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TMI Blog2019 (10) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... s not mean that the Respondents can make this sentence as a foundation to deviate from the mandate of prior notice under Section 245 of the Act all time to come. Almost one and a half years had passed, and there were subsequent events that could be pointed out. Since no prior notice was issued to the Petitioner before adjusting the refund, there was a breach of the requirement under section 245. The letter dated 19 February 2018 cannot be made the basis of deviating from the mandate under section 245. The sequitur is that the impugned communication adjusting the amount must be quashed and set aside. So also the notice dated 31 July 2019 under Section 245is set aside with liberty to the Deputy Commissioner of Income Tax to issue a fresh notice under Section 245 of the Act. - WRIT PETITION NO. 1900 OF 2019 - - - Dated:- 27-9-2019 - M.S. SANKLECHA NITIN JAMDAR, JJ. Mr. J.D. Mistri -Senior Advocate i/b Mint Conferers, for the Petitioner. Mr. Suresh Kumar a/w Suman devi Yadav a/w Priyankar Tiwari, for Respondents. JUDGMENT : (Per: Nitin Jamdar, J.) Rule. The Rule is made returnable forthwith. Respondent waives service. Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arising out of the return of income for the assessment year 2016-17 shall be paid over within a couple of days. Stand over to 29th July, 2019. After that, the Petition appeared on board on 29 July 2019, and it was adjourned by recording as under : Despite earlier statement, so far, refund has not been credited in the account of the Petitioner. Shri Rahul Singhania, Deputy Commissioner of Income Tax 1(3) (2), who is present before the Court, instructed learned Counsel Mr. Suresh Kumar for the Income Tax Department that the refund shall be credited in the account of the Petitioner latest by 2 nd August, 2019. Stand over to 5/8/2019.' On 5 August 2019 further order was passed as under : 1. Learned Counsel for the petitioner placed on record a communication dated 2.8.2019 received by the petitioner from the Deputy Commissioner of Income Tax giving a break-up of the refund of sum of ₹ 89,14,46,149/-. The said letter is taken on record. 2. Learned Counsel for the parties agree that a sum of ₹ 89,14,46,149/- has been credited in the account of the petitioner by way of refund. However, the learned Counsel for the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o have been paid. It is further contended that the adjustment of ₹ 58,07,58,796/- is contrary to this statement. The Petitioner further contends that an adjustment of refund without prior intimation to the Petitioner is contrary to the law laid down by this Court in the case of Hindustan Unilever Ltd. vs Deputy Commissioner of Income-tax-1(1) 377 ITR 281 (Bombay). The Petitioner also relies on Instruction No.1989 dated 20-10-2000 issued by the Central Board of Direct Taxes. It is further contended that the outstanding demand sought to be adjusted of ₹ 48,39,96,245/- along with interest accruing to ₹ 58,07,58,796/- did not exist as on 1 August 2019 as it was subsumed in the demand of ₹ 61,95,60,090/- in an order passed under Section 154 for A.Y. 2013-14. 11. The main contention advanced by the Respondents is based on the letter issued by the Petitioner on 19 February 2018 According to the Respondents in this letter the Petitioner itself had given its permission to adjust the refund, no further intimation to the Petitioner was necessary. It is contended that because of this letter, which was in the past also, acted upon and not complained, the Res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower not mandatory. This notice/intimation is required to be given so as to enable a party to point out not only factual errors but also point out why such a power should not be exercised in the facts of the case, such as the demand sought to be adjusted is still a subject-matter of appeal and the issue is covered by decisions of higher forums, etc. On consideration of the same, it is open to the officer of the revenue concerned to exercise its discretion, to adjust or not. This giving of prior intimation has been held by this Court in A.N.Shaikh Sixteenth ITO v. Suresh B.Jain [1987] 165 ITR 86/[1986] 29 Taxman 191 to be mandatory before any adjustment can be made. The exercise of powers under section 245 being discretionary has also been so held by the Delhi High Court in Glaxo Smith Kline Asia (P) Ltd. v. CIT [2007] 290 ITR 35/160 Taxman 259 [Para 14] Further, the Central Board of Direct Taxes have issued Instruction No.1989 issued on 20.10.2000 which reads thus : The Central Board of Direct Taxes have issued Instruction Nos.1952, dated 14-8-1998 and 1969, dated 20-8-1999, stating that written intimation must invariably be sent to assessee before adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot convey that any time in future the amount can be adjusted without notice depriving the Petitioner of opportunity to point out changed circumstances if any. By bare perusal of the letter, we are of the opinion that both the submissions of the Petitioner are correct. The Respondents have relied on the above-underlined sentence. However, the Respondents have noted only the first part regarding the adjustment of refund of 82 crores. It does not acknowledge the subsequent part of the sentence regarding the release of the due balance. Request for return of long overdue refunds is reiterated in the subsequent sentence. That the Petitioner earlier did not object does not mean that the Respondents can make this sentence as a foundation to deviate from the mandate of prior notice under Section 245 of the Act all time to come. Almost one and a half years had passed, and there were subsequent events that could be pointed out. 16. Therefore since no prior notice was issued to the Petitioner before adjusting the refund, there was a breach of the requirement under section 245. The letter dated 19 February 2018 cannot be made the basis of deviating from the mandate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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