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TMI Blog2021 (3) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... re the C.I.T. (Appeals) and the 1st respondent through an order dt.29.01.2020 granted stay subject to deposit of 20% of the outstanding demand, and the petitioner deposited on 31.01.2020 80,00,000/- and requested the 1st respondent to adjust the remainder of 80,31,593/- against the determined refund for Assessment Year 2018-19 vide letter dt.10.02.2020 (Annexure A.5). As per Office memorandum F.No.404/72/93-ITCC dt.29.2.2016 issued by the CBDT clarifying it s Instruction No.1914 dt.21.3.1996, the Assessing Officer can, while granting stay of the demand, reserve the right to adjust refunds arising, if any, against the demand, to the extent of amount required for granting stay subject to provisions of Sec.245. There is no dispute that the Office Memorandum is binding on both the respondents. We reject the plea of the respondents that demands for Assessment Year 2017-18 were collectible on 23.01.2020 and for Assessment Year 2008-09 was collectible on 29.01.2020, that the stay of collection of the demand for Assessment Year 2017 - 18 was granted only on 23.07.2020, and therefore, the adjustment made against the demands for Assessment Year 2008-09 and Assessment Year 2017-18 on 18.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is refundable to the petitioner with interest at 15% per annum from the date on which it was determined, i.e., 02.10.2019 till the date of payment of the same to the petitioner. X X X X Extracts X X X X X X X X Extracts X X X X ..... essment Year 2018-19 evidencing adjustment of refund on 15.04.2020. 11. Thereafter, on 09.05.2020, the 2nd respondent issued a notice under Section 245 of the Act proposing to adjust the determined refund of Assessment Year 2019-20 against the outstanding demand for Assessment Year 2017-18 and Assessment Year 2008-09. 12. This notice is subject matter of Writ Petition No.19259 of 2020. 13. Petitioner contends that in the notice dt.09.05.2020, the 2nd respondent acknowledged that the outstanding demand for Assessment Year 2017-18 as on 09.05.2020 was ₹ 5,91,12,157/- [being ₹ 8,01,57,967 minus (₹ 80,00,000/- + ₹ 1,30,45,813/-)] indicating that the adjustment of excessive refund for Assessment Year 2018-19 had occurred on 15.04.2020. 14. Thereafter, on 13.05.2020, another notice under Section 245 of the Act was issued by the 2nd respondent proposing to adjust the refund (which had in fact already been adjusted) due to the petitioner for Assessment Year 2018-19 against the outstanding demands of Assessment Year 2008-09 and Assessment Year 2017-18 (Annexure A.8). 15. Petitioner filed a letter Ex.A.9 dt.15.06.2020 with the 1st respondent apprising the 1st res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 07.06.2020 on-line reply. 23. On 08.07.2020, an order Annexure A.11 under Section 143(1) of the Act was passed by the 1st respondent for the Assessment Year 2019-20 determining the refund due to the petitioner to the tune of ₹ 6,25,70,390/-; and simultaneously 1st respondent issued the impugned notice dt.08.07.2020 (Annexure A.1) under Section 245 of the Act proposing to again adjust the above mentioned determined refund against the outstanding demands for Assessment Years 2008- 09 and 2017-18 and asked the petitioner to file a response thereto in (30) days. 24. Even before the said period of 30 days period granted to the petitioner to respond to the said notice expired, the 1st respondent on 24.07.2020 itself adjusted the entire refund for Assessment Year 2019-20 against the remainder outstanding demand for Assessment Year 2017-18 including the principal amount of ₹ 5,91,12,157/- and interest of ₹ 34,58,233/- which is evidenced by the screen-shot (Annexure A.13) and extracts of Form 26AS of Assessment Year 2017-18 (Annexure A.14). 