Law: Income Tax Act, 1961

Section: 154,245

Income-tax-----Refund---Rectification of mistakes---Notice---Set-off of refund against amounts due from assessee---Rectification reducing refund---Notice must be given to assessee before passing orders under Ss. 154 & 245---Indian Income Tax Act, 1961, Ss. 154 & 245. The assessee filed a writ petition claiming that refunds due to him had not been paid in spite of his applications. It was contended on behalf of the Revenue Authorities that the assessment order had been rectified and the refund was refused and that a refund had been granted on June 9, 1992, and adjusted against outstanding demands of penalty: Held, that no notice as required under section 154(3) as well as under section 245 of the Income Tax Act, 1961, were served on the petitioner. The income-tax Authorities had to refund the amount due forthwith. If they wanted to set-off the refund it was open to them to proceed in accordance with law. The petitioner was also entitled to interest for the illegally withheld amount according to law. JUDGMENT A.K. MATHUR, ACTG. C. J.---The petitioner, in this writ petition, has prayed that the respondents may be directed to refund the amount of Rs.1,14,886 with interest. The petitioner is an assessee and he was assessed for tax liability by the respondent to the tune of Rs.1,45,710 vide assessment order, dated March 27, 1989. The petitioner, being aggrieved against this order, filed an appeal before the Commissioner of Income-tax (Appeals), Bhopal, and the Commissioner by his order, dated March 7, 1990, directed the Assessing officer to allow the claim of interest under section 67(3) of the Income Tax Act, 1961 (for short, "the Act"). In Pursuance of the aforesaid order the respondent reassessed the income of the petitioner to the tune of Rs.1,04,070 by the assessment order dated April 11, 1991. The petitioner, in compliance with that order, deposited Rs.50,943 by the challan, dated December 13, 1989, and Rs.72,000 by the challan, dated December 20, 1989. The petitioner also deposited a sum of Rs.5,000 by the challan, dated December 6, 1990. The respondent by its order waived the interest under section 139(8) of the Act for the assessment year 1982-83 to…

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