IN THE HIGH COURT OF JUDICATURE AT BOMBAY
\nORDINARY ORIGINAL CIVIL JURISDICTION
\nWRIT PETITION NO. 732 OF 2021
\nTata Communications Ltd., ) .PETITIONER
\nhaving its address Videsh )
\nSanchar Bhavan, Mahatma )
\nGandhi Road, Fort, )
\nMumbai \u2013 400 001. )
\nV\/s.
\n1. Union of India ) .RESPONDENTS
\nThrough the Secretary, )
\nMinistry of Finance, Government )
\nof India, North Block, )
\nNew Delhi \u2013 110 001. )
\n)
\n2. Deputy Commissioner of )
\nIncome Tax \u2013 1(3)1, Aayakar Bhavan )
\nM. K. Road, )
\nMumbai \u2013 400 020. )
\n)
\n3. Additional Commissioner of )
\nIncome Tax \u2013 1(3), Aayakar Bhavan, )
\nM. K. Road, )
\nMumbai \u2013 400 020. )
\n)
\n4. Principal Commissioner of )
\nIncome Tax \u2013 1, Aayakar Bhavan, )
\nM. K. Road, )
\nMumbai \u2013 400 020. )
\n)
\n5. Commissioner of Income Tax )
\n( Centralized Processing Centre ) )
\nIncome Tax Department, )
\nBengaluru \u2013 560 500. )
\n)
\n6. Assistant Director of Income-tax )
\n( Centralized Processing Centre ) )
\nIncome Tax Department, )
\nBengaluru \u2013 560 500. )
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\nMr. J. D. Mistri, Senior Advocate a\/w Mr. Atul Jasani i\/b Mr. Harsh
\nKapadia, Advocates for the petitioner
\nMr. Suresh Kumar, Advocate for the respondents
\nCORAM : SUNIL P. DESHMUKH, AND
\nABHAY AHUJA, JJ.
\nDATE : 06.04.2021
\nORAL JUDGMENT (PER : SUNIL P. DESHMUKH, J.)
\n1. Rule. Rule made returnable forthwith and heard learned
\nadvocates for the parties, finally, by consent.
\n2. The petitioner is a telecommunications company
\nengaged in offering services as referred to in the writ petition.
\nPetitioner had filed its return of income for the Assessment Year (AY)
\n2019-20 of total income of Rs.638,05,85,060\/- and
\nRs.220,62,55,842\/- as total tax on said income. Petitioner had
\nclaimed a credit of Rs.425,84,02,174\/- as tax paid in the form of Tax
\nDeducted at Source (TDS) of Rs.425,83,76,387\/- and Tax Collected
\nat Source (TCS) of Rs.25,787\/- and had claimed refund of
\nRs.205,21,46,330\/-. Processing of said return had been getting
\nobfuscated and prolonged at the end of the respondents and the
\npetitioner had been before this court in writ petition bearing
\n(Lodging) No. 6965 of 2020. Said writ petition had been disposed of
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\nby this court on 11th January, 2021 directing to release due refund
\namount with interest within a period of two weeks from the date of
\nreceipt of the order.
\n3. Petitioner had forwarded a copy of aforesaid order dated
\n11th January, 2021 to the respondents on 14th January, 2021 with a
\nrequest to comply with the same and to release the refund with
\ninterest.
\n4. Respondent No. 6 issued an intimation under section
\n143 (1) of the Income Tax Act, 1961 (Herein after \u201cthe Act\u201d), on 17th
\nJanuary, 2021 and had determined income tax refund with interest
\npayable to the petitioner to the tune of Rs.227.27 crore, referring,
\ninter alia, to that certain demands were outstanding, including those
\nfor the AYs 2007-08 (Rs.153.91 crore) and 2008-09 (Rs.138.26
\ncrore), further referring to that intimation pursuant to section 245 of
\nthe Act has been issued separately proposing to adjust outstanding
\ndemands against aforesaid determined refund, asking the petitioner
\nto submit its response as release of refund would be considered with
\nreference to the same.
