Income Tax
Adjustment of a disputed tax demand pertaining to Assessment Year 2018-19 against refunds which were due to it for AY’s 2010-11, 2011-12 and 2020-21—Challenge is principally raised in the backdrop of such adjustment having been made despite the petitioner having moved a rectification application pertaining to the final assessment which was framed for AY 2018-19 and an admitted failure on the part of respondents to consider and dispose of stay application which was moved and was referable to Section 220(6) of the Income Tax Act—Petitioner has prayed for refund being processed after adjustment of 20% of disputed demand for AY 2018-19—Respondents have proceeded on a wholly incorrect and untenable premise that assessee was obliged to tender or place evidence of having deposited 20% of disputed demand before its application for stay under Section 220(6) of the Act could have been considered—Interpretation which is sought to be accorded to the such OM is clearly misconceived—20% which is spoken of in the OM cannot possibly be viewed as being an inviolate or inflexible condition—Extent of deposit which an assessee may be called upon to make would have to be examined and answered bearing in mind factors such as prima facie case, undue hardship and likelihood of success—Respondents have clearly erred in proceeding on assumption that application for consideration of outstanding demands being placed in abeyance could not have even been entertained without a 20% pre-deposit—Such stand as taken is thoroughly misconceived and wholly untenable in law—On the date when impugned adjustments came to be made, the application moved by petitioner referable to Section 220(6) of the Act had neither been considered nor disposed of—Respondents have clearly acted arbitrarily in proceeding to adjust the demand for AY 2018-19 against available refunds without attending to that application—Such action of respondents is wholly arbitrary and unfair—Intimation of adjustments being proposed would hardly be of any relevance or consequence once it is found that application for stay remained pending and said fact is not an issue of contestation—Matter remitted to respondents for considering the application of petitioner under Section 220(6) of the Act in accordance with observations. [Income Tax Act, 1961, Section 220(6)]
[Paras 11, 17, 19 & 20]