2022 (3) TMI 1199 - HC - Income Tax

Stay of demand - Intimation issued u/s 245 - HELD THAT - It is borne out from the records that the adjustment has already been resorted to by the Department pursuant to the intimation under Section 245 - Considering that the petitioner has made out his objections to the notice under Section 245, copies of which are found at Annexure-K Series, it would be appropriate to relegate the matter back to the Authority for reconsideration of the aspect relating to notice under Section 245 and orders to be passed regarding the same after considering the objections of the petitioner referred to above. Accordingly, the action of the respondents in adjusting the refund as regards to the subject matter of intimation at Annexure-C issued under Section 245 of the Act is set aside. The matter is relegated to the respondents to reconsider as regards the intimation under Section 245 after considering the objections of the petitioner at Annexure-K Series. The entire process to be completed within a period not later than six weeks from the date of release of this order. In the event the petitioner is entitled for refund, the same to be made expeditiously.

Summary

Issues:
1. Writ of certiorari to quash intimation under Section 245 of the Income Tax Act, 1961
2. Writ of mandamus to direct release of refund with interest under Section 244A of the Act

Analysis:
The petitioner sought a writ of certiorari to quash an intimation dated 09.05.2020 issued under Section 245 of the Income Tax Act, 1961, and a writ of mandamus to direct the release of a refund with interest under Section 244A of the Act. The petitioner had obtained a stay order for the assessment year 2017-18 after depositing 20% of the tax demand. However, an intimation under Section 245 was issued by the respondents expressing their intention to adjust the refund for the assessment year 2019-20 against the demand for 2017-18. The petitioner contended that this adjustment was not legally tenable as it related to a demand under appeal and stayed by the deposit made. The court noted that objections to the Section 245 notice were raised by the petitioner and directed the matter to be reconsidered by the Authority. The court set aside the adjustment of the refund and instructed the respondents to reevaluate the intimation under Section 245 after considering the petitioner's objections within six weeks. If entitled, the refund was to be processed promptly.

In conclusion, the court disposed of the petition, emphasizing the need for a reconsideration of the adjustment of the refund in light of the objections raised by the petitioner. The decision highlighted the importance of following due process and ensuring that adjustments under Section 245 are made in accordance with the law, especially when the demand is under appeal and subject to a stay order. The court's directive aimed to provide a fair opportunity for the petitioner to present their case and receive any entitled refunds promptly.