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2021 (8) TMI 593 - HC - Income TaxAdjustment of refund against outstanding demand - statutory interest under Section 244 (A) - HELD THAT - The fact that respondent has not followed the mandatory prior requirement of intimation under Section 245 of the Act would make the adjustment wholly illegal and therefore, respondent was clearly in error in not refunding the amount. 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 assessee 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 be set in motion. Respondent to refund the amounts to petitioner as determined for A.Y. 2019-20 under intimation issued under Section 143 (1) of the Act with interest thereon as per law within a period of four weeks from the date of receipt of this order.
Issues involved:
Seeking issuance of writ of certiorari for adjustment of refund against outstanding demand for A.Y. 2019-20; Failure to comply with mandatory intimation under Section 245 of the Act; Legality of adjustment made without prior intimation; Dispute regarding outstanding demand for A.Y. 2015-16 and 2016-17; Stay granted on depositing 20% of disputed demand; Interpretation of Section 245 of the Act for setting off refunds against tax remaining payable. Analysis: 1. Writ of Certiorari for Adjustment of Refund: The petitioner sought the issuance of a writ of certiorari or any appropriate writ under Article 226 and 227 of the Constitution of India, concerning the adjustment of refund against outstanding demand for A.Y. 2019-20. The petitioner claimed that the respondent had not refunded a significant sum for the mentioned assessment year along with statutory interest under Section 244 (A) of the Income Tax Act, 1961. 2. Failure to Comply with Mandatory Intimation under Section 245: The petitioner contended that the respondent failed to provide the mandatory intimation under Section 245 of the Act before adjusting the refund against outstanding demands. The petitioner highlighted that the intimation was given after the adjustment had already been made, rendering the adjustment illegal. The petitioner argued that this failure to comply with the mandatory requirement made the adjustment wholly illegal. 3. Dispute Regarding Outstanding Demands for A.Y. 2015-16 and 2016-17: The petitioner's representative clarified that the dispute primarily revolved around the outstanding demands for A.Y. 2015-16 and 2016-17. It was mentioned that the outstanding demand for A.Y. 2018-19 had been rectified, leaving the focus on the demands for the mentioned assessment years. 4. Stay Granted on Deposit of 20% of Disputed Demand: It was highlighted that the petitioner had filed appeals challenging the demands for A.Y. 2015-16 and 2016-17, and Stay Applications were also filed. Orders were stayed upon the petitioner depositing 20% of the demand amounts. The respondent accepted the deposit, and the stay for both assessment years was deemed to be in force. 5. Interpretation of Section 245 of the Act: The court analyzed Section 245 of the Income Tax Act, which deals with the set-off of refunds against tax remaining payable. The court emphasized that the intimation must be given prior to setting off the refund against the payable amount. The court cited relevant case laws to support the view that the failure to provide prior intimation makes the adjustment illegal. 6. Final Decision and Order: The court directed the respondent to refund the amounts determined for A.Y. 2019-20 under the intimation issued under Section 143 (1) of the Act, along with interest as per the law within a specified period. The petition was disposed of, and the appeals filed by the petitioner were instructed to be disposed of expeditiously. Overall, the judgment focused on the procedural requirements, the legality of the adjustment made without prior intimation, and the interpretation of relevant sections of the Income Tax Act to ensure fair treatment and compliance with legal provisions.
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