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IN THE HIGH COURT OF DELHI AT NEW DELHI
Vibhu Bakhru, Amit Mahajan, JJ.
Travelport International Operations Limited United Kingdom – Appellant
Versus
Commissioner of Income Tax International Taxation-3 N. Delhi – Respondent
W.P.(C) 7140 of 2023
Decided On : 26-05-2023
Adjustment - Income Tax Act - The court set aside the respondents' action in adjusting a sum of Rs.6,27,20,736/- under Section 245 of the Act and remanded the matter to the concerned authority to decide afresh.
Fact of the Case:
The petitioner challenged the adjustment of a sum of Rs.6,27,20,736/- against the demand for a prior period, claiming that the demand for the said assessment year was stayed and that the adjustment was made prior to the expiry of the period of thirty days provided to respond.
Finding of the Court:
The court set aside the respondents' action in adjusting the sum and remanded the matter to the concerned authority to decide afresh, considering the petition as the petitioner's response pursuant to the intimation dated 03.11.2022.
Issues: Impugning an order adjusting a sum against a prior period demand, misleading noting in the intimation, and the timing of the adjustment in relation to the period provided to respond.
Ratio Decidendi: The court found it impermissible for the respondents to make the adjustment and directed the concerned authority to consider the petition as the petitioner's response.
Final Decision: The petition is disposed of by setting aside the adjustment and remanding the matter to the concerned authority for fresh consideration.
JUDGMENT
Vibhu Bakhru, J.
1. The petitioner has filed the present petition, inter alia, impugning an order dated 17.11.2022, whereby a sum of Rs.6,27,20,736/- , which was payable to the petitioner, was adjusted by the respondents against the demand for a prior period (Assessment Year 2019-20). Intimation for proposing such adjustment under Section 245 of the Income Tax Act, 1961 (hereafter `the Act') was issued on 03.11.2022, affording the petitioner a period of thirty days to respond as to why such an adjustment not be made.
2. According to the petitioner, it was impermissible for the respondents to make any such adjustment for the dues pertaining to the Assessment Year 2019-20, as the demand in respect of the said assessment year was stayed in terms of an order dated 22.07.2022, passed by the Income Tax Appellate Tribunal. Further, the petitioner points out that the respondents' online portal on 15.11.2022 also reflected that the said demand was stayed.
3. Notwithstanding that the petitioner was afforded thirty days to respond to the notice why the adjustment of Rs.6,27,20,736/- not be made against the demand outstanding for the Assessment Year 2019-20; the respondents had proceeded to adjust the said amount and issued a refund for the balance amount (Rs.24,94,15,824/-) on 17.11.2021. The petitioner claims that it was entitled to receive the entire refund of Rs.31,21,36,560/- without any adjustment under Section 245 of the Act.
4. Mr. Chawla, learned counsel appearing for the respondents, has drawn the attention of this Court to the intimation under Section 143(1) of the Act, which indicates that there was "no response" from the petitioner. The petitioner claims that the said noting is misleading. Mr. Kaushik, learned counsel appearing for the petitioner, submits that the petitioner was, by an intimation dated 03.11.2022, provided a period of thirty days to respond as to why the said adjustment not be made; however, the said adjustment was made prior to the expiry of the period of thirty days.
5. In view of the above, we consider it apposite to set aside the respondents' action in adjusting a sum of Rs.6,27,20,736/- under Section 245 of the Act and remand the matter to the concerned authority to decide afresh, within a period of four weeks from today. The concerned authority shall consider the contents of this petition as the petitioner's response pursuant to the intimation dated 03.11.2022.
6. The petition is disposed of in the aforesaid terms.
The court emphasized the importance of allowing the petitioner the full period to respond before making any adjustment under Section 245 of the Income Tax Act.
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....
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 adjustment made by the Assessing Officer must comply with the stipulated percentage of the disputed demand as per the relevant provisions ....
Natural justice requires prior intimation before adjusting tax refunds against outstanding dues under Section 245 of the Income Tax Act.
Adjustment of tax refunds against outstanding dues requires prior intimation and adherence to principles of natural justice as mandated by Section 245 of the Income Tax Act.
The main legal point established in the judgment is the mandatory requirement of prior intimation under Section 245 of the Income Tax Act, 1961 for the set off of refunds against tax remaining payabl....
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