2023 (6) TMI 442 - HC - Income Tax

Adjustment u/s 245 - Set off and withholding of refunds in certain cases - order whereby a sum which was payable to the petitioner, was adjusted by the respondents against the demand for a prior period (Assessment Year 2019-20) - According to the petitioner, it was impermissible for the respondents to make any such adjustment for the dues pertaining to the Assessment Year 2019-20, as the demand in respect of the said assessment year was stayed in terms of an order dated 22.07.2022, passed by the Income Tax Appellate Tribunal - HELD THAT - Notwithstanding that the petitioner was afforded thirty days to respond to the notice why the adjustment not be made against the demand outstanding for the Assessment Year 2019-20; the respondents had proceeded to adjust the said amount and issued a refund for the balance amount on 17.11.2021. The petitioner claims that it was entitled to receive the entire refund without any adjustment u/s 245. In view of the above, we consider it apposite to set aside the respondents action in adjusting a sum u/s 245 of the Act and remand the matter to the concerned authority to decide afresh, within a period of four weeks from today. The concerned authority shall consider the contents of this petition as the petitioner s response pursuant to the intimation dated 03.11.2022.

Summary

Issues involved:
The petitioner challenged the adjustment made by the respondents against a demand for a prior period, claiming it was impermissible due to a stay order by the Income Tax Appellate Tribunal. The petitioner also argued that the adjustment was made before the expiry of the response period provided.

Summary:
The petitioner filed a petition challenging the adjustment of a sum of Rs. 6,27,20,736 against a demand for the Assessment Year 2019-20, contending that it was impermissible as the demand was stayed by the Income Tax Appellate Tribunal. The petitioner highlighted that the online portal also reflected the stay on the demand. Despite being given thirty days to respond to the adjustment notice, the respondents proceeded with the adjustment and issued a refund for the balance amount. The petitioner claimed entitlement to the full refund without any adjustment under Section 245 of the Income Tax Act.

During the proceedings, the respondents argued that there was "no response" from the petitioner as per an intimation under Section 143(1) of the Act. However, the petitioner's counsel contended that the adjustment was made before the expiry of the response period provided in the intimation dated 03.11.2022. The Court noted this discrepancy and set aside the adjustment, remanding the matter for fresh consideration by the concerned authority within four weeks. The authority was instructed to treat the contents of the petition as the petitioner's response to the intimation.

The Court ultimately disposed of the petition by setting aside the adjustment made by the respondents and directing a fresh decision within a specified timeframe.