Case Law Details
Greatship (India) Limited Vs ACIT (Bombay High Court)
Section 245 of Income Tax Act, 1961 envisages that when a refund is found to be due to any person under any of the provisions of the Act, the Revenue can set off/adjust the amount to be refunded or any part of that amount, against the sum which remains payable under the Act, 1961 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.
This Court in Suresh B. Jain (supra) held that giving of prior intimation under section 245 of the Act was mandatory. In Hindustan Unilever Ltd. (supra), it was held that the the purpose of giving prior intimation under section 245 of the Act, 1961 was to enable a party to point out factual errors or some further developments for example that there was a stay of the demand, or that there was a Supreme Court’s decision covering the demand, which is the subject matter of a pending appeal which would not warrant an adjustment of the refund against the pending demand. It was also held that where a party raises such issues in response to the intimation, the officer of the Revenue exercising powers under section 245 of the Act, 1961 must record reasons why the objection was not sustainable and also communicate it to the said party and that this would ensure that the power of adjustment under section 245 of the Act is not exercised arbitrarily.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
1. 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 (‘The Tribunal’) against the alleged outstanding demands for assessment years 2014-15 and 2015-16.
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