My refund was adjusted against an old demand and I was never told first. Is that adjustment valid?
No. Section 245 permits set-off only after an intimation in writing of the proposed action, and that requirement is a mandate, not a courtesy. A letter dated more than a year before the adjustment could not be used to deviate from it, so an adjustment of Rs. 58,07,58,796 for AY 2016-17 was quashed — with liberty to the officer to issue a fresh s.245 notice and start again properly.
Decided by the High Court (Bombay High Court — M.S. Sanklecha and Nitin Jamdar, JJ. (judgment by Nitin Jamdar, J.)) on 2019-09-27, reported as (2019) 183 DTR 26 (Bom.)(HC); Writ Petition No. 1900 of 2019. It bears on section 245 of the Income Tax Act 1961, in Refunds, Interest & Condonation and Demand, Recovery & Stay matters.
This answers the refund that quietly disappears against an old demand on the portal. Be clear about what it wins: the relief is procedural, the demand survives, and the department can redo the adjustment after giving proper notice. Its value is in forcing the department to state, before it acts, which refund it proposes to set off against which demand — which is when you get the chance to object.
Binding within that High Court's jurisdiction. Persuasive elsewhere.
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For assessment year 2016-17 the Deputy Commissioner adjusted a refund of Rs. 58,07,58,796 against outstanding demand. No prior notice under s.245 was issued to the petitioner before that adjustment was made. The Revenue relied on a letter dated 19 February 2018 as covering the position. The assessee petitioned under Article 226.
As reported: the petition was allowed, the adjustment of a refund of Rs. 58,07,58,796 for assessment year 2016-17 against outstanding demand without a prior notice under s.245 was held to violate the section, the adjustment was quashed and set aside, and the officer was left free to issue a fresh s.245 notice and follow the proper procedure. None of that has been checked against the order. The judgment could not be found in a full-text subscription research database, no paragraph of it has been read, and whether the Court decided the point in those terms or made some other direction cannot be established.
No paragraph of the order has been read and there is no sourced account of the Court's route. What was previously set out here — that the Court treated prior intimation as a mandate rather than a courtesy, that a communication predating the adjustment and addressed to other purposes cannot be pressed into service as the statutory intimation, and that the consequence is procedural so that the Revenue may repeat the adjustment properly — is a reconstruction from a digest and cannot be traced to any paragraph, so it has been removed. The proposition itself is separately established at Bombay High Court level in Tata Communications Ltd. v. Union of India [2021] 128 taxmann.com 196/281 Taxman 162/435 ITR 632 (Bombay), Writ Petition No. 732 of 2021, decided 6 April 2021, which has been read in full: for assessment year 2019-20 a refund determined under s.143(1) was adjusted against demands for 2007-08 and 2008-09, the intimation under s.143(1) recited that a s.245 intimation had issued separately, and the Court found at para 27 that no record of any such separate s.245 intimation had been produced and the affidavit in reply was silent on it. At paras 28 to 30 it held that the Revenue had not passed or communicated any reasoned order dealing with the assessee's objections before making the adjustment, and that there was a stark absence of material showing application of mind, a reasoned order and its communication. The adjustment was set aside and the refund directed to be released with interest (paras 34 and 35). That is a different writ petition, a different assessment year and different figures, and must not be cited for this entry.
Therefore since no prior notice was issued to the Petitioner before adjusting the refund, there was a breach of the requirement under section 245.
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Handle my notice → Ask a CA on WhatsAppNo. Section 245 permits set-off only after an intimation in writing of the proposed action, and that requirement is a mandate, not a courtesy. A letter dated more than a year before the adjustment could not be used to deviate from it, so an adjustment of Rs. 58,07,58,796 for AY 2016-17 was quashed — with liberty to the officer to issue a fresh s.245 notice and start again properly. This was decided by the High Court (Bombay High Court — M.S. Sanklecha and Nitin Jamdar, JJ. (judgment by Nitin Jamdar, J.)) and bears on section 245 of the Income Tax Act 1961. It is reported as (2019) 183 DTR 26 (Bom.)(HC); Writ Petition No. 1900 of 2019. This answers the refund that quietly disappears against an old demand on the portal. Be clear about what it wins: the relief is procedural, the demand survives, and the department can redo the adjustment after giving proper notice. Its value is in forcing the department to state, before it acts, which refund it proposes to set off against which demand — which is when you get the chance to object. If it applies to you, the first step is this: Ask the officer in writing to produce the s.245 intimation issued before the adjustment, with its date, and compare that date with the date the refund was appropriated.
