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Issues Involved: Interpretation of u/s 245 of the Income-tax Act regarding adjustment of tax liability and refund.
Judgment Summary: The High Court of BOMBAY dismissed the appeal, upholding the decision of the single judge who found that the officer's actions were not in line with the statutory provision of u/s 245 of the Income-tax Act. The court emphasized that u/s 245 requires a previous intimation of proposed action for adjustment, not a simultaneous intimation. The Department's argument was criticized for its perverse interpretation of the law. The court acknowledged the equity argument presented by Mr. Dhanuka but noted that the strict letter of the law governs income tax matters. Despite Mr. Dhanuka's assertion that the amount would not be recovered if a refund was made, the blame was placed on the officer for ignoring the clear provisions of u/s 245 and persisting in justifying his actions. Regarding compliance with the writ, the court clarified that the Department had until 5 p.m. on the day of the appeal's dismissal to send the necessary refund order or cheque to the advocate for the respondent-assessee to avoid contempt proceedings. The appeal was summarily dismissed, and an application for more time was rejected due to lack of substance in the Department's plea.
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