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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
M.S. SONAK, JITENDRA JAIN
Kishore Mohanlal Dingra – Appellant
Versus
Assistant Commissioner of Income Tax – Respondent
JUDGMENT :
Jitendra Jain, J.
1. Rule. The Rule is made returnable immediately at the request of and with the consent of the learned Counsel for the parties.
2. This Writ Petition is filed protesting against the adjustment of refund by the Respondent for assessment year 2014-15 against the alleged demand for assessment year2016-17.
3. On 30 December 2018, an assessment order under Section 143(3) for the assessment year 2016-17 was passed and a demand of Rs.23,63,374/- was raised. The said assessment order was challenged by the Petitioner by filling an appeal with the Commissioner of Income Tax (Appeal). Immediately after filing the said appeal, the Petitioner voluntarily paid an amount equivalent to 20% of the demand and filed proof of payment with the Respondents. We are informed that the appeal for assessment year 2016-17 is still pending as of today although a period of six years have lapsed.
4. Meanwhile, on 29 November 2019, Commissioner of Income Tax (Appeal) for assessment year 2014-15 disposed of the appeal filed for the said assessment year i.e., assessment year 2014-15. This appeal order resulted into refund for assessment year 2014-15. The Petitioner received partial refund of
Adjustment of tax refunds against pending demands is impermissible when 20% of the demand has been paid, as per CBDT Circular.
Adjustment of tax refunds against pending demands is impermissible when a taxpayer has made partial payment and an appeal is pending, as per the CBDT Circular.
The court ruled that the adjustment of a tax refund against a demand was unjustified due to the delay in adjudicating the stay application, emphasizing timely resolution in tax matters.
Adjustments of tax refunds should not exceed 20% of disputed demands, as established in judicial precedents, ensuring taxpayers receive fair treatment.
Mandatory requirement of prior intimation under section 245 of the Income-tax Act and the continuation of stay till the disposal of the appeal.
The main legal point established in the judgment is that the action of making adjustments of the refund without prior intimation, as required by section 245 of the Income Tax Act, is illegal and must....
Natural justice requires prior intimation before adjusting tax refunds against outstanding dues under Section 245 of the Income Tax Act.
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