Tata Communications Ltd vs. UOI (Bombay High Court)

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 732 OF 2021
Tata Communications Ltd., ) .PETITIONER
having its address Videsh )
Sanchar Bhavan, Mahatma )
Gandhi Road, Fort, )
Mumbai – 400 001. )
V/s.
1. Union of India ) .RESPONDENTS
Through the Secretary, )
Ministry of Finance, Government )
of India, North Block, )
New Delhi – 110 001. )
)
2. Deputy Commissioner of )
Income Tax – 1(3)1, Aayakar Bhavan )
M. K. Road, )
Mumbai – 400 020. )
)
3. Additional Commissioner of )
Income Tax – 1(3), Aayakar Bhavan, )
M. K. Road, )
Mumbai – 400 020. )
)
4. Principal Commissioner of )
Income Tax – 1, Aayakar Bhavan, )
M. K. Road, )
Mumbai – 400 020. )
)
5. Commissioner of Income Tax )
( Centralized Processing Centre ) )
Income Tax Department, )
Bengaluru – 560 500. )
)
6. Assistant Director of Income-tax )
( Centralized Processing Centre ) )
Income Tax Department, )
Bengaluru – 560 500. )
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Mr. J. D. Mistri, Senior Advocate a/w Mr. Atul Jasani i/b Mr. Harsh
Kapadia, Advocates for the petitioner
Mr. Suresh Kumar, Advocate for the respondents
CORAM : SUNIL P. DESHMUKH, AND
ABHAY AHUJA, JJ.
DATE : 06.04.2021
ORAL JUDGMENT (PER : SUNIL P. DESHMUKH, J.)
1. Rule. Rule made returnable forthwith and heard learned
advocates for the parties, finally, by consent.
2. The petitioner is a telecommunications company
engaged in offering services as referred to in the writ petition.
Petitioner had filed its return of income for the Assessment Year (AY)
2019-20 of total income of Rs.638,05,85,060/- and
Rs.220,62,55,842/- as total tax on said income. Petitioner had
claimed a credit of Rs.425,84,02,174/- as tax paid in the form of Tax
Deducted at Source (TDS) of Rs.425,83,76,387/- and Tax Collected
at Source (TCS) of Rs.25,787/- and had claimed refund of
Rs.205,21,46,330/-. Processing of said return had been getting
obfuscated and prolonged at the end of the respondents and the
petitioner had been before this court in writ petition bearing
(Lodging) No. 6965 of 2020. Said writ petition had been disposed of
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by this court on 11th January, 2021 directing to release due refund
amount with interest within a period of two weeks from the date of
receipt of the order.
3. Petitioner had forwarded a copy of aforesaid order dated
11th January, 2021 to the respondents on 14th January, 2021 with a
request to comply with the same and to release the refund with
interest.
4. Respondent No. 6 issued an intimation under section
143 (1) of the Income Tax Act, 1961 (Herein after “the Act”), on 17th
January, 2021 and had determined income tax refund with interest
payable to the petitioner to the tune of Rs.227.27 crore, referring,
inter alia, to that certain demands were outstanding, including those
for the AYs 2007-08 (Rs.153.91 crore) and 2008-09 (Rs.138.26
crore), further referring to that intimation pursuant to section 245 of
the Act has been issued separately proposing to adjust outstanding
demands against aforesaid determined refund, asking the petitioner
to submit its response as release of refund would be considered with
reference to the same.
5. Petitioner, had, in response, referred to that the
petitioner had not received any notice under section 245 of the Act,
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despite a statement in the intimation under section 143 (1) of the
Act. It was pointed out that the outstanding demands stated were
stayed by orders of the high court and the Income Tax Appellate
Tribunal (ITAT), giving details thereof. It had been specifically
pointed out that stay had been granted on 19th June, 2020 which was
to remain effective up to 15th July, 2020 by the ITAT to the demands
of AYs 2007-08 and 2008-09 and while final hearing had been
scheduled on 15th July, 2020 that could not take place. Thereafter,
there had been series of orders by the high court whereunder status
quo was maintained for all interim orders within the State till
31st January, 2021, as the high court had intervened in view of
nationwide lock-down due to pandemic. It was referred to that
petitioner had also met respondents No. 2 and 3 and explained
aforesaid position and had requested to release refund which had
been due. Petitioner had also furnished substantiating material on,
on-line portal of the Income Tax Department on 22nd January, 2021.
