2023 (11) TMI 40 - HC - Income Tax

Adjustment of refund against demand raised - revenue have adjusted demands not only for AY 2018-19, which was one of the proposals, but also for AY 2017-18 - Petitioner s case that there has been a breach of principles of natural justice inasmuch as the respondents/revenue have moved away from what was proposed in the two emails - HELD THAT - The infraction of principles of natural justice is also sought to be buttressed by emphasising the point that although the petitioner was given twenty-one (21) days to respond to the first of the above-captioned emails concerning adjustment qua demand concerning AY 2021-22, the impugned order was passed within four (4) days. There are several other issues as well, which Mr Jain has raised before us, including the fact that the demand for AY 2022-23 has been stayed by this court vide 2023 (8) TMI 1370 - DELHI HIGH COURT Therefore, in our view, the best way forward would be to set aside the impugned order dated 01.09.2023, with liberty given to the concerned officer to take the next steps in the matter, albeit, as per law. WP dispossed of.

Summary

Issues involved:
The issues involved in the judgment are the adjustment of refund against tax demands, breach of principles of natural justice, and stay of demand for assessment year 2022-23.

Adjustment of refund against tax demands:
The petitioner sought to quash the intimation adjusting the refund due for assessment year 2022-23 against disputed outstanding tax demands for other assessment years. The petitioner's counsel argued that the adjustment was made in violation of the statutory mandate. The petitioner's grievance was that the respondents adjusted demands not only for the proposed assessment years but also for additional years, breaching principles of natural justice. The court noted the breach of natural justice and set aside the impugned order, allowing the concerned officer to proceed as per law.

Breach of principles of natural justice:
The petitioner contended that there was a breach of principles of natural justice as the respondents deviated from the proposal communicated in emails regarding the adjustment of demands. The petitioner emphasized the short time given for response compared to the quick issuance of the impugned order. The court acknowledged the infraction of natural justice and decided to set aside the order, granting liberty to the concerned officer to proceed lawfully.

Stay of demand for assessment year 2022-23:
The petitioner highlighted that the demand for assessment year 2022-23 had been stayed by the court in a previous order. Considering this, the court decided to set aside the impugned order dated 01.09.2023, allowing the concerned officer to take further steps in accordance with the law. The writ petition was disposed of with parties instructed to act based on the digitally signed copy of the order.