Trent Ltd v. Deputy Commissioner Of Income Tax Circle 2 3 1 Mum

2025:BHC-OS:1311-DB Sayyed 3-WP.2961.2024.docx IN IN THE THE HIGH HIGH COURT COURT OF OF JUDICATURE JUDICATURE AT AT BOMBAY BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.2961 OF 2024 WRIT PETITION NO.2961 OF 2024 Trent Ltd.

Trent Ltd.

...Petitioner

...Petitioner

Versus

Versus

Deputy Commissioner of Deputy Commissioner of Income-tax Circle - 2(3)(1), Income-tax Circle - 2(3)(1), Mumbai & Ors.

Mumbai & Ors.

...Respondents

...Respondents

_____________________________________________________ Mr. Nishant Thakkar a/w Mr. Hiten Thakkar i/b. Lumiere Law Partners Mr. Nishant Thakkar a/w Mr. Hiten Thakkar i/b. Lumiere Law Partners for Petitioner.

for Petitioner.

Mr. Abhishek Mishra for Respondent.

Mr. Abhishek Mishra for Respondent.

_____________________________________________________ CORAM :

M. S. Sonak & Jitendra Jain, JJ.

DATED : 28 January 2025 ORAL JUDGMENT:- (Per M. S. Sonak, J.) 1.

Heard learned counsel for the parties.

Heard learned counsel for the parties.

2.

Rule. The Rule is made returnable immediately at the request Rule. The Rule is made returnable immediately at the request of and with the consent of the learned counsel for the parties. of and with the consent of the learned counsel for the parties. 3.

The Petitioner complains against the adjustment of refund of The Petitioner complains against the adjustment of refund of an amount of Rs.4,91,45,369/- against the outstanding demand of an amount of Rs.4,91,45,369/- against the outstanding demand of assessment year 2018-2019 in the purported exercise of powers under assessment year 2018-2019 in the purported exercise of powers under Section 245 of the Income Tax Act, 1961 (" the IT Act"). Section 245 of the Income Tax Act, 1961 (" the IT Act"). 4.

An intimation proposing an adjustment of Rs.2.82 crores and An intimation proposing an adjustment of Rs.2.82 crores and Rs.72,209/- was sent to the petitioner. However, after that, the Rs.72,209/- was sent to the petitioner. However, after that, the petitioner was not granted a hearing, and no formal order was made petitioner was not granted a hearing, and no formal order was made under Section 245 of the IT Act.

under Section 245 of the IT Act. Instead, by communication dated Instead, by communication dated 16 March 2024, the Petitioner was informed of the adjustment against 16 March 2024, the Petitioner was informed of the adjustment against the outstanding demand for assessment year 2018-2019. the outstanding demand for assessment year 2018-2019. In our In our

Sayyed 3-WP.2961.2024.docx judgment, the procedure followed by the Respondents grossly violates judgment, the procedure followed by the Respondents grossly violates the principles of natural justice and fair play. the principles of natural justice and fair play. 5.

The record shows that the Petitioner addressed The record shows that the Petitioner addressed communications dated 5 December 2023, 6 December 2023 and 7 communications dated 5 December 2023, 6 December 2023 and 7 December 2023 to the Respondents regarding objections to the December 2023 to the Respondents regarding objections to the proposed adjustments. There was no consideration of these objections. proposed adjustments. There was no consideration of these objections. The petitioner was granted no opportunity of a hearing. No formal The petitioner was granted no opportunity of a hearing. No formal order was also made dealing with the petitioner's objections. All this order was also made dealing with the petitioner's objections. All this violates the principles of natural justice.

violates the principles of natural justice.

6.

In In Hindustan Unilever Ltd. vs. Deputy Commissioner of Hindustan Unilever Ltd. vs. Deputy Commissioner of Income-tax-1(1) Income-tax-1(1)1. The Coordinate Bench of this Court has held that the The Coordinate Bench of this Court has held that the principles of natural justice must be followed before making any orders principles of natural justice must be followed before making any orders under Section 245 or making any adjustments under Section 245. We under Section 245 or making any adjustments under Section 245. We reiterated this position in reiterated this position in Sulzer Pumps India Private Limited vs. Sulzer Pumps India Private Limited vs.

Assistant Commissioner of Income-tax, Circle (15)(3)(2), Mumbai Assistant Commissioner of Income-tax, Circle (15)(3)(2), Mumbai2 and and the connected matters, disposed of on 20 January 2025. the connected matters, disposed of on 20 January 2025. 7.

In In Sulzer Pumps India Private Limited (supra), Sulzer Pumps India Private Limited (supra), we found fault we found fault with the revenue's order of adjustment under Section 245 of the IT Act with the revenue's order of adjustment under Section 245 of the IT Act and directed the revenue to deposit the adjusted amount in this Court. and directed the revenue to deposit the adjusted amount in this Court. A similar course of action will have to be adopted in this case because A similar course of action will have to be adopted in this case because the impugned adjustment was in gross breach of the principles of the impugned adjustment was in gross breach of the principles of natural justice and fair play.

natural justice and fair play.

8.

Accordingly, we quash the adjustments made in the purported Accordingly, we quash the adjustments made in the purported exercise of powers under Section 245 of the IT Act and direct the exercise of powers under Section 245 of the IT Act and direct the Respondents to deposit an amount of Rs.4,91,45,369/- in this Court Respondents to deposit an amount of Rs.4,91,45,369/- in this Court within two weeks from today. The Registry should invest this amount in within two weeks from today. The Registry should invest this amount in [2015] 60 taxmann.com 326 (Bombay) Writ Petition No.4891 of 2024

Sayyed 3-WP.2961.2024.docx a nationalised bank and it will abide by the orders of the Respondents a nationalised bank and it will abide by the orders of the Respondents under Section 245 of the IT Act after giving reasonable opportunity of under Section 245 of the IT Act after giving reasonable opportunity of hearing to the Petitioner.

hearing to the Petitioner.

9.

The Respondents must consider the Petitioner's objections and The Respondents must consider the Petitioner's objections and afford the Petitioner an opportunity of hearing. A reasoned order must afford the Petitioner an opportunity of hearing. A reasoned order must be made and communicated to the Petitioner. This exercise must be be made and communicated to the Petitioner. This exercise must be completed within two months from this order's uploading date. completed within two months from this order's uploading date. 10.

Suppose no orders are made within two months. In that case, Suppose no orders are made within two months. In that case, the Petitioner is granted liberty to apply for withdrawal of the deposited the Petitioner is granted liberty to apply for withdrawal of the deposited amount together with interest, if any, that shall be accrued on such amount together with interest, if any, that shall be accrued on such amount. Otherwise, the deposit will abide by the orders made by the amount. Otherwise, the deposit will abide by the orders made by the Respondents under Section 245 of the IT Act.

Respondents under Section 245 of the IT Act.

11.

The Petitioner's stay application concerning assessment year The Petitioner's stay application concerning assessment year 2018-2019 is pending before the assessing officer. The same should be 2018-2019 is pending before the assessing officer. The same should be disposed of in accordance with the law within four weeks of today. disposed of in accordance with the law within four weeks of today. 12.

The Rule is made absolute in the above terms without any The Rule is made absolute in the above terms without any cost order.

cost order. All concerned to act on an authenticated copy of this order. All concerned to act on an authenticated copy of this order. (Jitendra S. Jain, J.) (M. S. Sonak, J.) Signed by: Sayyed Saeed Ali Designation: PA To Honourable Judge Date: 29/01/2025 14:52:29