Trent Ltd. Vs Deputy Commissioner (Bombay High Court)
Bombay High Court ruled in favor of Trent Ltd. against the Deputy Commissioner of Income Tax, quashing the adjustment of ₹4.91 crore from the company’s tax refund against an outstanding demand for Assessment Year 2018-19. The court found that the adjustment was made without following the due process required under Section 245 of the Income Tax Act, 1961. Trent Ltd. was not given a hearing, and no formal order was passed before the adjustment was made. The company had submitted objections in December 2023, which were ignored by the tax authorities. Citing previous judgments, including Hindustan Unilever Ltd. vs. DCIT and Sulzer Pumps India Pvt. Ltd. vs. ACIT, the court reiterated that adjustments under Section 245 must adhere to principles of natural justice.
As a result, the court quashed the refund adjustment and directed the revenue authorities to deposit the amount in court within two weeks. The deposited amount will be held in a nationalized bank and will be subject to the final outcome of the reassessment process. The tax department was instructed to review Trent Ltd.’s objections, provide a hearing, and issue a reasoned order within two months. If no order is passed within this timeframe, Trent Ltd. may apply to withdraw the deposited amount with accrued interest. Additionally, the court directed the Assessing Officer to decide on Trent Ltd.’s pending stay application for AY 2018-19 within four weeks. The ruling underscores the necessity of procedural fairness before making refund adjustments under Section 245.
