No Notice before Adjusting Refund towards Outstanding Tax Demand: Delhi HC asks Income Tax Dept to re-consider Claim [Read Order]

The Delhi High Court, while granting an interim relief to the taxpayer, directed the income tax department to re-verify the claim since no notice was given before adjusting the refund against the outstanding tax demand.

The petitioner, M/s Goel Road Carriers Private Limited filed a writ petition seeking refund of Rs.57,65,410/-, which was recovered in excess of 20% of the total disputed tax demand, for the Assessment Year 2012-13 against the refund due for the Assessment Year 2020-21. The Petitioner also sought for a direction to expeditiously decide the appeal filed against the order dated 27^th November 2019 under Section 144 of the Income Tax Act, 1961. The petitioner claimed that the intimation under Section 245 of the Act is only for adjustment of Rs.30,000/- which was raised against the penalty under Section 271B of the Act.

Justice Manmohan and Justice Dinesh Kumar Sharma observed that the “refund has been adjusted against the outstanding tax demand by the Authority without following the due procedure prescribed under the said Section inasmuch as no notice or opportunity of pre-decisional hearing had been provided to the petitioner prior to such adjustment of refund, this Court is of the opinion that the petitioner is entitled to refund of adjustments made in excess of 20% of the disputed tax demands and Rs. 30,000/- set-off of refunds against tax payable.”

Allowing the petition, the Court held that “consequently, this Court directs the respondents to verify the facts stated in the writ petition and if it finds them to be true and correct then refund the amount adjusted in excess of 20% of the disputed tax demands for the Assessment Year 2012-13 as well as Rs.30,000/- as mentioned in the intimation under Section 245 of the Act to the petitioner within four weeks. The Appellate Authority is also directed to decide the petitioner’s appeal challenging the order dated 27th November, 2019 within a year.”

To Read the full text of the Order CLICK HERE

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