\n5. Petitioner, had, in response, referred to that the
\npetitioner had not received any notice under section 245 of the Act,
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\ndespite a statement in the intimation under section 143 (1) of the
\nAct. It was pointed out that the outstanding demands stated were
\nstayed by orders of the high court and the Income Tax Appellate
\nTribunal (ITAT), giving details thereof. It had been specifically
\npointed out that stay had been granted on 19th June, 2020 which was
\nto remain effective up to 15th July, 2020 by the ITAT to the demands
\nof AYs 2007-08 and 2008-09 and while final hearing had been
\nscheduled on 15th July, 2020 that could not take place. Thereafter,
\nthere had been series of orders by the high court whereunder status
\nquo was maintained for all interim orders within the State till
\n31st January, 2021, as the high court had intervened in view of
\nnationwide lock-down due to pandemic. It was referred to that
\npetitioner had also met respondents No. 2 and 3 and explained
\naforesaid position and had requested to release refund which had
\nbeen due. Petitioner had also furnished substantiating material on,
\non-line portal of the Income Tax Department on 22nd January, 2021.
\nThe petitioner had again requested respondents No. 2 and 3
\nexplaining status of the outstanding demands, highlighting that the
\ndemands stated in intimation dated 17th January, 2021 had been
\nstayed or injunction has been clamped.
\n6. As nothing was heard from the respondents, the
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\npetitioner on 30th January, 2021 had requested the respondents to
\nrelease refund as the period granted by the high court had come to
\nan end. In the meanwhile, the petitioner had informed the
\nrespondents that it had requested to fix stay applications for AYs
\n2007-08 and 2008-09.
\n7. On 1st February, 2021, the petitioner found that demands
\npertaining to AY 2007-08 had been stopped appearing as outstanding
\nand demand pertaining to AY 2008-09 had been reduced as on 31st
\nJanuary, 2021 on the income tax e-filing portal and \u201cdate of last
\nrefresh\u201d mentioned therein was 31st January, 2021.
\n8. Since the petitioner had neither received any
\ncommunication from the respondents nor the amount of refund, it
\nhad written on 2nd February, 2021 to respondents that there has been
\nno communication with regard to refund and that it was surprised to
\nsee on 1st February, 2021 that online income tax e-filing portal
\nsuggested that demand for AY 2007-08 is no longer outstanding and
\nfor the next AY 2008-09, it had been reduced and clarification was
\nsought in this respect as to whether refund of AY 2019-20 was
\nadjusted against these demands, reiterating that demands for said
\nAYs were stayed and could not be recovered.
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\n9. Petitioner noticed, when status of income tax refund for
\nAY 2019-20 on \u201cTax Information Network\u201d of the Income Tax
\nDepartment available on the website of National Securities
\nDepository Limited (NSDL) was checked, that refund of AY 2019-20
\nwas adjusted against the outstanding demands. Thus, the petitioner
\nis before this court seeking writ of certiorari or writ of its nature to
\nquash and set aside the adjustment of demands of AYs 2007-08 and
\n2008-09 against the determined refund due for the AY 2019-20.
\nPetitioner also seeks writ of mandamus directing respondent No. 3 to
\nrelease refund of AY 2019-20 along with interest as determined
\nunder the intimation dated 17th January, 2021 and to forthwith
\nwithdraw impugned adjustment purportedly done.
\n10. In the affidavit in reply to the writ petition, respondents
\nrefer to that return for the AY 2019-20 had been processed under
\nsection 143 (1) of the Act and total refund of Rs.204,74,43,697\/-
\nplus interest under section 244A of the Act of Rs.22,52,18,796\/- has
\nbeen given under intimation dated 17th January, 2021 and there is a
\ndifference of Rs.47,02,633\/- on account of lower TDS credits
\nappearing in Form 26AS of the assessee. It has been referred to that
\nthe petitioner had been communicated details of outstanding tax
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\ndemands, arrears from time to time and even the assessee has
\nforwarded its reply through e-filing portal. It is referred to that an
\nopportunity of being heard was granted to the petitioner and
\naccordingly on 21st January, 2021, authorized representative of the
\npetitioner had been heard and e-mail was sent by the petitioner to
\nthe respondents on 22nd January, 2021 and thus, the petitioner had
\nbeen granted opportunity to present its stand on outstanding
\ndemands and accordingly adjustment under section 245 of the Act
\nhas been carried out by CPC, which is in accordance with law.
