Case Note & Summary
The petitioner, Greatship (India) Limited, filed a writ petition challenging the action of respondent No.2 (Centralised Processing Centre) in adjusting its refund of Rs.2,22,89,942/- for assessment year 2008-09 against alleged outstanding demands for assessment years 2014-15 and 2015-16. The petitioner came to know of the adjustment on November 17, 2021, when it downloaded Form 26AS for assessment year 2014-15, which showed that Rs.61,64,649/- had been adjusted for assessment year 2014-15 and Rs.1,61,25,293/- for assessment year 2015-16. The petitioner contended that no intimation was given prior to the adjustment, as required under Section 245 of the Income Tax Act, 1961. The revenue argued that the petitioner had an alternative remedy of appeal and that the adjustment was permissible. The Court, relying on the judgment in A.N. Shaikh, Sixteen Income-Tax Officer Vs. Suresh B. Jain, held that the adjustment without notice was illegal and violative of principles of natural justice. The Court allowed the petition, quashed the adjustment, and directed the respondents to refund the adjusted amounts with interest within four weeks.
Headnote
A) Income Tax - Refund Adjustment - Section 245 of Income Tax Act, 1961 - Requirement of Notice - The petitioner challenged the adjustment of its refund of Rs.2,22,89,942/- for assessment year 2008-09 against alleged outstanding demands for assessment years 2014-15 and 2015-16 without any prior intimation. The Court held that the action of the respondent in adjusting the refund without giving notice as required under Section 245 of the Act is illegal and violative of principles of natural justice. (Paras 1-6)
B) Income Tax - Writ Jurisdiction - Alternative Remedy - Section 245 of Income Tax Act, 1961 - The Court rejected the revenue's contention that the petitioner should avail alternative remedy of appeal, holding that the action of adjustment without notice is without jurisdiction and a writ petition is maintainable. (Para 6)
Issue of Consideration
Whether the adjustment of refund due to the petitioner under Section 245 of the Income Tax Act, 1961 without giving prior intimation to the petitioner is illegal and violative of principles of natural justice.
Final Decision
The Court allowed the petition, quashed the adjustment of refund, and directed the respondents to refund the adjusted amounts with interest within four weeks.
Law Points
- Adjustment of refund without notice under Section 245 of Income Tax Act
- 1961 is illegal
- Natural justice requires prior intimation before adjustment of refund against outstanding demands
Case Details
2022 LawText (BOM) (07) 90
WRIT PETITION NO. 1476 OF 2022
Dhiraj Singh Thakur, Abhay Ahuja
Mr. Jeet Kamdar i/b Mr.Atul K Jasani for petitioner, Mr Akhileshwar Sharma for the respondents-revenue
Greatship (India) Limited
Assistant Commissioner Of Income Tax -5(1)(1), Mumbai; Centralised Processing Centre, Income Tax Department, Bengaluru; The Central Board of Direct Taxes; Union of India
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Nature of Litigation
Writ petition challenging adjustment of refund without notice under Section 245 of Income Tax Act, 1961.
Remedy Sought
Petitioner sought quashing of the adjustment of refund and direction to refund the amounts with interest.
Filing Reason
Respondent No.2 adjusted refund of Rs.2,22,89,942/- for assessment year 2008-09 against alleged outstanding demands for assessment years 2014-15 and 2015-16 without prior intimation to the petitioner.
Issues
Whether the adjustment of refund under Section 245 of the Income Tax Act, 1961 without prior intimation to the assessee is illegal.
Whether the writ petition is maintainable despite existence of alternative remedy.
Submissions/Arguments
Petitioner argued that no intimation was given prior to adjustment as required under Section 245 of the Act, 1961, and relied on A.N. Shaikh, Sixteen Income-Tax Officer Vs. Suresh B. Jain.
Respondents argued that the petitioner had an alternative remedy of appeal and that the adjustment was permissible.
Ratio Decidendi
Adjustment of refund under Section 245 of the Income Tax Act, 1961 without giving prior intimation to the assessee is illegal and violative of principles of natural justice. The writ petition is maintainable despite alternative remedy as the action is without jurisdiction.
Judgment Excerpts
By this petition, the petitioner challenges the action of respondent No.2 of adjusting the refund of Rs.2,22,89,942/- for the assessment year 2008-09 arising as consequence and effect of the order of the Income Tax Appellate Tribunal against the alleged outstanding demands for assessment years 2014-15 and 2015-16.
Learned counsel for the petitioner urged that the action of respondent No.2 in making adjustments of refund due was illegal inasmuch as no intimation was given to the petitioner as was the requirement in terms of section 245 of the Income Tax Act, 1961.
Procedural History
The petitioner filed Writ Petition No. 1476 of 2022 before the Bombay High Court challenging the adjustment of refund. The judgment was reserved on 20th June 2022 and pronounced on 18th July 2022.
Acts & Sections
- Income Tax Act, 1961: Section 245
