Law:

Section:

Section 245 of the Income-tax Act, 1961 - Refunds - Setting off against tax due (Conditions precedent) - Whether giving of prior intimation under section 245 of proposed action of adjustment of tax due out of refund due is mandatory and when a party raises objection such as a stay of demand, Supreme Court's decision covering demand which is still a subject matter of a pending appeal, etc., which would warrant not adjusting refund against pending demand in response to prior intimation, officer of revenue exercising powers under section 245 must apply his mind to it and must record reason why objection is not sustainable and also communicate it to party before or at time of adjusting refund - Held, yes - Whether where Assessing Officer proceeded with adjustment as proposed in prior notice without taking notice of assessee's objections, entire object of giving prior intimation as provided under Act had been rendered superfluous and adjustment of refund against demands due as well as consequent demand for interest was unsustainable - Held, yes [Paras 15-16] [In favour of assessee] Section 245, read with section 220, of the Income-tax Act, 1961 - Refunds - Setting off against tax due (Stay) - Whether it is open to revenue to adjust refund due to assessee for recovery of tax demand which has been stayed by orders of stay - Held, no - Assessing Officer, under section 245, adjusted demands for assessment years 2007-08 and 2008-09 out of refund due to assessee for assessment year 2006-07 - Facts revealed that demands for assessment years 2007-08 and 2008-09 had been stayed under section 220(6) till disposal of assessee's appeal before Commissioner (Appeals) - Said appeals were still pending and, consequently, stay was still in force - Whether adjustment under section 245 was permissible on facts of case - Held, no [Para 23] [In favour of assessee] Section 220 of the Income-tax Act, 1961 - Collection and recovery of tax - When tax payable and when assessee deemed in default (Interest) - Whether where a stay is granted under section 220(6) in view of pending appeal before Commissioner (Appeals), then such an assessee would not be treated in default till such time its…