\n11. It is being submitted that order dated 11th January, 2021
\nof this court has been complied with. The return of income for AY
\n2019-20 was processed under section 143 (1) of the Act and
\nintimation dated 17th January, 2021 was generated and served on the
\npetitioner. The petitioner has furnished reply on 21st January, 2021 to
\nnotice under section 245 of the Act. The direction was to release
\n\u201cdue refund amount\u201d which is after giving effect to all provisions of
\nlaw, including section 245 of the Act. It is submitted that the
\npetitioner had been confronted with outstanding demands and after
\nconsidering response, the respondents had communicated to CPC
\nregarding demands which are currently not recoverable (on account
\nof stay by ITAT), including that stay in respect of demands for AYs
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\n2007-08 and 2008-09 was not in operation. In short, it is submitted
\nthat it is not the case that the petitioner had no
\ncommunication\/intimation with regard to proposed adjustment.
\n12. It is referred to that stay to demands for AYs 2007-08
\nand 2008-09 expired on 15th July, 2020 and 7th April, 2020 and
\nduring hearing it was enquired with the petitioner as to whether
\nthere had been further stay granted and the assessee had not
\nproduced any stay order. It is contended that the suo motu writ
\npetition, referred to by the petitioner was in context of restraint on
\neviction by public authority and Union of India had not been a party
\nand no directions were issued with regard to the Act. It is under these
\ncircumstances, while two weeks\u2019 period was to expire, demands were
\nadjusted.
\n13. It is submitted that procedure, as per provisions of the
\nAct had been followed before adjusting the demands under section
\n245 of the Act and there is an acknowledgment with respect to the
\nsame vide petitioner\u2019s e-mail dated 22nd January, 2021. It is being
\nreferred to that while the stay had been operating, as contended on
\nbehalf of the petitioner and had been extended till 31st January,
\n2021, then no plausible explanation is coming forth from the
\npetitioner as to why the petitioner had got stay orders extended in
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\nrespect of other AYs until September, 2020 and why argument had
\nnot been advanced that the stay orders were automatically extended.
\n14. It is referred to in the reply that the period granted by
\nthis court was to expire on 28th January, 2021 and, as such, approval
\nto adjustment was given on 27th January, 2021.
\n15. It is, thus, submitted that proper procedure as per law
\nhad been followed while adjusting the refund and that the petitioner
\nhas an alternate remedy and, as such, the request of the petitioner
\nmay not be accepted and the writ petition be dismissed.
\n16. While resistance of the respondents is as aforesaid,
\nlearned senior advocate Mr. Jahangir Mistri appearing on behalf of
\nthe petitioner, submits that there has been no intimation as required
\nunder section 245 of the Act, before making adjustment of refund
\ntowards outstanding demands. He contends that contention on
\nbehalf of the respondents that the petitioner has been heard over
\nadjustment under section 245 of the Act, is not proper and is
\nfallacious. There has been no intimation whatsoever issued to the
\npetitioner in respect of adjustment as required under section 245 of
\nthe Act. As a matter of fact, the intimation dated 17th January, 2021
\nunder section 143 (1) of the Act under note specifically refers to that
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\n\u201cAn intimation under section 245 of the Income Tax Act, 1961 has
\nbeen issued separately proposing to adjust the outstanding demands
\nagainst the refund determined as per this order. Since, the release of
\nthe refundable amount will be considered on the basis of your
\nresponse\/compliance to the Intimation U\/s 245, you are requested to
\nsubmit your response expeditiously.\u201d He submits that pursuant to the
\nsame the petitioner has not received, any intimation under section
\n245 of the Act, at all.
