The High Court · 2025

Judgment

1. .....PETITIONER 1), Hyderabad, lncome Tax Towers, Masab

2. The PrincipalCommissioner of lncome Tax 1, 7th Floor, lncome Tax Toweis, A.C. Guards, Hyderabad-500004 :

3. The Centralized Processing Centre, lncome Tax Department Bangalore, Karnataka- 560500.

4. The Assessment Unit, lncome Tax Department, National Faceless Assessment Centre, Delhi, Ministry of Finance, Room No. 401, 2nd Floor, E- Ramp, Jawaharlat Nehru Stadium, Delhi-1 10003.

5. lncome Tax Officer, Ward-1, Warangal H. No 15-1-297, BSNL Bhavan. Near KMC, Rangampeta Warangal, Telangana- 506002. .....RESPONDENTS

Petition Under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewittr, the High Court may be pleased to issue an appropriate writ order or direction more particularly one in tlte nature of Writ of Mandamus, declaring the lrrtimation/Adjustment Order dt. 05.11 .2024 passed by the 3rdrespondent under the lncome-tax Act for A.Y.2A24- 25 vide DIN No. CPC124251G231517287961, as bad in Iaw since it was passed without issuing a notice uts 245 of the Act rendering the adjustment order dt. 05.11.2024, void, itlegal, and contrary to the prwisions of lncome-tax Act and contrary to ttre Principles of Natural Justice. !A.NO:1 OF 2024 Petition Under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the 2nd respondent to ensure implementation of his directions dt. 06.11.2024 by directing the 3rd respondent to withdraw its adjustment order dt.

05.11 .2024. Counsel for the Petitioner : SRI DUNDU MANMOHAN Counsel for the Respondent Nos.l to 3 & 5 : Ms. BOKARO SAPNA REDDY (Jr. sc FoR rNcoME TAX) Counsel for the Respondent No.4,: DEPUTY SOLICITOR GENERAL OF INDIA The Court rnade the folloring ORDER EONO-ITRABI,E SRr P'SAM KOSTTY ffiucE TIOIT'BLE SRI JUSIICE SI'DDALI\ CIIALAPATIII RAO WRIT PEf,ITION NO.35831 OF 2024 ORDER: (per I'=Ion'ble SriJrt'stie Suddata Chalapathi Rao) The above writ petition is filed challenging the Adjustment order/Intimation,datedo5.ll.2024passedbythe3'drespondent undertheIncomeTa>rAct,196l(forshort,.theAct,)forthe assessment year 2024-25 uide DIN No.CPC/2 425 l G23 l 517287961, wherein the 3rd respondent without there being any issuance of valid notice under section 24s of the Act adjusting the refund without following the directions of the respondent No.2, aS contrary to the provisions of the Act and gross violation of the principles of natural justice and consequently quash the same'

2.HeardMr.DunduManmohan,Iearnedcotrnselappearingfor petitioner and Ms. B.Sapna Reddy, learned Senior Standing counsel for[ncomeTaxDepartmentforrespondentsandwehavegone throught}rerecordandalsosubmissionso[thepartiesoneitherside.