For assessment year 2016-17 the Deputy Commissioner adjusted a refund of Rs. 58,07,58,796 against outstanding demand. No prior notice under s.245 was issued to the petitioner before that adjustment was made. The Revenue relied on a letter dated 19 February 2018 as covering the position. The assessee petitioned under Article 226. The matter was decided on 2019-09-27 by the High Court (Bombay High Court — M.S. Sanklecha and Nitin Jamdar, JJ. (judgment by Nitin Jamdar, J.)). On those facts the High Court held as follows. As reported: the petition was allowed, the adjustment of a refund of Rs. 58,07,58,796 for assessment year 2016-17 against outstanding demand without a prior notice under s.245 was held to violate the section, the adjustment was quashed and set aside, and the officer was left free to issue a fresh s.245 notice and follow the proper procedure. None of that has been checked against the order. The judgment could not be found in a full-text subscription research database, no paragraph of it has been read, and whether the Court decided the point in those terms or made some other direction cannot be established.
No paragraph of the order has been read and there is no sourced account of the Court's route. What was previously set out here — that the Court treated prior intimation as a mandate rather than a courtesy, that a communication predating the adjustment and addressed to other purposes cannot be pressed into service as the statutory intimation, and that the consequence is procedural so that the Revenue may repeat the adjustment properly — is a reconstruction from a digest and cannot be traced to any paragraph, so it has been removed. The proposition itself is separately established at Bombay High Court level in Tata Communications Ltd. v. Union of India [2021] 128 taxmann.com 196/281 Taxman 162/435 ITR 632 (Bombay), Writ Petition No. 732 of 2021, decided 6 April 2021, which has been read in full: for assessment year 2019-20 a refund determined under s.143(1) was adjusted against demands for 2007-08 and 2008-09, the intimation under s.143(1) recited that a s.245 intimation had issued separately, and the Court found at para 27 that no record of any such separate s.245 intimation had been produced and the affidavit in reply was silent on it. At paras 28 to 30 it held that the Revenue had not passed or communicated any reasoned order dealing with the assessee's objections before making the adjustment, and that there was a stark absence of material showing application of mind, a reasoned order and its communication. The adjustment was set aside and the refund directed to be released with interest (paras 34 and 35). That is a different writ petition, a different assessment year and different figures, and must not be cited for this entry. In the words reproduced by the source cited on this page: "Therefore since no prior notice was issued to the Petitioner before adjusting the refund, there was a breach of the requirement under section 245."
It was decided by the High Court on 2019-09-27 and is reported as (2019) 183 DTR 26 (Bom.)(HC); Writ Petition No. 1900 of 2019. Binding within that High Court's jurisdiction. Persuasive elsewhere. A High Court decision binds the assessing officer, the Commissioner (Appeals) and the Income Tax Appellate Tribunal within that state, and is persuasive elsewhere. If your assessment is in a different jurisdiction, check whether your own High Court has taken the same view before relying on it. On section 245, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. As reported: the petition was allowed, the adjustment of a refund of Rs. 58,07,58,796 for assessment year 2016-17 against outstanding demand without a prior notice under s.245 was held to violate the section, the adjustment was quashed and set aside, and the officer was left free to issue a fresh s.245 notice and follow the proper procedure. None of that has been checked against the order. The judgment could not be found in a full-text subscription research database, no paragraph of it has been read, and whether the Court decided the point in those terms or made some other direction cannot be established. It arises in Refunds, Interest & Condonation and Demand, Recovery & Stay matters, on section 245 of the Income Tax Act 1961, and was decided by Bombay High Court — M.S. Sanklecha and Nitin Jamdar, JJ. (judgment by Nitin Jamdar, J.). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If the department points to an earlier communication, insist that the intimation must be of the proposed set-off itself — correspondence written for other purposes will not do. Assume a fresh s.245 notice will follow and prepare the substantive objections to the underlying demand now, instead of resting on the procedural win.
