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IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
K.M. Joseph & V.K. Bist, JJ.
Commissioner of Income Tax (TDS) & Others – Appellants
Versus
State Bank of India & Another – Respondents
Special Appeal No. 525 of 2015
Decided On : 12-10-2015
The court held that the assessment order for the year 2015-2016 was not stayed by the High Court in the appeal pending against the same, it may amount to abuse of the discretionary power to satisfy the demand under the assessment order, which, though not stayed, has not been accepted by the assessee, but, instead, challenged before the competent forum.
Fact of the Case:
The assessee, a bank, filed a writ petition seeking a refund of Rs. 44,36,57,686/- with interest, which the Department had coercively recovered from the assessee. The Department had attached the assessee's account with RBI in a sum of Rs. 44 and odd crores, which amount related to 2013-2014. The assessee contended that the Commissioner of Income Tax (Appeals) had directed to delete the assessment in a sum of Rs. 97,85,38,937/-, which, apparently, was the basis for Annexure No. 5 and, as of today, no amount was outstanding against the assessee Bank and there is no question of adjustment or set off. The Department contended that, in fact, assessment has been completed for the year 2015-2016 and it is pointed out that the same was done by order dated 12.05.2015 and a total demand of Rs. 105,68,13,294/- has been raised.
Finding of the Court:
The court held that the assessment order for the year 2015-2016 was not stayed by the High Court in the appeal pending against the same, it may amount to abuse of the discretionary power to satisfy the demand under the assessment order, which, though not stayed, has not been accepted by the assessee, but, instead, challenged before the competent forum.
Issues: Whether the assessment order for the year 2015-2016 was stayed by the High Court in the appeal pending against the same.
Ratio Decidendi: The court held that the assessment order for the year 2015-2016 was not stayed by the High Court in the appeal pending against the same, it may amount to abuse of the discretionary power to satisfy the demand under the assessment order, which, though not stayed, has not been accepted by the assessee, but, instead, challenged before the competent forum.
Final Decision: The court allowed the appeal and modified the judgment of the learned Single Judge. The court directed the competent authority to decide whether to invoke Section 245 of the Act within 10 days. If the authority decides to invoke Section 245, then it must issue a notice to the assessee and provide an opportunity of being heard. The decision must be taken in accordance with law within two weeks from the date of affording an opportunity to the assessee.
K.M. Joseph, J.
1. Appellants are respondent Nos. 1 to 3 in the writ petition. Respondent No. 1 Bank filed a writ petition seeking the following reliefs:
“(a) Issue a writ, order or direction in the nature of mandamus directing the respondent No. 2 and 3 to refund to the petitioner the entire amount which it has coercively recovered on 29-03-2014 along with 15% interest per annum, as per sections 240 and 244(1) of ITA.
(b) Issue any other writ, order or direction in the nature of certiorari quashing letter dated 04-12-2014 (Annexure No. 5) issued by the Respondent No. 3 granting an illusory refund and instead direct respondent No. 2 and 4 to make actual refund under section 240 and 244(1) along with interest @ 15%.”
2. Very briefly put, the case of respondent No. 1/writ petitioner was as follows:
On 18.07.2014, the Income Tax Appellate Tribunal, Delhi Bench, in three appeals, passed a judgment and allowed the appeals filed by the writ petitioner and dismissed the appeals filed by the Income Tax Department (hereinafter referred to as the “Department”) holding that the provision of Section 194A(1) of the Income Tax Act (hereinafter referred to as the “Act”) is not applicable to the SRF deposit made. On 30.07.2014, on the basis of the said judgment, writ petitioner applied for refund of Rs. 44,36,57,686/- with interest, which the Department had coercively recovered from the writ petitioner. It is necessary to notice that recovery was effected by proceedings dated 29.03.2014, by which the Department attached the account of the writ petitioner with RBI in a sum of Rs. 44 and odd crores, which amount related to 2013-2014. Writ petitioner further sent communication dated 08.09.2014 (Annexure No. 4) seeking refund. It is, thereafter, that the impugned letter dated 04.12.2014 (Annexure No. 5) was issued, which reads as follows:
“F. No. DCIT(TDS)DDN/SBI/AY 2013-14/2014-15/26
Office of the Dy. Commissioner of Income Tax (TDS)
Dehradun
Dated : 04.12.2014
To,
The Branch Manager
State Bank of India
Tel Bhawan, Dehradun.
Sir,
Subject: Adjustment of Refund of Rs. 46,14,03,993/- for the AY 2013-14 against the demand of Rs. 97,85,38,937/- outstanding for the AY 2014-15 U/s 245 – Regarding.
Kindly refer to the above mentioned subject.
In this connection, the demand of Rs. 88,73,15,372/- for the AY 2013-14 was created on 12/12/2013. The said demand become nil after giving appeal effect U/s 251 dated 01/12/2014 and a refund of Rs. 46,14,03,993/- is payable to you for the AY 2013-14.
The demand of Rs. 97,85,38,937/- for the AY 2014-15 is still pending. The refund of Rs. 46,14,03,993/- is therefore being adjusted U/s 245 against the demand due of Rs. 97,85,38,937/- for the AY 2014-15.
Yours faithfully
Sd/-
(A.K. Sonkar)
Dy. Commissioner of Income Tax (TDS)
Dehradun.”
3. It is, on these facts, that the writ petition was filed.
4. The learned Single Judge allowed the writ petition. From the judgment of the learned Single Judge, we find that he notes the argument of the writ petitioner that the Commissioner of Income Tax (Appeals) has directed to delete the assessment in a sum of Rs. 97,85,38,937/-, which, apparently, was the basis for Annexure No. 5 and, as of today, no amount was outstanding against the writ petitioner Bank and there is no question of adjustment or set off. We, further, note that the learned counsel for the appellants contended that he was not aware of the judgment dated 03.03.2015 and that, if the amount has been directed to be deleted, the assessee would be entitled to refund of the amount with interest under Section 240, read with Section 244 of the Act. The learned Single Judge held as follows:
“I am of the opinion that once I.T.A.T. has opined that Section 194A of the Income Tax Act is not applicable against the Bank on SRF deposit, then the same legal position would be applicable in the subsequent assessment years as well, unless of course, Section 194A is amended or is substituted by any new law. Therefore, submission of Mr. Bishwajit Bhattac
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