2020 (7) TMI 693 - HC - Income Tax

Adjustment of resulting demand against the refunds arising to the petitioner pursuant to disposal of rectification applications - HELD THAT - Issue notice. Mr.Deepak Anand, Advocate accepts notice on behalf of the respondents. Keeping in view the limited prayer sought in the present writ petition, this Court disposes of the same by directing respondent No.2 to dispose of the petitioner s aforesaid rectification application within six weeks by way of a reasoned order and to allow adjustment of resulting demand against refunds arising in previous and subsequent assessment years, if any, in accordance with law.

Summary

Issues:
1. Delay in disposing of rectification application for assessment year 2016-17.
2. Adjustment of demand against refunds for previous assessment years.

Issue 1: Delay in disposing of rectification application for assessment year 2016-17

The petitioner filed a writ petition seeking direction for respondent No.2 to process the rectification application for assessment year 2016-17, acknowledging a tax liability of ?3,14,51,422. The counsel argued that respondent No.2 failed in its statutory duty by not adjudicating the application within the stipulated time under Section 154(8) of the Income Tax Act, 1961. The statutory limitation period of six months had expired on 30th November, 2019. The petitioner highlighted that the delay was in violation of CBDT Circular No.14/2001 and CBDT Instruction No.1/2016. The court issued notice and directed respondent No.2 to dispose of the rectification application within six weeks through a reasoned order.

Issue 2: Adjustment of demand against refunds for previous assessment years

The petitioner sought adjustment of the resulting demand against refunds from previous assessment years, including 2009-10, 2012-13, 2013-14, and an Appeal Effect application for 2010-11. The counsel mentioned that due to a spin-off and contract transfer, the petitioner had no operations remaining, and pending refunds were the only reason the office had not been closed. The court disposed of the petition by instructing respondent No.2 to allow the adjustment of demand against refunds arising in previous and subsequent assessment years, if any, in accordance with the law. The order was to be uploaded on the website immediately, and a copy was to be sent to the counsel via email.

This judgment addresses the delay in processing a rectification application for a specific assessment year and the subsequent adjustment of demand against refunds from various assessment years, providing relief to the petitioner and ensuring compliance with statutory provisions.