Point of law: So far as Section 245 of the Act is concerned, there need not be any debate as regards the power of the Department to adjust the refund, however, such power should be exercised in a reasonable manner. Here is a case wherein the assessee is sought to be deprived of a huge amount towards the refund. A huge amount towards refund is being declined on the ground that a demand is pending for the previous year. If such unbridled power is assumed by the Revenue to adjust the refund, it would result in a situation where two assessees against whom equal demands are raised will be treated differently. One assessee who has to recover significant amount towards the refunds and another who has not to recover the refunds would be put in two different categories because in the first case refund would be adjusted whereas in the second case, no such adjustment is possible.

JUDGMENT :

J.B.PARDIWALA, J.

1. By this writ application under Article 226 of the Constitution of India, the writ applicants have prayed for the following reliefs;

“(A) Quash and set aside the order dated 12.07.2019 passed by Respondent No.1 at Annexure-A to the extent it does not issue refund to the Petitioner No.1 but adjusts against the demand of A.Y.2012-13.

(B) Direct the Respondent No.1 to issue refund to the Petitioner No.1 arising out of the order giving effect of the order of CIT(A) for A.Y.2014-15;

(C) Quash and set aside the order dated 12.07.2019 passed by Respondent No.2 at Annexure- A to the extent it puts a condition of adjustment of future refunds arising to the Petitioner without any limit and to direct the Respondent No.2 to grant unconditional stay of demand against the application filed by the Petitioner dated 10.07.2019 till the disposal of appeal by the Income Tax Appellate Tribunal.

(D) Prohibit the Respondent No.1 to recover any amount from the Petitioner No.1 towards the demand raised for AY 2012-13 or 2010-11 or adjust any refunds arising to the petitioner No.1 against the demand of A.Y.2012-13 to 2010-11 till the disposal of appeal by the Income Tax Appellate Tribunal.

(D1) Quash and set aside intimations dated 22.07.2019 at Annexure-A1.

(D2) Stay the operation of intimations dated 22.07.2019 at Annexure-A1 and Prohibit the Respondent No.1 to recover any amount from or adjust any refunds arising to the petitioner No.1 towards the demand raised for the Assessment Year A.Y. 2012-13 or 2010-11 till the final disposal of appeal by the Income Tax Appellate Tribunal.

(E) Pending the admission, hearing and final disposal of this petition, prohibit the Respondent No.1 to recover any amount from the Petitioner No.1 or adjust any refunds arising to the Petitioner No.1 against the demand of A.Y.2012-13 or 2010-11.

(F) Any other and further relief deemed just and proper be granted in the interest of justice.”

2. The facts, giving rise to the present litigation, may be summarized as under;

2.1 The writ applicant filed its return of income for the A.Y. 2012-13 on 30th November, 2012.

2.2 The respondent passed the draft assessment order dated 31st March, 2016 under Section 143(3) read with Section 92CA read with Section 144C of the Income Tax Act (for short “the Act”).

2.3 Against the aforesaid draft assessment order, the writ applicant made a reference dated 28th April, 2016 to the Dispute Resolution Panel under Section 144C of the Act.

2.4 The Dispute Resolution Panel vide its directions dated 30th December, 2016, by an large, confirmed all the additions/disallowances.

2.5 The respondent No.1 herein passed the final assessment order dated 23rd January, 2017 under Section 143(3) read with Section 92CA read with Section 144C of the Act in accordance with the directions of the Dispute Resolution Panel at Rs.3946,48,67,610/- and raised a demand of Rs.2004.94 Crore to the writ applicant No.1.

2.6 Against the aforesaid assessment order, the writ applicant No.1 filed First Appeal before the Income Tax Appellate Tribunal (ITAT) on 10th February, 2017.

2.7 On 14th February, 2017, the writ applicant preferred an application under Section 220(6) of the Act with a request to the respondent No.1 to stay the demand.

2.8 The respondent No.1 rejected the aforesaid application vide order dated 17th February, 2017.

2.9 The writ applicant No.1, thereafter, preferred an application for stay before the ITAT dated 20th February, 2017.

2.10 The ITAT Vide order dated 10th March, 2017, relegated the writ applicant No.1 to seek stay by preferring application addressed to the respondent No.2.

2.11 On 15th March, 2017, the writ applicant filed an application addressed to the respondent No.2. 2.12 The respondent No.2, vide his order dated 27th March, 2017, granted stay till 30th June, 2017 or the order that may be passed by the ITAT whichever would have been earl