No Adjustment of refund against outstanding demand without Notice

By | August 8, 2015

Question  Whether the Income tax department can make adjustment of refund against outstanding demand without issuing notice to Assessee ?


Where a sum was recovered from bank account of assessee by issuing a garnishee order and amount due on refund was adjusted against a tax demand without giving a notice to assessee, since Department had unilaterally adjusted refund amount, same would be remitted to account of assessee

HIGH COURT OF CALCUTTA

Indian Chamber of Commerce

v.

Director of Income-tax (Exemption)

I.P MUKERJI, J.

WRIT PETITION NO. 316 OF 2014

AUGUST  6, 2014

Section 245, read with section 226, of the Income-tax Act, 1961

Facts 

Assessing Officer passed an assessment order and the  Said assessment order was challenged by assessee before Commisssioner (Appeals)

Assessee also filed stay application before Commissioner (Appeals)

While appeal and stay application were pending, revenue by an order in nature of garnishee, obtained payment from assessee’s bank in full satisfaction of its claim after adjusting refund due to assessee

Assessee contended that Department had unilaterally adjusted refund due to assessee since  appeal was pending for more than a year before Commissioner (Appeals) and stay application was pending for four months , recovery of sum from bank by garnishee order was  a case of sudden coercive action.

Since Department had unilaterally adjusted amount due on refund against a tax demand without giving a notice to assessee, Department would be required to remit that amount to account of assessee [Paras 8 and 10]

 

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