\n17. Apart from aforesaid, he submits that it had been
\nexplained to the authorities that demand of taxes for AYs 2007-08
\nand 2008-09 are pending adjudication and that stay had been
\noperating under orders passed from time to time by tribunal as well
\nas this court. However, all aforesaid contentions have fallen on deaf
\nears and the respondents, with a view to not to pay refund to
\npetitioner, have rushed to adjust due refund amount to petitioner for
\nAY 2019-20, which is absolutely without authority of law and
\nwithout jurisdiction and an act which is patently capricious.
\n18. In support of his submissions, Mr. Mistri purports to refer
\nto and rely on a decision of division bench in the case of \u201cA. N.
\nShaikh and Others V\/s Suresh B. Jain\u201d, Income Tax Reports Vol.165,
\npage 86, wherein it has been found that \u2013 \u201cIntimation given in the
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\nassessment order for 1983-84 that the tax liability of the respondent
\n(original petitioner) came to Rs.7,47,732\/- and that the amount of
\nrefund for the previous assessment year 1982-83 is adjusted against
\nthe said liability does not amount to intimation in writing as
\ncontemplated by section 245. Section 245 clearly requires a previous
\nintimation of the proposed action for adjustment and not
\nsimultaneous intimation.\u201d
\n19. Yet another division bench judgment of this court in the
\ncase of \u201cHindustan Unilever Ltd., V\/s Deputy Commissioner of
\nIncome Tax and Others\u201d, [2015] 377 ITR 281 (Bom) has been
\nreferred to. It has been observed in said judgment that \u201cGiving of
\nprior intimation under section 245 of the Act is mandatory, the
\npurpose being to enable the party to point out that there are factual
\nerrors or some further developments, if any \u2026.. the officer of the
\nRevenue exercising power under section 245 of the Act must apply
\nhis mind to it and must record reasons why the objection is not
\nsustainable and also communicate these to the party before or at the
\ntime of adjusting the refund. This alone would ensure that the power
\nof adjustment under section 245 of the Act is not exercised
\narbitrarily.\u201d
\n20. Learned senior advocate also refers to a decision of
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\ndivision bench of this court in the case of \u201cMilestone Real Estate
\nFund V\/s Assistant Commissioner of Income Tax and Others\u201d [2019]
\n415 ITR 467 (Bom), wherein as well it has been observed that the
\nassessing officer while exercising powers under section 245 of the
\nAct, must apply his mind to the objections raised by the assessee and
\nrecord his reasons why the objection is not sustainable or otherwise
\nand communicate it to the party before making the adjustment. It has
\nfurther been observed that when the issue stands concluded in favour
\nof the assessee by orders of the appellate authority in assessee\u2019s own
\ncase, it would be proper to grant stay to demand for the assessment
\nyear under section 220 (6) of the Act till the appeal of the assessee
\nagainst the order is disposed of. Thus, this court had set aside
\nadjustment of refund. It is submitted that it is well settled that the
\nreasons in affidavit would not substitute and replace a reasoned
\nquasi judicial order and its communication.
\n21. Learned senior advocate submits that the petitioner had
\nplaced on record order of the high court dated 26th March, 2020 in
\nthe suo motu writ petition (2 of 2020). He submits, title of the order
\nclearly suggests that it is with reference to extension of interim
\norders (page 97 of this writ petition). From time to time thereafter,
\norders were passed extending operation of interim orders till 31st
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\nJanuary, 2021. Said orders as well have been supplied to the
\nrespondents and it is not in dispute. He submits that perusal of the
\norders would show that those are not confined only to eviction \/
\ndispossession of persons and it embraces all the cases of interim
\norders passed by courts, authorities and tribunals, etc. He, therefore,
\nsubmits that there is not only contumacy in refund adjustment
\nviolating stipulation under section 245 of the Act and letter and spirit
\nof order dated 11th January, 2021, but also the reply filed by the
\nrespondents is even more contumacious wherein it is purportedly
\ncontended that orders of this court in suo motu writ petition would
\nhardly put on hold adjustment of refund.
