Court On Its Own Motion v. Commissioner of Income Tax

Court On Its Own Motion v. Commissioner of Income Tax is a Delhi High Court Division Bench judgment of 14 March 2013. The Indian Kanoon title line is Court On Its Own Motion vs Commissioner Of Income Tax on 14 March, 2013. It was heard with All India Federation of Tax Practitioners v. Union of India, W.P.(C) 5443/2012. The bench was Sanjiv Khanna and Siddharth Mridul JJ. The author is Sanjiv Khanna J. The signature block reads MARCH 14th, 2013. Do not cite this case as authority in an RTI appeal about disclosure of information.

Section 245 mandates prior intimation in writing so that the assessee can respond before any refund is adjusted towards a demand for another assessment year. The section postulates two-stage action. First, prior intimation. Then adjustment only when warranted, after the response has been considered. The Central Processing Centre at Bengaluru must follow that procedure. Adjustments already made without it are to be sent back to the Assessing Officer for a fresh Section 245 order.

The petition began as a letter dated 30 April 2012 from Anand Prakash, a chartered accountant, treated as a public interest petition. Taxpayers were being denied TDS credit because of Form 26AS mismatches, and refunds were being adjusted against old demands uploaded to the Central Processing Centre without a proper chance to object.

The Court accepted computerised processing in principle. The problem was wrong data and a procedure that skipped the statute.

On Section 245, the Court quoted the section and then stated the mandate. Prior intimation must go to the assessee so that he or she can respond before any adjustment of refund towards a demand for another assessment year. An opportunity of reply should be given. Only after that stand is considered can a justified order of adjustment be made. Two stages are required: prior intimation, then subsequent action when warranted.

The Department's counter affidavit had described the opposite practice at the Central Processing Centre. When a return was processed under Section 143(1), the computer itself adjusted the refund against existing demand, without the two-stage procedure. An interim order dated 31 August 2012 directed the respondents to follow Section 245 in future. That interim direction was confirmed as the second mandamus.

For past adjustments already made without Section 245, the Court issued a third mandamus. Those cases are to be transferred to the Assessing Officers. The Assessing Officer must issue notice, receive a reply, and then pass an order under Section 245 permitting or refusing the set-off. That direction applies only where the two-stage procedure was not followed.

The Court issued seven mandamuses in all, summarised at paragraph 57:

1. Registers and acknowledgements for Section 154 rectification applications, with disposal on a speaking order.
2. Future refund adjustments only after the Section 245 two-stage process.
3. Past adjustments made without that process, sent back to the Assessing Officer.
4. Interest under Section 244A where delay is not the assessee's fault, including delay caused by wrong uploaded arrears or by skipping Section 245.
5. Uncommunicated Section 143(1) intimations, made before 31 March 2010, treated as non est if never dispatched.
6. Verification and correction of unmatched TDS challans in Form 26AS.
7. Credit of TDS to the assessee where the tax deducted has been deposited with the Revenue, with the Assessing Officer to verify and compel the deductor if needed.

The writ petitions were disposed of.

A PAN-card difficulty was mentioned in an interlocutory order and expressly left open. This judgment does not decide PAN dispatch timelines. It does not hold that a citizens' charter is enforceable. It does not decide whether NSDL is a public authority under the RTI Act.

• Income Tax Act, 1961, Section 245 - set-off of refunds, prior intimation
• Income Tax Act, 1961, Section 244A - interest on refunds
• Income Tax Act, 1961, Section 143(1) - processing of returns
• Income Tax Act, 1961, Section 154 - rectification

Cite this case in a tax proceeding when the Central Processing Centre has adjusted a refund without a prior written intimation under Section 245. Do not cite it as an RTI Act authority. If you need the intimation itself, that record can be sought under the RTI Act from the Assessing Officer. The right to the intimation comes from Section 245 of the Income Tax Act, not from this Court construing the RTI Act.

• High Court rulings
• Case-law database
• The RTI Playbook
• AI RTI Drafter
• The RTI Act, 2005

• Indian Kanoon, Court On Its Own Motion vs Commissioner Of Income Tax on 14 March, 2013, https://indiankanoon.org/doc/145268200/
• Signature block in the judgment: (SANJIV KHANNA) JUDGE (SIDDHARTH MRIDUL) JUDGE MARCH 14th, 2013
• Cause titles: W.P.(C) 2659/2012, Court On Its Own Motion versus Commissioner of Income Tax, and W.P.(C) 5443/2012, All India Federation of Tax Practitioners versus Union of India and others

Last reviewed: 11 September 2026. Holding taken from the judgment text fetched on that date.