The petitioner had again requested respondents No. 2 and 3
explaining status of the outstanding demands, highlighting that the
demands stated in intimation dated 17th January, 2021 had been
stayed or injunction has been clamped.
6. As nothing was heard from the respondents, the
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petitioner on 30th January, 2021 had requested the respondents to
release refund as the period granted by the high court had come to
an end. In the meanwhile, the petitioner had informed the
respondents that it had requested to fix stay applications for AYs
2007-08 and 2008-09.
7. On 1st February, 2021, the petitioner found that demands
pertaining to AY 2007-08 had been stopped appearing as outstanding
and demand pertaining to AY 2008-09 had been reduced as on 31st
January, 2021 on the income tax e-filing portal and “date of last
refresh” mentioned therein was 31st January, 2021.
8. Since the petitioner had neither received any
communication from the respondents nor the amount of refund, it
had written on 2nd February, 2021 to respondents that there has been
no communication with regard to refund and that it was surprised to
see on 1st February, 2021 that online income tax e-filing portal
suggested that demand for AY 2007-08 is no longer outstanding and
for the next AY 2008-09, it had been reduced and clarification was
sought in this respect as to whether refund of AY 2019-20 was
adjusted against these demands, reiterating that demands for said
AYs were stayed and could not be recovered.
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9. Petitioner noticed, when status of income tax refund for
AY 2019-20 on “Tax Information Network” of the Income Tax
Department available on the website of National Securities
Depository Limited (NSDL) was checked, that refund of AY 2019-20
was adjusted against the outstanding demands. Thus, the petitioner
is before this court seeking writ of certiorari or writ of its nature to
quash and set aside the adjustment of demands of AYs 2007-08 and
2008-09 against the determined refund due for the AY 2019-20.
Petitioner also seeks writ of mandamus directing respondent No. 3 to
release refund of AY 2019-20 along with interest as determined
under the intimation dated 17th January, 2021 and to forthwith
withdraw impugned adjustment purportedly done.
10. In the affidavit in reply to the writ petition, respondents
refer to that return for the AY 2019-20 had been processed under
section 143 (1) of the Act and total refund of Rs.204,74,43,697/-
plus interest under section 244A of the Act of Rs.22,52,18,796/- has
been given under intimation dated 17th January, 2021 and there is a
difference of Rs.47,02,633/- on account of lower TDS credits
appearing in Form 26AS of the assessee. It has been referred to that
the petitioner had been communicated details of outstanding tax
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demands, arrears from time to time and even the assessee has
forwarded its reply through e-filing portal. It is referred to that an
opportunity of being heard was granted to the petitioner and
accordingly on 21st January, 2021, authorized representative of the
petitioner had been heard and e-mail was sent by the petitioner to
the respondents on 22nd January, 2021 and thus, the petitioner had
been granted opportunity to present its stand on outstanding
demands and accordingly adjustment under section 245 of the Act
has been carried out by CPC, which is in accordance with law.
11. It is being submitted that order dated 11th January, 2021
of this court has been complied with. The return of income for AY
2019-20 was processed under section 143 (1) of the Act and
intimation dated 17th January, 2021 was generated and served on the
petitioner. The petitioner has furnished reply on 21st January, 2021 to
notice under section 245 of the Act. The direction was to release
“due refund amount” which is after giving effect to all provisions of
law, including section 245 of the Act. It is submitted that the
petitioner had been confronted with outstanding demands and after
considering response, the respondents had communicated to CPC
regarding demands which are currently not recoverable (on account
of stay by ITAT), including that stay in respect of demands for AYs
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2007-08 and 2008-09 was not in operation. In short, it is submitted
that it is not the case that the petitioner had no
communication/intimation with regard to proposed adjustment.
