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TMI Blog2022 (3) TMI 1040X X X X Extracts X X X X X X X X Extracts X X X X ..... er intimation. The case is being decided only on the narrow point of lack of intimation under Section 245 of the I.T. Act. The respondents are not empowered to adjust the refund amount automatically without complying the provisions of Section 245 of the Act. Adjustment made against the refund due to the petitioner for the relevant year therefore have to be set aside. Accordingly, they are set aside. However, department is at liberty to act in accordance with law after due intimation and opportunity to file response, as contemplated under Section 245 of the I.T. Act for undertaking adjustment against any refund admissible to the petitioner for any assessment year against the outstanding demand for relevant assessment years. Accordingly, the writ petitions are allowed in the manner and to the extent indicated hereinabove. - W.P.(T) No. 2073 of 2021 With W.P.(T) No. 2851 of 2021 - - - Dated:- 8-3-2022 - HON BLE MR. JUSTICE APARESH KUMAR SINGH AND HON BLE MR. JUSTICE DEEPAK ROSHAN For the Petitioner : Mr. Niraj D. Sheth, Advocate M/s. Sumeet Gadodia, Ranjeet Khushwaha, Advs. [in both cases] For the Respondents : Ms. Amrita Sinha, Advocate [W.P.(T) No 2073 of 2021] Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable. CBTD can fix a time limit for communication of findings by the Assessing Officer. The final adjustment will also be communicated to the assesses The following points emerge from the above quoted para: (i) The process of issue of prior intimation and service thereof on the assesse is as per the law. (ii) The assessee must be given an opportunity to file reply/response. (iii) The reply will be considered/examined by the Assessing Officer before any direction for adjustment is made. (iv) The Assessing Officer will therefore examine the reply and communicate his finding to CPC, Bengaluru who will process the refund and adjust the demand, if any payable. (v) The final adjustment will be communicated to the assesse. 4. The S.O.P prescribed under CPC Instruction No. 1 dated 27th November, 2012 also quoted at para-7 of the counter affidavit of respondent no. 4 is extracted hereunder: (i) Physical verification of demands from all sources-Arrear demand from IRLA, TMS and Manual demands prior to 01.04.2010 and demand from AST, TMS, Manual and CPC. (ii) The Assessing Officer have to communicate the legitimate actionable demands to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer within 30 days of receipt of grievance in response to notice under Section 245, shall either rectify or confirm the demand. The demand so crystallized, shall be communicated back to the CPC in reference to the same communication by which the Assessing Officer was initially communicated regarding the demand. As per the SOP, CPC was required to develop the functionality for executing the guidelines contained in the SOP within six months. The interim order of Delhi High Court was later on confirmed on 14th March, 2013, whereafter the department has taken remedial steps to ensure compliance of section 245 of the I.T. Act by giving option to the assessee to approach the jurisdictional assessee. In this background, it is necessary to refer to the facts of the individual writ petitions. 6. In W.P. (T) No. 2073 of 2021, petitioner is aggrieved by adjustment of the amount refundable for the Assessment Year 2020-21 amounting to ₹ 22,85,16,240/- against the outstanding liability for the Assessment Years 2014-15, 2015-16 and 2016-17 in purported exercise of the power under Section 245 of Act. Petitioner has also asked for refund of the amount along with statutory in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e petitioner, he has filed online response on 14th April, 2021 disagreeing with the demand raised for the said Assessment Year and consequential proposed adjustment. Petitioner has taken steps for filing the appeal before ITAT, Ranchi. On 27th April, 2021 he has filed an application before respondent no 3 online with a prayer for stay of demand for the Assessment Year 2016-17, which is pending. Learned counsel for the petitioner has drawn attention of this Court to Annexures-25/1 and 25/2 being circulars dated 29th February, 2016 and 31st July, 2017, whereunder in case the outstanding demand is disputed before CIT(A), the Assessing Officer should grant stay of demand till disposal of appeal on payment of 20%, as per Circular dated 31st July, 2017, unless the case falls in the category under Para-B thereunder. These Circulars have been placed in support of plea taken for the Assessment Year 2014-15. Learned counsel for the petitioner has, in particular, placed reliance upon the decision of Bombay High Court in the case of Tata Communications Ltd. Vs. Union of India Ors reported in [2021] 128 taxmann.com 196(Bombay), where similar issue was involved. No separate intimation was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecember, 2019 and the demand was reduced to ₹ 33,30,559/- from ₹ 8,77,72,805/- for the Assessment Year 2014-15. It has been stated that the period of stay has been extended upon deposit of 20% of the outstanding demand again and again and lastly till 31st December, 2020. Learned counsel for the respondent has pointed to the letter dated 16th November, 2020 (Annexure- 24/2) on the subject of stay of recovery proceeding against the outstanding demand for the Assessment Year 2014-15. It is stated that the Assessee was requested to cooperate in early disposal of appeal and intimated that any refund