M/s CTC Geotechnical Pvt. Ltd. vs Deputy Director of Income Tax CPC Bangalore & Anr. – Refund Adjustment Against Alleged Demand | Delhi High Court

Facts of the Case

The petitioner, M/s CTC Geotechnical Private Limited, filed a writ petition challenging the adjustment of refund for Assessment Year (AY) 2022-23.

The refund amount of Rs. 82,08,971/- (inclusive of interest under Section 244A) was adjusted against an alleged outstanding demand relating to AY 2009-10.

As per the intimation issued under Section 143(1), an amount of Rs. 49,47,077/- was adjusted, out of which Rs. 47,10,751/- pertained to AY 2009-10.

Consequently, the net refundable amount was reduced to Rs. 32,61,893/-.

The petitioner contended that the demand for AY 2009-10 was illusory and incorrect, and despite multiple representations made to the Assessing Officer (AO), no reconciliation or speaking order was passed.

Issues Involved

1. Whether the Income Tax Department was justified in adjusting the refund against an alleged outstanding demand.
2. Whether failure to pass a speaking order on representations violates principles of natural justice.
3. Whether the petitioner is entitled to proper reconciliation and determination of refund.

Petitioner’s Arguments

• The adjustment of refund was made against a non-existent/illusory demand for AY 2009-10.
• The figures reflected in the intimation under Section 143(1) were inconsistent with assessment records.
• Several communications were sent to the AO seeking reconciliation and a speaking order.
• The failure of the department to respond amounted to arbitrariness and denial of lawful refund.

Respondent’s Arguments

• The Revenue accepted notice and chose to argue the matter based on the existing record.
• No counter-affidavit was filed.
• The department relied upon the intimation issued under Section 143(1).

Court’s Findings / Order

• The Court took note of the grievance regarding incorrect adjustment of refund.
• Considering the circumstances and with consent of both parties, the matter was taken up for final disposal at the admission stage.
• The Court directed that:
• The writ petition shall be treated as a representation.
• The Assessing Officer shall pass a speaking order after proper examination.
• The order must be passed within 8 weeks from receipt of the judgment.
• The matter was listed for compliance on 26.09.2023.

Important Clarification

• The Court did not adjudicate on the correctness of the demand.
• It emphasized the necessity of passing a reasoned (speaking) order.
• Reinforces the principle that tax authorities must address taxpayer grievances through proper adjudication before adjusting refunds.

Sections Involved

• Section 143(1), Income Tax Act, 1961
• Section 244A, Income Tax Act, 1961

Link to download the order -

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