Greatship (India) Limitedone International Centre,Tower v. Assistant Commissioner Of Income Tax -5(1)(1), Mumbai,Room

Digitallysigned bySHRADDHASHRADDHAKAMLESHKAMLESHTALEKARTALEKARDate:2022.07.1815:06:04+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 1476 OF 2022 Greatship (India) LimitedOne International Centre,Tower 3, 23[rd] foor, Senapati Bapat Mar,,Elphinstone Road (West), Mumbai-400 013 ....Petitioner V/s 1. Assistant Commissioner Of Income Tax -5(1)(1), Mumbai,Room No. 568, 5[th] foor,Aayakar Bhavan, M.K. Road,Mumbai-400 001. 2. Centralised Processin, Centre,Income Tax Department,Ben,aluru,Karnataka – 560 500 3. The Central Board of Direct Taxes,Department of Revenue, Ministry of Finance,Government of India, North Block,New Delhi – 110 001. 4. Union of India,Throu,h the Joint Secretary & Le,al Adviser,Branch Secretariat,Department of Le,al Affairs,Ministry of Law and Justice,2[nd] Floor, Aayakar Bhavan, M.K. Mar,,New Marine Lines, Mumbai-400 020....Respondents *** Mr. Jeet Kamdar i/b Mr.Atul K Jasani for petitioner. Mr Akhileshwar Sharma for the respondents-revenue **** CORAM : DHIRAJ SINGH THAKUR AND ABHAY AHUJA, JJ. Jud,ment reserved on : 20[th] June 2022Jud,ment pronounced on : 18[th] July 2022 PER DHIRAJ SINGH THAKUR, J. : 1.By this petition, the petitioner challen,es the action ofrespondent No.2 of adjustin, the refund of Rs.2,22,89,942/- forthe assessment year 2008-09 arisin, as consequence and effect ofthe order of the Income Tax Appellate Tribunal (‘The Tribunal’)a,ainst the alle,ed outstandin, demands for assessment years2014-15 and 2015-16. 2.The case set up is that an amount of Rs.61,64,649/- asrefund for assessment year 2008-09 came to be adjusted forassessment year 2014-15 which came to the knowled,e of thepetitioner on November 17, 2021, when the petitioner downloadedthe Form 26AS for the assessment year 2014-15, where ‘Part C’ ofForm No.26AS provided details of tax paid (other than TDS orTCS). 3.The petitioner’s case further is that an amount of Rs.1,61,25,293/- came to be adjusted ille,ally by the respondentNo.2 from the refund determined in favour of the petitioner upon,ivin, effect to the tribunal’s order for assessment year 2008-09a,ainst the alle,ed outstandin, demand for the assessment year2015-16. Knowled,e of this ille,al adjustment was also stated tohave been acquired by the petitioner on November 17, 2021 whenthe petitioner downloaded the Form No.26AS. 4.Learned counsel for the petitioner ur,ed that the action ofrespondent No.2 in makin, adjustments of refund due was ille,alinasmuch as no intimation was ,iven to the petitioner as was therequirement in terms of section 245 of the Income Tax Act, 1961(‘the Act, 1961’). 5.Reliance was placed upon the jud,ments of this Court in thecase of A.N. Shaikh, Sixteen Income-Tax Offcer Vs. Suresh B.Jain [1]and Hindustan Unilever Ltd. Vs. Deputy Commissioner ofIncome-Tax and Others [2]and a jud,ment of Delhi Hi,h Court inthe case of Maruti Suzuki India Limited Vs. Deputy Commissioner of Income Tax & Ors. [3]. 1[1987] 165 ITR 86 (Bom.)2[2015] 377 ITR 281 (Bom.)3[2012] 347 ITR 43, Delhi2[2015] 377 ITR 281 (Bom.)3[2012] 347 ITR 43, Delhi 6.Reply affdavit has been fled in which a ,eneral statementhas been made that the requirements of section 245 of the Act,1961 have been complied with. However, the reply affdavit doesnot specifcally state as to whether before makin, such anadjustment, the petitioner had been ,iven prior intimation aboutthe proposed adjustment in terms of section 245 of the Act, 1961. 7.Section 245 of the Act, 1961 envisa,es that when a refund isfound to be due to any person under any of the provisions of theAct, 1961, the Revenue can set off/adjust the amount to berefunded or any part of that amount, a,ainst the sum whichremains payable under the Act, 1961 by the person to whom therefund is due, after ,ivin, an intimation in writin, to such personof the action proposed to be taken under this section. 7.Section 245 of the Act, 1961 envisa,es that when a refund isfound to be due to any person under any of the provisions of theAct, 1961, the Revenue can set off/adjust the amount to berefunded or any part of that amount, a,ainst the sum whichremains payable under the Act, 1961 by the person to whom therefund is due, after ,ivin, an intimation in writin, to such personof the action proposed to be taken under this section. 8.This Court in Suresh B. Jain (supra) held that ,ivin, of priorintimation under section 245 of the Act was mandatory. InHindustan Unilever Ltd. (supra), it was held that the the purposeof ,ivin, prior intimation under section 245 of the Act, 1961 wasto enable a party to point out factual errors or some furtherdevelopments for example that there was a stay of the demand, or that there was a Supreme Court’s decision coverin, the demand,which is the subject matter of a pendin, appeal which would notwarrant an adjustment of the refund a,ainst the pendin, demand.It was also held that where a party raises such issues in responseto the intimation, the offcer of the Revenue exercisin, powersunder section 245 of the Act, 1961 must record reasons why theobjection was not sustainable and also communicate it to the saidparty and that this would ensure that the power of adjustmentunder section 245 of the Act is not exercised arbitrarily. 9.In the present case, it can be seen that the alle,ation thatthere was no prior intimation under section 245 of the Act hasremained unrebutted as no proof of any such prior intimation wasplaced on record by the Revenue. Followin, the decisions (supra), we have no hesitationin holdin, that the impu,ned action of respondent No.2 inmakin, adjustments of the amount of Rs.61,64,649/- andRs.2,22,89,942/- for assessment year 2008-09 a,ainst thealle,ed outstandin, demands for assessment years 2014-15and 2015-16 is bad and ille,al and is accordin,ly quashed. 10.Notwithstandin, what has been observed hereinabove, itwould be open to respondent No.2 to exercise its discretion of makin, an adjustment in terms of section 245 of the Act, after,ivin, prior intimation and considerin, all the issues andobjections which the petitioner may raise pursuant to such anintimation. Needful may be done in ei,ht weeks failin,, which thecase of the petitioner will be processed for ,rant of refund asdetermined for the assessment year 2008-09. 11.With these observations, the petition stands disposed of. [ABHAY AHUJA, J.] [DHIRAJ SINGH THAKUR, J.]