arising for other assessment years will be adjusted against the outstanding demand as per Section 245 of the Act. According to learned counsel for the respondent, this was in the nature of intimation under Section 245 of the Act. 10. Respondent no. 4 has also filed an affidavit. The proposition in law as to the requirement of an intimation under Section 245 of the I.T. Act has been noted in the foregoing paragraphs of this order. It is accepted at paragraph 11 (iii) that intimation under Section 143(1) of the IT Act was issued on 30th March, 2021 indicating the proposed adjust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Annexure-14) and other two Office Memorandum dated 29th February 2016 and 31st July, 2017, referred to earlier, which are Annexure-14/1 and 14/2 of the present writ petition. In this context, learned counsel for the petitioner has once again referred to the judgment of Bombay High Court in the case of Andrew Telecommunications India (P.) Ltd.(Supra). Petitioner has also sought refund of the total amount of ₹ 14,36,27,445/- along with statutory interest for the aforesaid assessment years. The relevant facts necessary to be taken note of in the present writ petitions are being narrated hereinafter. 13. Petitioner in the present writ petition claims to have deposited ₹ 11.83 crores, which approximately comes to 31.28% of the outstanding demand of ₹ 37,82,25,500/- (page -58 of the petition) payable for the Assessment Year 2014-15. One of the arguments of learned counsel for the petitioner in the present case is that any adjustment beyond 20% of the amount liable to be deposited for seeking stay of the impugned demand pending disposal of appeal before CIT(Appeal) could not have been adjusted against the refund due for the relevant assessment year. The other argu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counter affidavit has separately been filed by respondent no. 4 as well. Petitioner has filed rejoinder to the affidavit of both sets of respondent. Discussions and Analysis 15. We have taken note of the relevant materials placed from the pleadings on record as also the submission of learned counsel for the parties. The legal issue involved is in a narrow compass pertaining to issuance of statutory intimation required under Section 245 of I.T Act. The contention of the parties as to whether adjustment for those refunds due to the petitioner could be made against the relevant years on merits need not be commented upon. In both the writ petitions, it is not in dispute that adjustments have been made for the assessment years regarding which no intimation was issued. In W.P.(T) No. 2073 of 2021 intimation at Annexure-2 specifically relates to Assessment Year 2016-17 against the refund due to the petitioner for the Assessment Year 2020- 21, whereas adjustments have been made from the refund due to the petitioner against the outstanding demand for the Assessment Years 2014-15 and 2015-16 also. As regards W.P (T) No. 2851 of 2021, petitioner did not get any intimation for adjust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Unilever Limited v. Deputy Commissioner of Income-tax-1 (1 ) relied upon by Mr. Pardiwalla. 14. The fact that respondent has not followed the mandatory prior requirement of intimation under Section 245 o the Act would make the adjustment wholly illegal and therefore, respondent was clearly in error in not refunding the amount. 15. As per the Office Memorandum [F.No. 404/72/93- ITCC] issued dated 29th February, 2016, amended by another Office Memorandum dated 25th August, 2017 the assessing officer shall grant stay of demand where the outstanding demand is disputed on assesse paying 20% of the disputed demand. Admittedly, petitioner has filed an appeal disputing the outstanding demand for A.Y 2015-16 and A.Y 2016-17 and have deposited 20% of the amount demanded. Therefore, there is a stay of demand in force. The effect of this deposit would mean that the time to make the payment stands extended and petitioner is not deemed to be an assessee in default for the recovery provisions to be set in motion [Hindustan Unilever (supra). 16. In the case of Andrew Telecommunications India (P.) Ltd (Supra), the issue before the learned court was, whether the entire amount of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscussed in para 4(B). It is not in dispute that the present case would not fall in the category as provided in para 4(B) of the O.M. and thus, would be governed by para 4(A) 10. It is further not in dispute that a refund for ₹ 12,25,45,340/ is pending before the Principal CIT for the Assessment Years 2006-07 and 2007-08. It is further undisputed that the said refund is pending since 20.01.2016 (Assessment Year 2006-07) and since 20.04.2016 (Assessment Year 2007-08) 11. It would further appear that para 4 (E) contemplates some additional conditions, which may be imposed by the assessing officer, while granting stay, which includes a right to adjust the refund, if any, to the extent of demand required for granting stay and subject to the provisions of Section 245. It was not disputed during the course of the arguments at bar that such a demand can be adjusted against the pending refund for the previous year, if any. The dispute is really about the extent of such adjustment. While it is claimed by the respondents that the entire amount of the refund shall be adjusted as against the impugned demand as a condition for stay, on behalf of the petitioner, it is contended ..... X X X X Extracts X X X X X X X X Extracts X X X X
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