25. As a last resort, petitioner filed its grievance before the 1st respondent's on-line portal as well as by physical let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Circulars of the CBDT; that the said adjustment was made without issuing any notice under Section 245 prior to such adjustment, and a notice under Section 245 issued after such adjustment of refund, is also illegal; and consequently, the respondents ought to refund ₹ 1,06,06,740/- with interest in Writ Petition No.19243 of 2020; (e) the notice dt.08.07.2020 issued by the 1st respondent under Section 245 of the Act and the consequential adjustment of refunds due to the petitioner for Assessment Year 2019-20 against the outstanding demand for Assessment Year 2017-18, is illegal since recovery had already been stayed by the 2nd respondent post compliance of the 20% deposit as required; in any event there could not have been any adjustment even before the expiry of the 30 days period granted to petitioner to respond to the intimation under Section 245; and consequently, the respondents ought to refund ₹ 6,25,70,390/- with interest in Writ Petition No.19259 of 2020; The stand of respondent nos.1 and 2: 29. The respondent nos.1 and 2 filed counter-affidavits in both Writ Petitions. 30. They admit that an intimation ought to be given to the assessee before making an adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court: 38. We have noted the contentions of the respective parties. 39. Section 245 of the Income Tax Act states : "245. Where under any of the provisions of this Act, a refund is found to be due to any person, the Assessing Officer, Deputy Commissioner (Appeals), Commissioner (Appeals), or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section."(emphasis supplied) 40. It is admitted in para no.8 of the counter-affidavit filed by respondent nos.1 in Writ Petition No.19243 of 2020 that intimation under Section 245 of the Act was not issued by oversight by the 1st respondent before adjusting on 15.04.2020 the refund due to the petitioner for Assessment Year 2018-19 of ₹ 1,86,38,333/- against the outstanding demand for ₹ 1,30,45,813/- for Assessment Year 2017-18 and for ₹ 55,92,520/-, the all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessment Year 2008-09 since the assessee had objected on 06.09.2017 itself stating that the demand for the said Assessment Year had already been paid and proceedings were initiated for refund for Assessment Year 2008-09 on 22.06.2020 which was processed and allegedly issued on 09.12.2020. 45. We may also point out that as per Office memorandum F.No.404/72/93-ITCC dt.29.2.2016 issued by the CBDT clarifying it's Instruction No.1914 dt.21.3.1996, the Assessing Officer can, while granting stay of the demand, reserve the right to adjust refunds arising, if any, against the demand, to the extent of amount required for granting stay subject to provisions of Sec.245. There is no dispute that the Office Memorandum is binding on both the respondents. 46. So at best the 1st respondent could have adjusted a portion of the total refund due to the petitioner for the Assessment Year 2018-19 i.e., ₹ 80,31,593/- only as sought by the petitioner, since the petitioner had already deposited ₹ 80,00,000/- towards the dues on 31.1.2020 in part compliance of the condition of 20% deposit of the tax liability for Assessment Year 2017-18 ( 20% comes to Rs. ₹ 1,60,31,593/-); and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation before making adjustment was that subsequently on 13.05.2020 such intimation was issued under Section 143(1) of the Act, but the said Intimation is not valid in law as held in Japson Estates Private Limited (1 supra). 53. The letter dt.29.01.2020 issued by the 1st respondent stated that in respect of Assessment Year 2017-18 petitioner was required to deposit 20% of the disputed demand in terms of CBDT instructions. In para-6 of the counter, the respondents state that this is only a communication and the actual stay was granted on 23.07.2020. We do not agree with the said plea because the said communication specifically states that the stay will be granted on payment of 20%, and on 30.01.2020 itself part payment was made of ₹ 80.00 lakhs with a request letter dt.10.2.2020 to adjust the balance of ₹ 80.31 lakhs from the determined refunds of Assessment Year 2018-19. 54. So the 1st respondent ought to have held that the petitioner complied with the 20% deposit as directed in the order dt.29.01.2020 on 10.02.2020 itself and ought to have refrained from proceeding with the adjustment on 22.07.2020 for the demand for Assessment Year 2017-18. Also admittedly, there wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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