Tax refunds must comply with legal protocols, and any readjustment without notice lacks justification under tax law.

ORDER :

1. The petitioner has sought for the following reliefs:

"For direction to the Respondents to forthwith refund an amount of Rs. 380,39,86,658/- due to the petitioner pursuant to the order dated 28.02.2023 [Annexure-J] passed by 1st Respondent on giving effect to the order of the Tribunal, along with applicable interest".

Sri. T. Suryanarayana, the learned Senior Counsel for the petitioner, and Sri. E. I. Sanmathi, the learned counsel for the respondents, are heard for final disposal of the petition in the light of this undisputed facts.

2. The petitioner, after the orders of the Income-Tax Appellate Tribunal on 31.07.2020 in IT(TP)A No.725/Bang/2018, has the advantage of the Assessing officer's Remand Report dated 31.03.2022 under the provisions of Section 143(3) read with Section 254 of the INCOME TAX ACT , 1961 [for short, 'the IT Act'], the directions of the DRP dated 31.10.2022 under the provisions of Section 144 C(5) read with Section 254 of IT Act and the order dated 28.02.2023 by the Assessing officer under Section 143(3) read with Section 254 of IT Act. Further, the Joint Commissioner of Income-Tax (OSD), Circle - 3(1)(1), Bengaluru has determined that a sum of Rs. 380,39,86,658/- is refundable to the petitioner for the assessment year 2013-14. The petitioner has thereafter submitted an application on 01.06.2023 [Annexure-M], and after this submission, the Joint Commissioner of Income-Tax (OSD), Circle 3(1)(1), Bengaluru, as an officer attached to the Deputy Commissioner of Income Tax, has addressed a Communication dated 22.03.2023 to the Deputy Commissioner of Income Tax (International Taxation).

3. The substance of this Communication is to give the status of the enforceability of the demand for the assessment years starting from 2005-06, and it is stated that the demands are not enforceable for all the years mentioned therein except insofar as the Assessment Years 2013-14, 2019-20 and 2021-22. As regards these assessment years, more specifically the subject assessment year 2013-14, it is stated that the proceedings are pending with the DRP [and in fact, the proceedings before the DRP is decided on 31.10.2022] and as regards the Assessment Years 2019-20 and 2021-22, it is stated that the demands are because of certain mismatch in prepaid taxes.

4. Sri. T. Suryanarayana, relying upon the aforesaid circumstances, submits that there is no recoverable demand from the petitioner as of this date and therefore there would be no justification for refusing to give refund of the amount determined in the order dated 28.02.2023. Sri. E. I. Sanmathi submits that the amount refundable for the subject assessment year has been adjusted towards demands that could be for the Assessment Year 2010-11 and therefore is not refunded.

5. Sri. E. I. Sanmathi elaborates that there is a rectification order on 15.06.2018 for the Assessment year 2010-11, and with the petitioner calling in question the assessment order for this Assessment year [and another Assessment year] in the appropriate proceedings before the ITAT, the assessment orders are quashed, and the proceedings are restored on 18.07.2022 for reconsideration of certain issues. He further emphasizes that the proceedings are pending before the concerned DRP as of today and in the interregnum [in the year 2023] the refund payable for the Assessment Year 2013-14 has been adjusted towards what could be a possible demand for the Assessment Year 2010-11. However, when queried, Sri. E.I. Sanmathi submits that the refunds readjusted in the year 2023 is without notice to the petitioner. Sri. T.Suryanarayana, while submitting that there cannot be any readjustment without notice to the petitioner under the provisions of Section 245 of the IT Act, submits that in the peculiarities of this case, t