions are diredted to pav costs of Rs.5,000/- (Rupees Five Thousand Only) each to the petitioner in both the Writ Petitions. TOTAL //TRUE COPY// 2 TheAssistantCommissioneroflncomeTax,Cilc]e?(-1),sthFloor,SignatureTowers' onn sotlnicat Garden, Kondapur, Hyderabad-sOO 084' idJei.irir\"ibr;;i;;;i i;;il,e tax'cpc, centralized processins- centre prestise . . niiinl'i.ii'ie/i;87i, eeritenagranara Begur Hobli, Hosur Road, Bengaluru, Karnataka- 560100 v *.u 63. To, 3 I:iar\"\"T:j?ird#inister of Finance Department of Revenue, Union of tndia, North Btock One CC to Sri G Narendra Chetty Advocate [OpUCl one CC to Sri Namavaraori Rajelhwar nJo AisiEoficitor General tOpUCl ?,ffi 33 [\"y,L^ Ma mati c no u oa,v. senio I s'6\"ro iri'.ii,il Y\" i j
Other Referred Cases
Japson Estates (P) Ltd. vs. Dy. Commissioner of Income Tax, Glaxo Smith Kline Asia (P) Ltd. vs. Commissioner of Income Tax, Maruti Suzuki India Ltd. vs. D.C.I.T.
Laws Referred To
Income Tax Act, 1961, Article 226 of the Constitution of India
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