Law:

Section:

Section 245 of the Income-tax Act, 1961 - Refunds - Set off of against tax remaining payable - Assessment year 1982-83 - Whether word 'refund' in section 245 does not admit of limited meaning but must be held to mean any amount payable by department to an assessee whether as and by way of refund or 'interest' - Held, yes - Whether, therefore, interest payable to assessee under section 244(1A) can be set off and adjusted against tax liability of assessee under section 245 as if said amount was a refund due to assessee - Held, yes - Whether letter sent to assessee, though after fifteen months from date from which interest was payable, informing him that amount of interest due for assessment year in question was proposed to be adjusted against his tax liability for subsequent assessment year was to be treated as previous intimation under section 245 - Held, yes Words and phrases: Word 'refund' as occurring in section 245 of the Income-tax Act, 1961. FACTS After giving effect to the appellate order for the assessment year in question, the assessee was entitled to refund. While forwarding the revised assessment order, the ITO also simultaneously issued a notice for finalisation of the assessment for the assessment year subsequent to the assessment year in question. In the mean-while, the assessee, by a letter dated 31-05-1985, addressed to the Commissioner requested that refund due be granted to him for with and the pendency of the assessment for the subsequent year should not delay the refund. However, the refund was not given to him. On writ, the Single Judge directed the revenue to refund the amount. The revenue's appeal to the Division Bench was summarily dismissed. Ultimately the ITO refunded to the assessee excess income-tax amount of Rs. 4,26,090. When the assessee demanded interest on said amount to the extent of Rs. 1,96,295 under section 244(1A), he was informed by the ITO,vide letter dated 21-07-1986, that an amount of Rs.7,47,755 was outstanding against him for the subsequent assessment year which was created under section 132(5) as a result of raid conducted at the premises of the assessee, and, therefore, it was proposed to adjust it against the…

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