LSI INDIA RESEARCH AND DEVELOPMENT PRIVATE LIMITED vs. ASSISTANT DIRECTOR OF INCOME-TAX

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WP/11220/2023HC KarnatakaKAHC01026772202327 July 2023Author: S SUNIL DUTT YADAV6 pages
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What did the High Court hold?

The High Court held that once an intimation under Section 143(1) of the Income Tax Act, 1961, indicating a refund has been issued and processed, the assessing authority's power under that section is exhausted. The Court found that there was no power for the authority to issue a fresh intimation (Annexure-D) that overrides the earlier intimation (Annexure-A) without recourse to the statutory scheme for revision or alteration. Consequently, the intimation at Annexure-D was set aside. The Court directed the Authority to take steps for the implementation of the intimation at Annexure-A, reverse the adjustments made pursuant to Annexure-D, and give effect to the refund determined in Annexure-A within eight weeks. The Court also noted that if any demand arose in the interregnum, the Department was at liberty to take appropriate steps with notice to the petitioner and considering their objections.

What were the facts?

The petitioner, LSI India Research and Development Private Limited, sought to quash an intimation dated 27.02.2023 issued by the Assistant Director of Income-tax (R1) under Section 143(1) of the Income Tax Act, 1961, for Assessment Year (AY) 2021-22. The petitioner also sought a direction for the refund of Rs. 15,81,87,648/- for AY 2021-22. The petitioner had initially received an intimation (Annexure-A) on 14.10.2022, indicating a refund of Rs. 15,81,87,650/-. Subsequently, another intimation (Annexure-D) was issued, adjusting this refund against alleged demands for AYs 2012-13 and 2013-14, along with interest. The petitioner contended that the adjustment was contrary to records and that issuing a subsequent intimation overriding the earlier one was impermissible.

What were the issues?

1. Whether the issuance of a subsequent intimation under Section 143(1) of the Income Tax Act, 1961, adjusting a determined refund against alleged prior demands, is permissible after an initial intimation determining the refund has already been processed and issued? (Question of law) Assessee's Contentions: - The intimation at Annexure-D, issued subsequent to Annexure-A, is impermissible in law as it attempts to override the earlier intimation. - Any subsequent demand or adjustment must follow the statutory scheme and cannot be made by issuing an alternative demand that overrides a previously processed intimation. - The adjustment made pursuant to Annexure-D is contrary to records, as no dues existed for AYs 2012-13 and 2013-14. Revenue's Contentions: - The Revenue does not dispute the intimation at Annexure-A. - The adjustments were made as per the intimation at Annexure-D. - The Authority may be directed to pass an order under Section 154 of the Act to rectify any mistake in the intimation at Annexure-D.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 154

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF JULY, 2023 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 11220 OF 2023 (T-IT)

BETWEEN: 1. LSI INDIA RESEARCH AND DEVELOPMENT PRIVATE LIMITED S1, WIPRO ELECTRONIC CITY SEZ, DODDATHOGUR VILLAR, BEGUR HOBLI, ELECTRONIC CITY, BANGALORE-560100 REPRESENTED HEREIN BY ITS DIRECTOR, MR JIJU GEORGE, INCORPORATED U/S COMPANIES ACT 1956 …PETITIONER

(BY SRI. T. SURYANARAYAN, SENIOR ADVOCATE FOR SMT. TANMAYEE RAJKUMAR, ADVOCATE)

AND: 1. ASSISTANT DIRECTOR OF INCOME-TAX CENTRALIZED PROCESSING CENTER, INCOME TAX DEPARTMENT, BENGALURU, KARNATAKA-560 500

2.