3.l.earnedcounselforthepetitionersubmitsthatforthe AssessmentYear2o22-2S,theAssessmentOrder,dated1r9.o3.2o24 waspassedbythe4ftrespondentmakingahigh-pitchedadditionof Rs.3,43,5L,75g1-,withoutproperlyconsideringthesubmissionsand documentsfrledbythepetitionerandtherefore,petitionerhasfiled GG, : I I L _-i-, "t I I I l I I i : 2 an appeal before the 2'<r respondent along with stay application on 25'04'2024' The 3'd respondent issued notice dated ls.Lo.2o24 to their t:-mail asking for repry within 21 days in respect of refund/ adjustment- It is stated that surprisingry, even before the expiry of 2r days, r-[6 Jrd respondent has adjusted the said refund amount on 05'11.t1o24. It is further contended that as per the central Board of Direct Taxes (CBDT) oflice Memorandum, dated gl.or.2ol7, if the deman<l is contested before 2ncr respondent, only 2oo/o of the disputed demancl can be collected and the balance amount would be stayed for recovery- In the instant case, though the petitioner has fired an appeal lrcfore the 2nd respondent and in spite of knowredge of filing an appeal by the petitioner, the 3.d resppndent without waiting for expiry period of 2r days has adjusted the refund of tax on 05.11 .2ct24, which is contra4r to law and also violative of period specified in the notice, dated rs.ro.2o24 *td. besides viorative o[ principles of natural justice. 4' LeuLrned Standing counsel appearing for respondent/revenue would submi. that notice under section 24s ofthe Act was issued by the centralized processing center (cpc) on rs.ro.2o24 and the same w€rS also served to the petitioner/assessee by e-mail (accountq2)ajarahospitals.com), and as the assessee has failed to submit any reply to the same, the order for adjusting the refund u,as passed on 05. t1.2024. However, was granted 3 by the 2nd respondent on 06. L1.2O24. That the stay of recovery of outstanding demand was passed subsequent to adjudtment under Section 245 of the Act. As such, there is no procedural lapse on the part of the Department and also averred that the Department has not collected any outstanding ta:r by EIny coercive measures, but it was mere adjustment of refund.under Section 245 of the Act after giving due opportunity to the assessee.

5. The main challenge of the writ petitioner is that the 3'd respondent has issued a notice to the petitioner under Section 245 of the Act on 15. tO.tOZ+ to their e-mail and has granted 21 days time to submit its reply. That the petitioner has filed an appeal before the

2.d respondent along with stay application on 25.O4-2024 and the 3'd respondent without there hitg any valid notice under Section 245{ll of the Act, by simply sending notice to the e-mail of the petitioner and granting 21 days tg respond and even before the expiry of 2L days, has adjusted the refund of ta:r uide order dated 05- 1i -2024. [t is also submitted that despite the pendency of appeal before the )ttd respondent, the impugned grder of adjustment was passed and as such, the respondents have violated CBDT Circulars and the impugned orders are bad in law and in violation of due procedure under Section 245(Ll of the Act and also principles of natural justice. + I .J r-, 4 6- As observed from the record, the said fact. that notice of refund,/adjustment under Section 245 of the Act was issued on

15.1O.i1O24 to the e-mail of the petitioner by tJ:e 3'd respondent by granting 21 days time to the petitioner/assessee and even before expiry of 2L days, the tax refund was adjusted on 05.11.2024. ltis also pertinent to mention that pendency of the appeal before the 2'd respon<lent was also overlooked by the 3rd respondent and it is evident that the 3rd respondent was in a hurry to adjust the refund anticiperting that the 2"d respondent would pass appropriate orders. In that view of the matter, 3.d respondent has 'grossly erred in adjustirrg the tax refund uid.e order dated O5.ll:2O24 even without waiting for the lapse of 2l days, as per his own notice dated t5.to.2)24.

7. We hereby hold that the order of the 3'd respondent dated O5.1 i .2t)24 in adjusting the tax refund of petitioner even before expiry of 2l days from the date of issuance of the notice is bad in law and violative of procedure as contemplated under the Act and also principlt:s of natural justice. Accordingly, the order dated 05.11 .2024 is liable to be set aside and the contention that the respondent/ revenue that there are no procedural lapse on the part of the Departrrrent is untenable. ."_..-__\. 5 g. we, therefore, in view of the said findings, set aside the impugned order dated 05.11.2024 passed by the 3'a rispondent in respect of adjustment of tax refund and said proceedings are hereby quashed. g. The respondent Nos.S to 5 are directed to refund the tax to the petitioner/ assessee forthwith,

10. In view of the above stated findings, Writ Petition is hereby allowed. There shatl be no order as to costs. Pending Miscellaneous Application if any shall stand closed SD'.A. JAYASREE / AsstsifNf nEctsrnnn / e SECTION OFFICER (J r. OF lNDlA, Advocate (OPUC) To

4. 5 Near KMC, 6. One CC to SRI 7. One CC to Ms' TAX) Advocate 8. One CC to I Two CD CoPies SA BS\+ \ i) C) t * t. 2 B riB 2026 * HIGH COURT DATEDi12l09l2025 WP.No.35831 of 2024 ALLOWING THE W.P WITHOUT COSTS. $ A,\#