Delhi High Court

Ms. Archana Shukla vs Joint Commissioner Of Income Tax & ... on 26 May, 2000

Equivalent citations: (2000) 161 CTR Del 159

Author: A Pasayat

ORDER

Arijit Pasayat, CJ :

Prayer in the writ petition is for a direction to the respondents to grant refund flowing from the order of assessment under section 143(1)(a) of the Income Tax Act, 1961 (for short, the Act), dated 18-8-1999 for the assessment year 1998-99. It is her grievance that instead of granting refund, a subterfuge was adopted to make adjustment of the refund due to her against a demand purported to have been raised against M/s Techno Exports in respect of the assessment year 1994-95. Petitioner moved the in CIT (Respondent No. 1) for grant of refund. It was communicated to her by said authority that a notice under section 226(3) had been issued, on 8-12-1999, and the refund has been adjusted against the demand raised in the case of M/s Textile Exports and the communication was indicated to be an intimation under section 245 of the Act.

2. It is to be noted that by communication dated 3rd Dec., 1999, it was communicated to the petitioner that in her balance sheet as on 31-12-1998, Rs. 5.02 crores was shown as outstanding from her to U.K. Shukla, partner of the firm Techno Exports, Said amount was indicated to have been attached in terms of s- 226(3) of the Act and petitioner was directed to make payment by 10-12-1999.

3. According to learned counsel for petitioner the purported action under section 2145 is misconceived and the said provision has no application to the facts of the case. It is brought to our notice that the notice purported to have been issued under section 226(3) has been subsequently withdrawn by orders dated 24-12-1999.

4. By way of reply counsel for the revenue submitted that the action initially taken was in terms of section 226(3) as the document filed by the assessee reflected about the liability to U.K. Shukla. Provisions of section 188A were pressed into service for such a stand. It has been submitted further that orders of attachment were withdrawn after the partners of M/s Techno Exports had given undertaking before the Commissioner to pay a sum of Rs. 80 lakhs in three instalments.

5. Certain factual aspects which we find quite interesting need to be noted .The order under section 143(1)(a) was passed on 19th Aug., 1999, and there is a mention there in the place meant for "explanation for adjustment, (if any) made", which has been noted as follows :

"Refund of Rs. 14,58,370 is adjusted against the demand of Techno Exports vide Refund Voucher No. 273563 dated 8-12-1999. "

If in reality, the order was passed on 19-8-1999, about which there is no dispute, explanation for adjustment, quoted above, could not have appeared in the intimation because a reference is made to refund voucher dated 8-12-1999, i.e., four months after the date of intimation. Additionally, what is required to be indicated there is the amount(s) if any required to be adjusted for the purpose of assessment and the explanation therefor.

Obviously, adjustment could not have been done in the manner done and in any event with reference to a matter which came into existence after an order of assessment. Further, section 245 of the Act has been pressed into service by the revenue for the purpose of adjustment. The said provision read as follows :

245. Where under any of the provisions of this Act, a refund is found to be due to any person, the assessing officer, Dy. Commissioner (Appeals), Commissioner (Appeals) or Chief Commissioner or Commissioner, as the case may be, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due after giving an intimation in writing to such person of the action proposed to be taken under this section.

6. According to the learned counsel for the revenue , the sum remaining payable under the Act is the relevant aspect. According to him, if any sum is remaining payable in respect of demand made in the Act, action under section 245 can be taken- We find no substance in such a plea because the provision is very clear that an adjustment in respect of a demand can be made relating to a person to whom refund is due. Admittedly, the demand did not relate to the petitioner and related to some other person. The provision authorizes the prescribed officer to set off, after intimation to the claimant, the amount to be refunded or any part thereof against any sum payable under the Act by the person to whom the refund is due. The following considerations must be dst or be fulfillled in order to set off a refund under section 245 of the Act: (a) a refund is found due to a person under the Act, (b) the set off against another sum payable by that person under the Act, and (c) the refundable amount is set off after intimation in writing of such proposed action to that person. All the conditions are cumulative. Further, after the withdrawal of the order of attachment under section 226(3), there is no scope for further action against the petitioner.

7. Looked at from any angle, the action of the respondents in making adjustment and/or not granting refund flowing from the intimation under section 143(1)(a) of the Act, cannot be maintained in law. Accordingly, we direct the amount to be refunded unless there is any amount due from the petitioner which is to be liquidated. The refund shall be granted within two weeks from today. If the refund is not granted within the stipulated period, it shall carry an interest applicable for refund from 24-12-1999.

Petition disposed of Dasti to both the parties.