JUDGMENT Meena, J.
By this appeal, the appellants have challenged the impugned judgment of a learned Single Judge dated 28-1-1999 and prayed that the impugned judgment be set aside.
2. The petitioner/respondent is a company within the meaning of the [ACT]. The respondent-company filed the declaration under the Kar Vivad Samadhan Scheme for the assessment years 199192 and 1992-93 to settle the tax arrears for the said assessment years. On account of settlement of the tax liability under the [ACT], there was a refund due. instead of refunding that amount part of the amount of refund due was adjusted against the tax liability and the refund due to the petitioners was withheld and there was no tax arrear within the meaning of KVSS. The petitioner has wrongly been deprived of its right to get the refund due.
3. Against the balance demands payable for the assessment years 1991-92 and 1992-93, respondent No. 2 had set off refunds. An intimation was sent to the petitioner by respondent No. 2. On receipt of the intimation, the petitioner raised objection to set off by respondent No. 2, especially pointed out to the respondent No. 2 that the refund due to the assessee cannot be adjusted against the amount seized from residence of Shri [ENTITY] unitarily but the request of the petitioner/ respondent was rejected and the full amount of refund due has not been refunded to the petitioner-respondent. Then the petitioner/ respondent filed this writ petition before this Court. The learned single Judge discussed views expressed by various High Courts and has taken the view that no adjustment can be made of the refund due to the assessee, against any tax arrears, without intimation to the assessee as required under [SECTION] of the [ACT].
4. Heard I he learned counsel for the appellants, Shri [ENTITY] submits that though the intimation was not given before set-off of tile amount due against the assessee but after setting off the amount against tax arrears the intimation was given and the assessee has not raised objection for sometime. Therefore, now the assessee cannot take the plea that set-off was illegal.
On the other hand, the learned counsel for the assessee/respondent Dr. [ENTITY] submits that there are a number of decisions of various High Courts and in one case the decision is challenged before the Supreme Court. The Supreme Court has rejected even the special leave petition. Not even a single decision has been shown by the counsel for the revenue in favour of the revenue which supports the case of the revenue that without intimation the amount due can be set-off against the tax arrears.
5. The facts are not in dispute that the respondent-company's assessment year 1990-91, 1993-94,1994-95,1995-96 and 1996-97 resulted in refunds of Rs. 5,77,94,371, the break-up of which is given as under:
Assessment year of refund Assessment year of demand Amount of refund Date of purported set-off 1990-91 1991-92 3,21,706 28-12-1995 1993-94 1991-92 23,87,516 31-1-1996 1994-95 1992-93 1,20,32,585 5-2-1996 1995-96 1992-93 2,37,61,939 30-7-1996 1996-97 1992-93 1,92,90,625 27-1-1997 Total 5,77,94,371 This amount of refund due to the respondent was set-off against the outstanding demand for the assessment years 1991-92 and 1992-93, without giving any intimation and writing to the respondent-company, as required under [SECTION]. The details of amount of refund, dates of order of set-off and dates of communication of set-off are as under:
Amount of Refund Date of purported set off Date of communication set-off/adjustment 3,21,706 28-12-1995 11-9-1996 23,87,516 31-1-1996 11-9-1996 1,20,32,585 5-2-1996 21-11-1996 2,37,61,939 30-7-1996 12-8-1996 1,92,90,625 27-1-1997 14-2-1997 5,77,94,371
6. it is also brought to our notice that an order under [SECTION] of the Act was passed by the assessing authority in the case of Mr. [ENTITY] at Delhi on 15-4-1994 in respect of the amount seized from the residence of Mr. [ENTITY] that it should be taxed in the hands of [ENTITY] but that has been wrongly taxed and the tax liability adjusted against the refund due in the assessment year 1991-92. No intimation or an opportunity was given to the assessee how the amount due can be adjusted against tax liability of Shri [ENTITY].
7. Before going into that controversy we would like to consider whether the amount due can be set-off against tax liability without prior intimation as required under [SECTION]. The same issue has been considered by the various High Courts wherein the view has been taken that before set-off of any amount due to the assessee the prior intimation is necessary.
