Instruction No. 06/2013
F. No. 312/53/2013-0T
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, the 10th July, 2013
To
All Chief-Commissioners of Income Tax
All Director General of Income Tax
Subject: Past adjustment of refunds against the arrears where procedure u/s 245 of Income Tax Act was not followed- regarding.
Sir/Madam,
Hon’ble Delhi High Court vide its judgement in case of Court On Its Own Motion Vs. UOI and Others in W.P.(C) 2659/2012 dated 14.03.2013 has issued seven Mandamus for necessary action by the Income Tax
Department. One Mandamus is on past adjustments of refunds against the
arrears; in particular, where procedure prescribed under Section 245 of
the Income Tax Act, 1961 has not been followed.
2. On the above issue, the Hon’ble Court
has noted in Para 25 of its order that the problem relating to ‘past
adjustment’ of refunds persists and hence needs to be addressed.
The Hon’ble Court has observed as under:
“26. In spite
ofthe opportunity given to the Revenue to take steps, prescribe, adopt a
just procedure, to correct the records, etc., nothing has been done and
they have not taken any decision or steps. The affidavits filed
subsequently after 31s1 August, 2012, are silent on
this specific point. In these circumstances, we direct and issue the
third mandamus and direction which will be applicable only to cases
where returns have been processed by the CPC, Bengaluru and refunds have
been fully or partly adjusted against the past arrears while passing or
communicating the order under Section 143(l} of the Act, without
following the procedure under Section 245 of the Act. In such cases, it is directed that:-
A. All such cases will be transferred to the Assessing Officers;
B. The Assessing Officers will issue notice to the assessee which will be served as per the procedure prescribed under the Act.
C. The assessees will be entitled to file response/reply to the notice seeking adjustment of refund;
D. After considering the reply, if any, the Assessing Officers will pass an order under Section 245 of the Act permitting or allowing the refund.
E. The Board will fix time limit and schedule for completing the said process.
27. There are three reasons why we have issued the said direction. Firstly, the respondents accept and admit
the position that wrong and incorrect demands have been uploaded in the
CPC, Bengaluru. Secondly, the respondents have not followed the mandate
and requirement of Section 245 of the Act before making the adjustment. The two stage
process with the opportunity and right ofthe assessee to submit a reply
before the adjustment is made, has been denied. CPC, Bengaluru did not
entertain or accept any application of the assessee questioning past
arrears uploaded in their system as they are not custodian of past
records. CPC. Bengaluru entertain on-line applications but do not
entertain physical or hard copy applications. Assessing Officer
similarly did not entertain any application by the assessee on the
ground that the order under Section 143(1) was passed by the
CPC, Bengaluru and they do not have the files/return with them. Thus.
the problem was created and caused by the respondents who did not
realize the effect and impact of incorrect and wrong arrears being
uploaded in CPC, Bengaluru and did not follow the statutory requirements
of Section 245 q(the Act.
28. We clarify that the aforesaid directions are only applicable to Cases where two stage procedure under Section 245 of the Act has not been followed and not to cases where procedure under Section 245 of the Act was followed.“
3. In view of the direction of the Hon’ble Court, I am directed to convey that the exercise desired by the Hon’ble High Court
as listed in Para 26 A, B, C & D above in respect of cases where
returns have been processed by the CPC, Bengaluru and refunds have been
fully or partly adjusted against the past arrears while passing or
communicating the order under Section 143( I) of the Act, without
following the procedure under Section 245 of the Act, be carried out by
31st August, 2013 positively.
4. I am further directed to state that
the above be brought to the notice of all officers working under your
jurisdiction for necessary and strict compliance within the time
frame prescribed above.
(Ekta Jain)
Deputy Secretary to Government of India
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