2016 (6) TMI 379 - HC - Income Tax

Net refund after adjustment of any outstanding demands along with interest - rectification of mistake - Held that - It is difficult to understand the adamant approach adopted by the respondent in not giving effect to the order passed by the Commissioner (Appeals) when he is duly empowered by the provisions of section 245 of the Act to adjust the refund against other pending dues. In fact, the petitioner has implored the respondent to adjust the refund amount against other dues, but to give effect to the rectification order. The requests made by the petitioner, however, have fallen on deaf ears as the respondent has granted himself a stay against the order passed by the Commissioner (Appeals) and refused to give effect to the same. The respondent being statutorily bound to comply with the provisions of sub-section (5) of section 154 of the Act, in the opinion of this court, cannot refuse to give effect to the order passed by the Commissioner (Appeals). The stand adopted by the respondent in the affidavit-in-reply and as urged before this court is thoroughly misconceived and contrary to the provisions of law. Under the circumstances, the petition deserves to be allowed by issuing the directions as prayed for therein. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The respondent is directed to forthwith give effect to the order dated 5.9.2013 passed by the Commissioner (Appeals) and grant consequential refund along with interest, after adjustment of any outstanding dues. Having regard to the fact that the petitioner was required to approach this court on account of the inaction on the part of the respondent in not complying with the statutory duty cast upon him, costs are quantified at ₹ 10,000/- (Rupees ten thousand).

Summary

Issues:
- Delay in giving effect to appellate order by the Income Tax Officer.
- Dispute over refund due to the petitioner.
- Legal obligation of the respondent to comply with appellate orders.
- Statutory provisions regarding rectification and refund under the Income Tax Act.

Analysis:
1. Delay in Giving Effect to Appellate Order: The petitioner sought a direction for the Income Tax Officer to promptly give appeal effect and refund after adjusting any outstanding demands. The case involved the finalization of assessment for the year 2005-06, where the petitioner claimed a refund. Despite multiple reminders and appeals, the respondent failed to act on the order passed by the Commissioner (Appeals) on the rectification application, leading to the petitioner approaching the court for relief.

2. Dispute Over Refund: The respondent argued against immediate compliance with the order dated 5.9.2013, citing pending appeals and outstanding demands against the petitioner. The respondent contended that no refund was due to the petitioner, and there were demands for subsequent assessment years. This dispute over the refund amount formed a crucial aspect of the case, with the respondent resisting the petitioner's claim based on the overall tax liabilities.

3. Legal Obligation to Comply with Appellate Orders: The petitioner highlighted various circulars and the Citizen's Charter, emphasizing the duty of the respondent to give effect to appellate orders promptly. The respondent's failure to act on the order passed by the Commissioner (Appeals) was challenged by the petitioner as a violation of statutory obligations and established procedures under the Income Tax Act.

4. Statutory Provisions on Rectification and Refund: The court extensively analyzed the provisions of Section 154 and Section 245 of the Income Tax Act. It emphasized the requirement for the authority to issue a written order for rectification and to calculate the revised tax liability, including any refunds due to the assessee. The court noted the respondent's noncompliance with these provisions and criticized the adamant attitude displayed in disregarding the rectification order passed by the Commissioner (Appeals).

5. Final Judgment: The court, after considering the legal aspects and the respondent's unjustifiable stance, granted the petition in favor of the petitioner. It directed the respondent to immediately give effect to the order dated 5.9.2013 passed by the Commissioner (Appeals) and provide the consequential refund along with interest after adjusting any outstanding dues. The court also imposed costs on the respondent for the delay and noncompliance, emphasizing the importance of upholding statutory duties and ensuring timely execution of appellate orders.