\n22. He submits that in the present matter, neither any notice
\nhad been issued to the petitioner under section 245 of the Act nor
\nany order has been passed on the submission and\/or the objections
\ninasmuch as there is no communication of orders to the petitioner.
\nHe, thus, urges to allow the writ petition.
\n23. Mr. Suresh Kumar, learned advocate appearing for the
\nRevenue, however, submits that the record sufficiently reveals that it
\nis not the case that the petitioner had no idea that the department is
\npurporting to have adjustment of refund towards outstanding
\ndemands. An intimation about adjustment would be considered, had
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\nbeen given under the intimation pursuant to section 143 (1) of the
\nAct.
\n24. He submits that petitioner had been given opportunity
\nand had been before the authorities on 21st January, 2021 over the
\nissue of adjustment of refund in respect of AYs 2007-08, 2008-09.
\nAssuming that the orders cover only eviction \/ dispossession of
\npersons, he purports to submit that order of high court in suo motu
\npetition would not be legitimately said to cover matters before ITAT.
\nHe submits that the order dated dated 11th January, 2021, having
\nregard to facts and circumstances, has been complied with. Order for
\nadjustment of refund has been made before expiry of period of
\nfourteen days from the date of orders of the court dated 11th January,
\n2021. He submits that the provisions of the Act under section 245 of
\nthe Act have been duly followed before adjusting outstanding
\ndemands. He, therefore, submits that the petition would not be said
\nto carry any weight in it and the same be not entertained and be
\nrejected.
\n25. This court, under its order dated 11th January, 2021 in
\nwrit petition (Lodging) No. 6965 of 2020 had observed as under:
\n\u201c 10. From the above, it is seen that the grievance of
\nthe petitioner is now within a narrow compass. Matter
\nis with respondent No. 5 which will intimate the
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\npetitioner regarding processing and release of refund
\nsince processing of the income tax return for the
\nassessment year 2019-20 has been completed. It is also
\nseen that the said respondents have admitted that
\ncertain amount of refund is due to the petitioner
\nprocessing of which at the level of respondent No. 2 is
\ncomplete after resolution of all technical issues.
\n11. Having heard learned counsel for the parties and
\nhaving considered the provisions of section 143 (1) of
\nthe Act, we direct respondent No. 5 to complete the
\nprocessing of the refund claim of the petitioner and
\nthereafter, release the due refund amount to the
\npetitioner along with applicable interest in accordance
\nwith law within a period of two weeks from the date of
\nreceipt of a copy of this order.\u201d
\n26. Paragraphs of the order, reproduced above, show that
\nrespondents had admitted that certain amount of refund is due to the
\npetitioner for AY 2019-20 and in the next paragraph, it has been
\ndirected to release the due refund within a period of two weeks. The
\nobservations about admission of refund amount due and its release
\nare in tandem.
\n27. Although it is referred to that on 21st January, 2021,
\npetitioner was communicated about adjustment and was
\nacknowledged under e-mail dated 22nd January, 2021, perusal of the
\ne-mail annexed to the reply refers to \u201cstatus of outstanding demands
\nand intimation under section 143 (1) of the Income Tax Act (\u2018Act\u2019)\u201d
\nand not to under section 245 of the Act. It also emerges that there is
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\nno record made available by the respondents about any separate
\nintimation being issued to the petitioner under section 245 of the Act
\nfor adjustment of demands from the refund from AY 2019-20 as
\nreferred to under note in intimation pursuant to section 143 (1) of
\nthe Act. The affidavit in reply is silent over the same.
\n28. It is not the case of the respondents that revenue officer
\nhad passed an order, inter alia, with regard to contention that there is
\nno receipt of intimation under section 245 of the Act at the end of the
\npetitioner and reasons were recorded as to why those are not
\nsustainable and that it was communicated to the petitioner before
\nadjusting the refund.
