Facts of the Case

  • The petitioner, BT Global Communications India Pvt. Ltd., filed writ petitions against actions of the Income Tax Department.
  • One petition challenged an order dated 03 July 2020 passed under Section 143(1) adjusting refund for Assessment Year 2019-20 against alleged past demands.
  • Another petition challenged a notice dated 09 May 2020 issued under Section 245 proposing adjustment of refund.
  • The petitioner had filed objections both before the Assessing Officer and online through the Centralized Processing Centre prior to passing of the impugned order.
  • Despite this, the order recorded that no response was received from the petitioner.

Issues Involved

  1. Whether adjustment of refund under Section 143(1) read with Section 245 can be made without considering objections filed by the assessee.
  2. Whether failure to consider objections amounts to violation of principles of natural justice.
  3. Whether such adjustment order is liable to be set aside.

Petitioner’s Arguments

  • The impugned order was passed without considering objections dated 29 May 2020.
  • Objections were duly filed both manually before the Assessing Officer and electronically before the CPC.
  • The order incorrectly recorded that no response was received.
  • The action of the department violated principles of natural justice.

Respondent’s Arguments

  • The department relied on the impugned order stating that no response had been filed by the petitioner to the proposed adjustment.
  • Justified the adjustment of refund against pending tax demands.

Court’s Findings / Order

  • The Court observed that objections had indeed been filed by the petitioner prior to passing of the impugned order.
  • The order dated 03 July 2020 was passed without considering such objections.
  • This amounted to a clear violation of principles of natural justice.

Held:

  • The impugned order was set aside.
  • The Assessing Officer was directed to:
    • Reconsider the petitioner’s objections,
    • Pass a reasoned order within six weeks,
    • Provide an opportunity of hearing to the petitioner.
  • It was further clarified:
    • If objections are not decided within the stipulated period, the petitioner shall be entitled to release of refund of ₹11,23,33,263/- with applicable interest.

Important Clarification by Court

  • Adjustment of refund without considering objections is unsustainable in law.
  • Authorities must pass a reasoned order after granting an opportunity of hearing.
  • Compliance with natural justice is mandatory even in automated or CPC-driven processes.

Link to download the order - https://delhihighcourt.nic.in/app/case_number_pdf/2020:DHC:3951-DB/MMH01092020CW54142020_144535.pdf

Disclaimer

This content is shared strictly for general information and knowledge purposes only. Readers should independently verify the information from reliable sources. It is not intended to provide legal, professional, or advisory guidance. The author and the organisation disclaim all liability arising from the use of this content. The material has been prepared with the assistance of AI tools.