12. It is referred to that stay to demands for AYs 2007-08
and 2008-09 expired on 15th July, 2020 and 7th April, 2020 and
during hearing it was enquired with the petitioner as to whether
there had been further stay granted and the assessee had not
produced any stay order. It is contended that the suo motu writ
petition, referred to by the petitioner was in context of restraint on
eviction by public authority and Union of India had not been a party
and no directions were issued with regard to the Act. It is under these
circumstances, while two weeks’ period was to expire, demands were
adjusted.
13. It is submitted that procedure, as per provisions of the
Act had been followed before adjusting the demands under section
245 of the Act and there is an acknowledgment with respect to the
same vide petitioner’s e-mail dated 22nd January, 2021. It is being
referred to that while the stay had been operating, as contended on
behalf of the petitioner and had been extended till 31st January,
2021, then no plausible explanation is coming forth from the
petitioner as to why the petitioner had got stay orders extended in
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respect of other AYs until September, 2020 and why argument had
not been advanced that the stay orders were automatically extended.
14. It is referred to in the reply that the period granted by
this court was to expire on 28th January, 2021 and, as such, approval
to adjustment was given on 27th January, 2021.
15. It is, thus, submitted that proper procedure as per law
had been followed while adjusting the refund and that the petitioner
has an alternate remedy and, as such, the request of the petitioner
may not be accepted and the writ petition be dismissed.
16. While resistance of the respondents is as aforesaid,
learned senior advocate Mr. Jahangir Mistri appearing on behalf of
the petitioner, submits that there has been no intimation as required
under section 245 of the Act, before making adjustment of refund
towards outstanding demands. He contends that contention on
behalf of the respondents that the petitioner has been heard over
adjustment under section 245 of the Act, is not proper and is
fallacious. There has been no intimation whatsoever issued to the
petitioner in respect of adjustment as required under section 245 of
the Act. As a matter of fact, the intimation dated 17th January, 2021
under section 143 (1) of the Act under note specifically refers to that
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“An intimation under section 245 of the Income Tax Act, 1961 has
been issued separately proposing to adjust the outstanding demands
against the refund determined as per this order. Since, the release of
the refundable amount will be considered on the basis of your
response/compliance to the Intimation U/s 245, you are requested to
submit your response expeditiously.” He submits that pursuant to the
same the petitioner has not received, any intimation under section
245 of the Act, at all.
17. Apart from aforesaid, he submits that it had been
explained to the authorities that demand of taxes for AYs 2007-08
and 2008-09 are pending adjudication and that stay had been
operating under orders passed from time to time by tribunal as well
as this court. However, all aforesaid contentions have fallen on deaf
ears and the respondents, with a view to not to pay refund to
petitioner, have rushed to adjust due refund amount to petitioner for
AY 2019-20, which is absolutely without authority of law and
without jurisdiction and an act which is patently capricious.
18. In support of his submissions, Mr. Mistri purports to refer
to and rely on a decision of division bench in the case of “A. N.
Shaikh and Others V/s Suresh B. Jain”, Income Tax Reports Vol.165,
page 86, wherein it has been found that – “Intimation given in the
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assessment order for 1983-84 that the tax liability of the respondent
(original petitioner) came to Rs.7,47,732/- and that the amount of
refund for the previous assessment year 1982-83 is adjusted against
the said liability does not amount to intimation in writing as
contemplated by section 245. Section 245 clearly requires a previous
intimation of the proposed action for adjustment and not
simultaneous intimation.”
19. Yet another division bench judgment of this court in the
case of “Hindustan Unilever Ltd., V/s Deputy Commissioner of
Income Tax and Others”, [2015] 377 ITR 281 (Bom) has been
referred to. It has been observed in said judgment that “Giving of
prior intimation under section 245 of the Act is mandatory, the
purpose being to enable the party to point out that there are factual
errors or some further developments, if any ….. the officer of the
Revenue exercising power under section 245 of the Act must apply
his mind to it and must record reasons why the objection is not
sustainable and also communicate these to the party before or at the
time of adjusting the refund. This alone would ensure that the power
of adjustment under section 245 of the Act is not exercised
arbitrarily.”