Still good law. Verified against the judgment itself: Bombay High Court, Writ Petition No. 1900 of 2019, decided 27 September 2019, M.S. Sanklecha and Nitin Jamdar, JJ., judgment per Jamdar J., assessment year 2016-17. The Court held that the written intimation required by section 245 is mandatory before a refund is set off, following Hindustan Unilever Ltd. and CBDT Instruction No. 1989 dated 20 October 2000; that the assessee's letter of 19 February 2018 agreeing to one adjustment could not be treated as a standing waiver of that requirement a year and a half later; and it quashed the adjustment of Rs.58,07,58,796 out of the AY 2016-17 refund and set aside the section 245 intimation dated 31 July 2019, with liberty to the Deputy Commissioner to issue a fresh notice under section 245 (para 16). No appellate treatment or special leave petition in respect of this writ was traced, and no later decision applying, following or doubting it was traced — absence of contrary authority is not the same as later affirmance. The Delhi High Court decision in Huawei Telecommunications India Company (P) Ltd. v. ACIT (2025) 344 CTR 433 applies the same statutory requirement but does not cite this judgment, so it is separate support for the proposition and not later treatment of this case. The same proposition is covered by Tata Communications Ltd. v. Union of India [2021] 128 taxmann.com 196/281 Taxman 162/435 ITR 632 (Bombay), Writ Petition No. 732 of 2021, decided 6 April 2021 by Sunil P. Deshmukh and Abhay Ahuja, JJ., read in full, which set aside a section 245 adjustment where no separate section 245 intimation was on record and directed refund with interest. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The judgment behind this entry could not be found in a full-text subscription research database. Searches were run on the reported citation, on the refund figure, on the petition number, on the assessee's name filtered to the Bombay High Court and sorted by date, and on the assessee's name together with the section; none produced a decision of 27 September 2019 or any decision of this assessee answering to Writ Petition No. 1900 of 2019. Treat the citation, the date, the petition number, the judges and every figure in this entry as unconfirmed. The sentence previously quoted here was a digest's rendering, truncated mid-clause, and has been removed rather than repaired, so the entry now carries no quotation. What the database does carry for this assessee on s.245 is a different decision, read in full: Tata Communications Ltd. v. Union of India [2021] 128 taxmann.com 196/281 Taxman 162/435 ITR 632 (Bombay), Sunil P. Deshmukh and Abhay Ahuja, JJ., Writ Petition No. 732 of 2021, decided 6 April 2021, assessment year 2019-20, where a refund determined under s.143(1) was adjusted against demands for 2007-08 and 2008-09 and the adjustment was set aside because no separate s.245 intimation was on record and no reasoned order on the objections had been communicated. Cite that decision for the proposition. The database also carries three other 2019 Bombay refund writs of this assessee, on ss.143(1), 143(1D) and 241A rather than s.245, which are not this case. This is also a different writ from the Tata Communications s.244A interest matter elsewhere in this library. The judgment could not be located in a subscription case-law database, so nothing in this entry has been checked against the judgment text: not the date, not the petition number, not the reported citation, not the judges, not the quoted sentence, and not whether any special leave petition was filed. The same assessee has three other 2019 Bombay refund writs in the reports, on ss.143(1), 143(1D) and 241A, which are not this case and must not be cited for it. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
As reported: the petition was allowed, the adjustment of a refund of Rs. 58,07,58,796 for assessment year 2016-17 against outstanding demand without a prior notice under s.245 was held to violate the section, the adjustment was quashed and set aside, and the officer was left free to issue a fresh s.245 notice and follow the proper procedure. None of that has been checked against the order. The judgment could not be found in a full-text subscription research database, no paragraph of it has been read, and whether the Court decided the point in those terms or made some other direction cannot be established.
TaxSphere, “Tata Communications Ltd v Dy CIT”, https://taxnotice.vittsphere.com/caselaw/case/tata-communications-v-dcit-245-2019-writ/ (validity last checked 2026-08-19)
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