The petitioner argued that the adjustment of the refund against the demand is impermissible when there’s no mandatory intimation provided under section 245. This contention was put forth in the case between G.E. Power India Ltd. (formerly known as Alstom India Ltd.) and the Assistant Commissioner of Income Tax, heard by the Bombay High Court in Writ Petition (L) No. 13033 of 2023, dated September 25, 2023 (reported in [2023] 458 ITR 450 (Bom).

In the case of Bharat Petroleum Corporation Ltd. v. Asst. DIT [2021,133 taxmann.com 320 (Bom)], the court ruled that the necessity of prior intimation as per section 245 of the Act is mandatory. The court emphasized that failure to adhere to this essential prerequisite renders the entire adjustment process wholly illegal. Consequently, the respondents were unable to proceed with the intended adjustment due to the absence of this mandatory requirement.

Based on the sole basis mentioned, the prayer clause (a) mentioned earlier must be granted. Additionally, the petition also states that the Income-tax Appellate Tribunal had placed a stay on the demand for the assessment year 2014-15. Consequently, the respondent was not entitled to make adjustments against the refund. However, the court refrained from delving into this aspect due to the preceding judgment regarding the indispensable requirement of prior intimation under section 245 of the Act.

~Navneet Shukla