20. Learned senior advocate also refers to a decision of
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division bench of this court in the case of “Milestone Real Estate
Fund V/s Assistant Commissioner of Income Tax and Others” [2019]
415 ITR 467 (Bom), wherein as well it has been observed that the
assessing officer while exercising powers under section 245 of the
Act, must apply his mind to the objections raised by the assessee and
record his reasons why the objection is not sustainable or otherwise
and communicate it to the party before making the adjustment. It has
further been observed that when the issue stands concluded in favour
of the assessee by orders of the appellate authority in assessee’s own
case, it would be proper to grant stay to demand for the assessment
year under section 220 (6) of the Act till the appeal of the assessee
against the order is disposed of. Thus, this court had set aside
adjustment of refund. It is submitted that it is well settled that the
reasons in affidavit would not substitute and replace a reasoned
quasi judicial order and its communication.
21. Learned senior advocate submits that the petitioner had
placed on record order of the high court dated 26th March, 2020 in
the suo motu writ petition (2 of 2020). He submits, title of the order
clearly suggests that it is with reference to extension of interim
orders (page 97 of this writ petition). From time to time thereafter,
orders were passed extending operation of interim orders till 31st
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January, 2021. Said orders as well have been supplied to the
respondents and it is not in dispute. He submits that perusal of the
orders would show that those are not confined only to eviction /
dispossession of persons and it embraces all the cases of interim
orders passed by courts, authorities and tribunals, etc. He, therefore,
submits that there is not only contumacy in refund adjustment
violating stipulation under section 245 of the Act and letter and spirit
of order dated 11th January, 2021, but also the reply filed by the
respondents is even more contumacious wherein it is purportedly
contended that orders of this court in suo motu writ petition would
hardly put on hold adjustment of refund.
22. He submits that in the present matter, neither any notice
had been issued to the petitioner under section 245 of the Act nor
any order has been passed on the submission and/or the objections
inasmuch as there is no communication of orders to the petitioner.
He, thus, urges to allow the writ petition.
23. Mr. Suresh Kumar, learned advocate appearing for the
Revenue, however, submits that the record sufficiently reveals that it
is not the case that the petitioner had no idea that the department is
purporting to have adjustment of refund towards outstanding
demands. An intimation about adjustment would be considered, had
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been given under the intimation pursuant to section 143 (1) of the
Act.
24. He submits that petitioner had been given opportunity
and had been before the authorities on 21st January, 2021 over the
issue of adjustment of refund in respect of AYs 2007-08, 2008-09.
Assuming that the orders cover only eviction / dispossession of
persons, he purports to submit that order of high court in suo motu
petition would not be legitimately said to cover matters before ITAT.
He submits that the order dated dated 11th January, 2021, having
regard to facts and circumstances, has been complied with. Order for
adjustment of refund has been made before expiry of period of
fourteen days from the date of orders of the court dated 11th January,
2021. He submits that the provisions of the Act under section 245 of
the Act have been duly followed before adjusting outstanding
demands. He, therefore, submits that the petition would not be said
to carry any weight in it and the same be not entertained and be
rejected.
25. This court, under its order dated 11th January, 2021 in
writ petition (Lodging) No. 6965 of 2020 had observed as under:
“ 10. From the above, it is seen that the grievance of
the petitioner is now within a narrow compass. Matter
is with respondent No. 5 which will intimate the
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petitioner regarding processing and release of refund
since processing of the income tax return for the
assessment year 2019-20 has been completed. It is also
seen that the said respondents have admitted that
certain amount of refund is due to the petitioner
processing of which at the level of respondent No. 2 is
complete after resolution of all technical issues.
11. Having heard learned counsel for the parties and
having considered the provisions of section 143 (1) of
the Act, we direct respondent No. 5 to complete the
processing of the refund claim of the petitioner and
thereafter, release the due refund amount to the
petitioner along with applicable interest in accordance
with law within a period of two weeks from the date of
receipt of a copy of this order.”
26. Paragraphs of the order, reproduced above, show that
respondents had admitted that certain amount of refund is due to the
petitioner for AY 2019-20 and in the next paragraph, it has been
directed to release the due refund within a period of two weeks. The
observations about admission of refund amount due and its release
are in tandem.
