Case Law Details
Danieli India Limited Vs ACIT (Calcutta High Court)
The Calcutta High Court considered a writ petition challenging the Income Tax Department’s adjustment of admitted refunds under Section 245 of the Income Tax Act, 1961. The petitioner contended that the Income Tax Authority adjusted refunds due for Assessment Years (AYs) 2010-11 and 2017-18 against tax demands relating to AYs 2011-12, 2012-13 and 2013-14 without complying with the mandatory requirement of prior intimation under Section 245. The petitioner also argued that, since appeals against the assessment orders for AYs 2011-12, 2012-13 and 2013-14 were pending before the CIT (Appeals), the Income Tax Authority could not recover more than 20% of the disputed demand by adjusting refunds from other assessment years. The Court recorded the undisputed facts that the petitioner was entitled to refunds for AYs 2010-11 and 2017-18, that statutory appeals against the assessment orders for AYs 2011-12, 2012-13 and 2013-14 were pending before the CIT (Appeals), and that the amount adjusted from the refunds exceeded 20% of the disputed demand.
The principal legal issue before the Court was whether the Income Tax Authority could recover more than 20% of the disputed demand, during the pendency of appeals before the CIT (Appeals), by adjusting admitted refunds relating to other assessment years. The petitioner relied on the Calcutta High Court’s earlier decision in Graphite India Ltd. vs. Deputy Commissioner of Income Tax & Ors., contending that the issue was already settled in its favour. After considering the facts, the submissions of the parties, and the earlier decision, the Court held that the Assessing Officer’s action of recovering an amount exceeding 20% of the disputed demand through adjustment of admitted refunds from other assessment years was arbitrary and not sustainable in law. Accordingly, the Court directed the Income Tax Authority to refund the amount recovered in excess of 20%, after verification of the actual amount recovered, within four weeks from the date of communication of the order. The Court further directed that the petitioner be afforded an opportunity of hearing, if required, for clarification regarding the claim before processing the refund. With these observations and directions, the writ petition was disposed of.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
Heard learned advocates appearing for the parties.
By this writ petition, petitioner has challenged the impugned action of the respondent Income Tax Authority concerned in denying the admitted refund to the petitioner in respect of the assessment years 2010-11 and 2017-18 by making adjustment under Section 245 of the Income Tax Act, 1961 for recovery of demand arising out of the assessment order relating to assessment years 2011-12, 2012-13 and 2013-14 without compliance of mandatory formality of making prior intimation to the petitioner before making such adjustment of demands relating to the aforesaid assessment years against which admittedly appeals are pending before the CIT (Appeals) concerned and also on the ground that if at all, the Income Tax Authority even without intimation under Section 245 of the Act, he cannot recover more than 20% of the demand arising out of the aforesaid assessment orders against which appeals are pending before the CIT (Appeals).
Considering the facts and circumstances of the case as appears from record annexed to the writ petition, undisputed and admitted fact which emerge are as follows :
1) That admittedly petitioner is entitled for refund in respect of assessment years 2010-11 and 2017-18;
2) Admittedly statutory appeals before the CIT (Appeals) are pending against the assessment orders relating to assessment years 2011-12, 2012-13 and 2013-14 out of which demand has arisen and for recovery of the same by way of adjustment has been made from the refund relating to assessment years 2010-11 and 2017-18 ;
3) Admittedly the amount recovered by way of adjustment from the admitted refund in respect of assessment year 2010-11 and 2017-18, for the demand relating to assessment years 2011-12, 2012-13 and 2013-14 are in excess of 20% of the demand.
The legal issue which petitioner has raised in this writ petition is that if at all the respondent Income Tax Authority can recover, can he recover more than 20% of the demand arising out of the relevant assessment orders against which appeals are pending, by way of making adjustment from the refund in respect of any other assessment years and petitioner submits that in this case admittedly the assessing officer has recovered more than 20% of the demand relating to assessment orders against which appeals are pending from the admitted refund in respect of other assessment years and such action of the assessing officer is not sustainable in law.
Petitioner in support of its contention has relied on a decision of this Court in the case of Graphite India Ltd. vs. Deputy Commissioner of Income Tax & Ors. reported in (2022) 448 ITR 292 (Cal) and submits that the aforesaid issue is directly covered in favour of the petitioner, by the aforesaid reported decision of this Court.
Considering the facts and circumstances of this case which appears from record and submission of the parties and the decision in the case of Graphite India Ltd. (supra), this writ petition being WPO 2294 of 2022 is disposed of by holding that the action of the assessing officer recovering amount in excess of 20% of the demand arising out of relevant assessment orders against which Appeals are pending before CIT (Appeals) by way of adjustment from the admitted refund relating to other assessment years are arbitrary and not sustainable in law.
Accordingly, the respondent Income Tax Authority concerned is directed to refund the amount in excess of 20% which has been recovered from the refund of assessment years 2010-11 and 2017-18 for recovery of the demand arising out of the assessment orders relating to assessment years 2011-12, 2012-13 and 2013-14 against which appeals are pending before the CIT (Appeals), within a period of four weeks from the date of communication of this order subject to verification of the actual amount recovered and for this purpose respondent Income Tax Authority concerned shall afford an opportunity of hearing to the petitioner if required for clarification in support of such claim.
With these observations and directions, this writ petition stands disposed of.
Affidavit in reply filed in Court be kept with the records.
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