2023 (12) TMI 97 - HC - Income Tax

Adjustment of refund against demand - petitioner's case that no such adjustment is permissible in the absence of the mandatory intimation required to be given u/s 245 - HELD THAT - In Bharat Petroleum Corporation Ltd. v. Asst. DIT 2021 (11) TMI 1158 - BOMBAY HIGH COURT the court has held that the requirement of prior intimation under section 245 of the Act was a mandatory requirement and failure to comply with this mandatory requirement of prior intimation would make the entire adjustment as wholly illegal and, therefore, the respondents could not have made the adjustment as they wanted to. On this ground alone prayer clause-(a) as quoted above has to be granted. Moreover it is also averred in the petition that the Income-tax Appellate Tribunal had stayed the demand for the assessment year 2014-15 and, therefore, the respondent could not have adjusted against the refund. We are not getting into that in view of what we have held above on the mandatory intimation under section 245 of the Act.

Summary

Issues involved:
The issue involves a writ petition seeking a mandamus for the refund of a specific amount under the Income-tax Act, 1961, which was adjusted against a demand without the mandatory intimation required under section 245 of the Act.

Summary:

1. The prayer clause in the petition sought a writ mandating the respondent to issue a refund of a specified amount along with interest, citing sections 244A(1) and 244A(1A) of the Income-tax Act, 1961.

2. The respondent claimed the refund was adjusted against a demand for a different assessment year without the necessary intimation as required by section 245 of the Act. The respondent acknowledged the lack of intimation but argued it was due to technical reasons and should be condoned.

3. Referring to a previous case, the court emphasized the mandatory nature of the prior intimation requirement under section 245 of the Act. Failure to comply with this requirement renders any adjustment illegal, as established in Bharat Petroleum Corporation Ltd. v. Asst. DIT [2021] 133 taxmann.com 320 (Bom).

4. The court held that due to the absence of the mandatory intimation, the adjustment made by the respondent was unlawful, leading to the granting of the prayer clause seeking the refund.

5. The petitioner also mentioned that the Income-tax Appellate Tribunal had stayed the demand for the relevant assessment year, further supporting the argument that the adjustment against the refund was unjustified.

6. Consequently, the court made the petition absolute in terms of the prayer clause, directing the respondent to provide the refund within four weeks along with any accumulated interest as per the law.

7. The judgment concluded by disposing of the petition, upholding the petitioner's claim for the refund and emphasizing the importance of complying with legal requirements in such matters.