27. Although it is referred to that on 21st January, 2021,
petitioner was communicated about adjustment and was
acknowledged under e-mail dated 22nd January, 2021, perusal of the
e-mail annexed to the reply refers to “status of outstanding demands
and intimation under section 143 (1) of the Income Tax Act (‘Act’)”
and not to under section 245 of the Act. It also emerges that there is
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no record made available by the respondents about any separate
intimation being issued to the petitioner under section 245 of the Act
for adjustment of demands from the refund from AY 2019-20 as
referred to under note in intimation pursuant to section 143 (1) of
the Act. The affidavit in reply is silent over the same.
28. It is not the case of the respondents that revenue officer
had passed an order, inter alia, with regard to contention that there is
no receipt of intimation under section 245 of the Act at the end of the
petitioner and reasons were recorded as to why those are not
sustainable and that it was communicated to the petitioner before
adjusting the refund.
29. Although the respondents purport to contend that proper
procedure had been followed, record does not bear that there had
been any communication made to the petitioner as to its submissions
being not acceptable before or at the time of making the adjustment.
30. Decisions in the cases of “A. N. Shaikh”, “Hindustan
Unilever Ltd.,” and “Milestone Real Estate Fund” (supra) relied on,
on behalf of the petitioner have not been met with by the
respondents nor it is the case of the respondents that any other
course could be adopted for adjustment of refund. There is stark
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absence of material showing compliance of requirements viz:
application of mind to contentions on behalf of the petitioner,
reasoned order and its communication to the assessee. The facts and
circumstances lend lot of substance to submissions advanced on
behalf of the petitioner that there is absence of compliance of
requirements under section 245 of the Act, coupled with observations
of high court in the decisions relied upon on behalf of the petitioners.
31. Perusal of order dated 26th March, 2020 by this court
(copy of entire order is appended to the writ petition), which is with
reference to extension of interim orders it does not appear that the
canvas of order is limited to eviction by public authorities from
building / structures. Copy of the order is at page 97 as Annexure-1.
Relevant portion thereof reads, thus,
“In this situation, we find it appropriate to continue all
interim orders which are operating till today and are not
already continued by some other courts / authority
including this court and the same shall remain in force
till 30/04/2020, subject to liberty to parties to move for
vacation of interim orders passed by this High Court at
Mumbai, Aurangabad, Nagpur and Panaji as also all
courts / Tribunal and authorities subordinate over which
it has power of superintendence expiring before
30/04/2020, shall continue to operate till then. It is
clarified that such interim orders which are not granted
for limited duration and therefore, are to operate till
further orders, shall remain unaffected by this order.”
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32. Said order was continued from time to till 31st January,
2021. The order specifically refers to that same is applicable to
interim orders of courts, tribunals and authorities over which the
court has power of superintendence. All the subsequent orders are
also made available whereunder there does not appear that their
operation is limited to the extent of eviction / dispossession of
persons / tenants.
33. Having regard to aforesaid extract of the order of this
court and the order passed from time to time, as have been annexed
by the petitioner to the writ petition, it would be discernible that
interim orders passed by the tribunal were to be operative till 31st
January, 2021. In the scenario, it is difficult to go by the explanation
and submission that there had hardly been any interim relief granted
by the tribunal operating in respect of demands for AYs 2007-8 and
2008-09. It is difficult to appreciate the stand of the respondents that
the order passed by the high court would not cover/operate over the
matters and orders passed by the ITAT, Union of India being not a
party to the matter. Such a justification from and the approach of, the
respondent authorities is difficult to be approved of which is not in
fitness of stature, especially of the state department, which is
supposed to act like a model litigant.
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34. We, therefore, consider in the circumstances of the case
and emerging position, it would not be said that the action of the
respondents of adjusting the amount is sustainable.
35. As such, writ petition is allowed in terms of prayer clause
b (i). The respondents would refund the amount to the petitioner for
AY 2019-20 as determined under intimation under section 143 (1) of
the Act dated 17th January, 2021 with interest thereon, as per law,
within a period of four weeks from the date of receipt of this order.
(ABHAY AHUJA, J.) (SUNIL P. DESHMUKH, J.)
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