2017 (11) TMI 581 - HC - Income Tax

Validity of notice issued under Section 245 - Cause of action having arisen to M/s Premier Security Services to file this writ petition - Refund of tax already paid to be adjusted against demand outstanding denied - Held that - Record shows that Assessee before Income Tax Department is Jasjit Singh , an individual having PAN No. ASSPS7046N. Writ petition has been filed by M/s Premier Security Services, through its Proprietor Jasjit Singh and not by Jasjit Singh himself. In fact photocopy of PAN Card has also been filed as part of affidavit and it also shows that the same is in the name of Jasjit Singh and not in the name of M/s Premier Security Services whereof Jasjit Singh claimed to be Proprietor. Impugned notice under Section 246 has been issued in the name of Jasjit Singh . Assessment Orders, copies whereof have been filed, passed in the name of Jasjit Singh . TDS certificates, which petitioner has placed on record, claiming their benefit show that on pages 27, 28 and 29 the same relate to Jasjit Singh and on pages 32 to 45, the same relate to Birendra Singh . Jasjit Singh may have earned income by running Premier Security Services, but Premier Security Services is not an Assessee before Income Tax Department. Therefore this writ petition at the instance of Premier Security Services , challenging orders and notices relating to Jasjit Singh is thoroughly misconceived and not maintainable.It is not stated anywhere in the writ petition that M/s Premier Security Services is a firm or company and a sole proprietor firm and whether registered with Registrar, Firms, Societies and Chits or even with Income Tax Department. Be that as it may, we do not find any cause of action having arisen to M/s Premier Security Services to file this writ petition challenging notice dated 16.08.2014, which is in the name of Jasjit Singh . Moreover, assessment orders are not under challenge and so long as liability of income tax is outstanding, pursuant to the assessment orders, which are operating, ex facie, adjustment of demand, outstanding under such assessment orders, against amount of refund payable to an Assessee cannot be said to be illegal and it can well be adjusted by the authority concerned.

Summary

Issues:
Challenge to notice under Section 245 of the Income Tax Act, 1961 for adjustment of tax refund against outstanding demand.

Analysis:
1. The writ petition challenged a notice issued by the Assistant Commissioner of Income Tax (CPC) under Section 245 of the Income Tax Act, 1961, informing the petitioner about the adjustment of tax refund against outstanding demands for Assessment Years 2009-10 and 2010-11. The petitioner sought a writ of Mandamus for the issuance of a refund voucher with interest under Section 244A for A.Y. 2010-11.

2. The petitioner, a proprietorship firm, filed its income tax return for A.Y. 2010-11, including income of a deceased individual. The Assessing Officer finalized the assessment, disallowing certain expenses and computing the tax liability. An application under Section 154 was filed regarding the TDS credit, which was not decided before the issuance of the impugned notice.

3. The petitioner contended that the adjustment was illegal as the Section 154 application was pending. Various legal authorities were cited to support this argument. However, the court found that the petitioner had cited irrelevant authorities, and the adjustment was lawful based on the existing assessment orders.

4. The court noted that the petitioner, Premier Security Services, was not the assessed entity before the Income Tax Department; instead, it was Jasjit Singh, an individual. The writ petition challenging orders and notices related to Jasjit Singh was deemed misconceived and not maintainable.

5. The court emphasized that Premier Security Services did not have the standing to challenge the notice issued in the name of Jasjit Singh. Since the assessment orders were not under challenge, the adjustment of the outstanding demand against the refund payable to the assessee was found to be legally permissible.

6. Ultimately, the court dismissed the writ petition as thoroughly misconceived, imposing costs on the petitioner. The judgment highlighted the importance of maintaining legal standing and the relevance of challenging assessments and notices within the appropriate legal framework.