\n29. Although the respondents purport to contend that proper
\nprocedure had been followed, record does not bear that there had
\nbeen any communication made to the petitioner as to its submissions
\nbeing not acceptable before or at the time of making the adjustment.
\n30. Decisions in the cases of \u201cA. N. Shaikh\u201d, \u201cHindustan
\nUnilever Ltd.,\u201d and \u201cMilestone Real Estate Fund\u201d (supra) relied on,
\non behalf of the petitioner have not been met with by the
\nrespondents nor it is the case of the respondents that any other
\ncourse could be adopted for adjustment of refund. There is stark
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\nabsence of material showing compliance of requirements viz:
\napplication of mind to contentions on behalf of the petitioner,
\nreasoned order and its communication to the assessee. The facts and
\ncircumstances lend lot of substance to submissions advanced on
\nbehalf of the petitioner that there is absence of compliance of
\nrequirements under section 245 of the Act, coupled with observations
\nof high court in the decisions relied upon on behalf of the petitioners.
\n31. Perusal of order dated 26th March, 2020 by this court
\n(copy of entire order is appended to the writ petition), which is with
\nreference to extension of interim orders it does not appear that the
\ncanvas of order is limited to eviction by public authorities from
\nbuilding \/ structures. Copy of the order is at page 97 as Annexure-1.
\nRelevant portion thereof reads, thus,
\n\u201cIn this situation, we find it appropriate to continue all
\ninterim orders which are operating till today and are not
\nalready continued by some other courts \/ authority
\nincluding this court and the same shall remain in force
\ntill 30\/04\/2020, subject to liberty to parties to move for
\nvacation of interim orders passed by this High Court at
\nMumbai, Aurangabad, Nagpur and Panaji as also all
\ncourts \/ Tribunal and authorities subordinate over which
\nit has power of superintendence expiring before
\n30\/04\/2020, shall continue to operate till then. It is
\nclarified that such interim orders which are not granted
\nfor limited duration and therefore, are to operate till
\nfurther orders, shall remain unaffected by this order.\u201d
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\n32. Said order was continued from time to till 31st January,
\n2021. The order specifically refers to that same is applicable to
\ninterim orders of courts, tribunals and authorities over which the
\ncourt has power of superintendence. All the subsequent orders are
\nalso made available whereunder there does not appear that their
\noperation is limited to the extent of eviction \/ dispossession of
\npersons \/ tenants.
\n33. Having regard to aforesaid extract of the order of this
\ncourt and the order passed from time to time, as have been annexed
\nby the petitioner to the writ petition, it would be discernible that
\ninterim orders passed by the tribunal were to be operative till 31st
\nJanuary, 2021. In the scenario, it is difficult to go by the explanation
\nand submission that there had hardly been any interim relief granted
\nby the tribunal operating in respect of demands for AYs 2007-8 and
\n2008-09. It is difficult to appreciate the stand of the respondents that
\nthe order passed by the high court would not cover\/operate over the
\nmatters and orders passed by the ITAT, Union of India being not a
\nparty to the matter. Such a justification from and the approach of, the
\nrespondent authorities is difficult to be approved of which is not in
\nfitness of stature, especially of the state department, which is
\nsupposed to act like a model litigant.
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\n34. We, therefore, consider in the circumstances of the case
\nand emerging position, it would not be said that the action of the
\nrespondents of adjusting the amount is sustainable.
\n35. As such, writ petition is allowed in terms of prayer clause
\nb (i). The respondents would refund the amount to the petitioner for
\nAY 2019-20 as determined under intimation under section 143 (1) of
\nthe Act dated 17th January, 2021 with interest thereon, as per law,
\nwithin a period of four weeks from the date of receipt of this order.
\n(ABHAY AHUJA, J.) (SUNIL P. DESHMUKH, J.)
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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. Decisions in the cases of \u201cA. N. Shaikh\u201d, \u201cHindustan Unilever Ltd.,\u201d and \u201cMilestone Real Estate Fund\u201d (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 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<\/p>\n