THE PRINCIPAL COMMISSIONER OF INCOME TAX -2 5TH FLOOR, BMTC BUILDING, 6TH BLOCK, 80 FEET ROAD, KORAMANGALA, BANGALORE-560 095 …RESPONDENTS (BY SRI. E.I. SANMATHI,ADVOCATE FOR R1 & R2)

Digitally signed by RENUKAMBA K G Location: High Court of Karnataka

THIS WRIT PETITIN IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA PRAYING TO-QUASH THE INTIMATION DTD 27/02/2023 ISSUED BY THE R-1 UNDER SEC 143(1) OF THE ACT BEARING NO.DIN CPC/2122/A6/305804058 (ANNEXURE-D) FOR THE AY 2021-22 AND TO DIRECT THE R-1 TO FORTHWITH REFUND RS.15,81,87,648/- BEING REFUND DETERMINED FOR THE AY 2021-22 ALONG WITH APPLICABLE INTEREST.

THIS PETITION, COMING ON FOR PRIMILINARY HEARING THIS DAY, THE COURT MADE THE FOLLOWING:

ORDER

The petitioner has sought for quashing of the intimation dated 27.02.2023 issued by the 1st respondent –Assistant Director of Income-tax under Section 143(1) of Act at Annexure-D bearing No.DIN- CPC/2122/A6/305804058 for the Assessment Year 2021- 22 and also sought direction to the 1st respondent to refund Rs.15,81,87,648/- being the refund for the Assessment Year 2021-22 along with applicable interest.

2.

The case made-out by the petitioner is that, he was informed that he had refund of Rs.15,81,87,650/- for the Assessment Year 2021-22 by way of an Intimation

under Section 143(1) of the Act (Annexure-D) dated 27.02.2023. The said intimation contains all relevant details. The issuance of such intimation is not in dispute.

3.

The petitioner submits that, he has received another intimation bearing No.DIN- CPC/2122/A6/305804058, a copy of which is enclosed at Annexure-A dated 14.10.2022 intimating the petitioner that 1st respondent has adjusted refund of Rs.15,81,87,650/- under Annexure-D, against the alleged demand for the Assessment Years 2012-13 and 2013-14. It is submitted that the intimation at Annexure-D having already been processed and as it was being issued subsequent to the intimation at Annexure-A, it is impermissible in law for issuing an alternative demand at Annexure-D and even if the same is to be issued, it must be after following statutory scheme and on exercising powers available and there cannot be any resort to action of over-riding the earlier intimation, which is impermissible in law.

4.

It is submitted that, pursuant to Intimation at Annexure-D, the Revenue has resorted to an adjustment as is evident from Annexure-D, wherein, adjustments have been made for the Assessment Years:2013-14 and 2012-13, and also as regards interest for the period morefully mentioned in the intimation at Annexure-D. It is submitted that, the adjustment that has been resorted to is contrary to records, as there was no due for the Assessment Years mentioned at Annexure-D.

5.

Learned counsel for the Revenue does not dispute the Intimation at Annexure-A. He submits that the adjustments having been made as per the Intimation at Annexure-D and that the Authority may be directed to pass an order under Section 154 of the Act and rectify the mistake if any, as regards the Intimation at Annexure-D.

6.

Heard learned counsel for the petitioner and the learned counsel for the respondent.

7.

It is not in dispute that, Intimation under Section 143(1) of the Act indicating refund at Annexure-A has been made and amount was shown as Rs.15,81,87,650/-. This intimation is not in dispute and it is a matter of record. If that were to be the stand of the revenue authority, obviously the validity of the Intimation at Annexure-D and the consequent adjustments made, is a matter that requires consideration.

8.

Once the intimation for refund has been issued, the power stands exhausted and without taking recourse to the statutory scheme for revision/alternation, there is no power for the authority to issue a fresh intimation as has been made at Annexure-D. Accordingly, the Intimation at Annexure-D is set aside. The Authority to take steps for implementation of intimation at Annexure-A. The adjustments made pursuant to the intimation at Annexure-A will have to be reversed and refund at Annexure-D be given effect to, within the outer limit of

Eight Weeks from the date of receipt of the certified copy of this order.

9.

It is needless to state that, if there is any demand in the interregnum, the Department is at liberty to take appropriate steps for adjustment, of course with notice to the petitioner and upon considering the objections to be filed by him.

Accordingly, the petition is disposed off.

Sd/- JUDGE

KGR* List No.: 1 Sl No.: 24

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