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RAJIV SHAKDHER, GIRISH KATHPALIA
Jindal Stainless Ltd. – Appellant
Versus
Deputy Commissioner of Income Tax – Respondent
ORDER
Rajiv Shakdher, J. (Oral)--On the previous date i.e., 14.07.2023, we had heard the counsels for the parties and etched out the broad contours of the matter. For the sake of convenience, the relevant parts of the said order are extracted hereafter:
"2. The principal grievance of the petitioner is, that the respondents/revenue have adjusted against the refund payable qua Assessment Year (AY) 2022-23, demands outstanding with respect to AYs 2011-12, 2012-13 and 2013-14.
3. Mr Ajay Vohra, learned senior counsel, who appears on behalf of the petitioner, says that there are several flaws with regard to the steps taken by the respondents/revenue:
(i) First, the adjustment made is more than 20% which is contrary to the Office Memorandum [in short, "OM"] dated 29.02.2016, as amended by OM dated 31.07.2017.
(ii) Second, it disregards the fact that an appeal vis-a-vis the aforementioned AYs is pending adjudication with the Commissioner of Income Tax (Appeals) [in short, "CIT(A)"].
(iii) Third, the adjustment has been made without passing an order, as required in law under Section 245 of the Income Tax Act, 1961 [in short, "Act"]. In this regard, it is submitted that a mere intimation was give
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.
Adjustments of tax refunds should not exceed 20% of disputed demands, as established in judicial precedents, ensuring taxpayers receive fair treatment.
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.
Point of Law : Taxation - Lieu of payment of refund tax - Government is bound to follow rules and standards they themselves had set on pain of their action being invalidated.
Exceeding 20% adjustments of income tax refunds are impermissible, and full refunds must be made within stipulated time frames as per legal precedents.
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....
Tax authorities must adhere to established guidelines for refund adjustments, and deviations require explicit justification.
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