8. In A.N. Shaikh v. Suresh B. [ENTITY] ( 1987) 165 ITR 86/(1986) 29 Taxman 191, the Bombay High Court has taken the view that the intimation which is required under [SECTION] is a prior intimation of the proposed action for adjustment. In the case of Suresh B. [ENTITY] v. A.N. Shiakh, [PRECEDENT], the Bombay High Court observed as under :
"A mere perusal of this section makes it clear that the Income Tax Officer may, in lieu of payment of refund, set-off the amount to be refunded against the sum payable by the person, but only after giving intimation in writing to such person of the proposed action. Shri [ENTITY], learned counsel appearing on behalf of the respondents, had to concede that the Income Tax Officer did not give any intimation to the petitioner before making adjustment while passing the assessment order for the assessment year 1983-84. In my judgment, the action of the Income Tax Officer is wholly illegal and the respondents were clearly in error in not refunding the amount of Rs. 4,26,090 to the petitioner forthwith." (p. 153)
9. In the case of [PRECEDENT], the Allahabad High Court has observed as under:
". . . The petitioner's grievance in this respect is well-founded. It is, therefore, necessary to quash that part of the impugned order which contains an adjustment of a sum of Rs. 2,02,931 from out of the sum of Rs. 4,44,600.97 refundable to the petitioner towards the tax liabilities of [ENTITY] in his capacity as an individual assessee. The matter deserves to be left to be redetermined, if the respondents so desire, after notice to the petitioner-firm." (p. 32) The view that the proceedings for adjusting an amount towards tax liability under [SECTION] out of any sum due to an assessee by way of refund, are quasi-judicial in nature. Without anything more, the assessee is entitled on the principles of the natural justice to a reasonable notice to represent his case before the authority before an order of adjustment is passed.
10. In the case of [PRECEDENT], the Delhi High Court observed as under:
". . . For the purpose of any set off an intimation has to be given in writing to the assessee of the action proposed to be taken under this section. Earlier to this order it has never been the case of the revenue to claim any set-off. This order purporting to be under [SECTION] of the Act is neither fair, nor just, nor reasonable and has to be ignored. . . ." (p. 120)
11. The prior intimation of the proposed action is requirement of observing principles of natural justice that any such set-off without any prior intimation or opportunity is not only illegal but void and non as in the eye of law and the respondent-company is entitled to challenge the same, as, any void action is nonest in the eye of law. Such illegal setting off of the amount refundable against the outstanding demand is, therefore, to be ignored. Against the decision of the Delhi High Court S.L.P. was filed in the Supreme Court and the Supreme Court has dismissed the S.L.P which is reported in [PRECEDENT]). The same view has been taken by the Punjab and Haryana High Court in [PRECEDENT].
12. In [PRECEDENT], the Madhya Pradesh High Court has observed as under:
". . . Therefore, the so-called order passed on June 9, 1992, appears to be without jurisdiction as no notice was given to the petitioner-assessee nor Shri [ENTITY] could point out that any notice was given before proceedings were taken up, This is in breach of principles of natural justice as no notice as required under [SECTION] as well as under [SECTION] of the Act were served on the petitioner. Hence, the respondents are directed to refund the amount due forthwith. If they want to make recourse of setoff, it is open to them to proceed in accordance with law. . " (p. 622)
13. The requirement under [SECTION] is denied, then such an order is void and without jurisdiction.
14. In the case of [PRECEDENT], the issue before their Lordships was that the order was passed in violation of principles of natural justice. The order is nullity. Their Lordships have observed as under:
". . . We are of the opinion that in view of the facts and circumstances of the case and in the context in which these objections had been made, it is necessary, as a concomitant of the fulfilment of natural justice, that the appellant should be heard on the objections made by the Commissioner. It is true that in the relevant orders for the years for which the Commissioner had objected, concealment had been upheld in the appeal before the appropriate authorities. But it may be that in spite of this concealment, it may be possible for the appellant to demonstrate or to submit that in disclosure of concealed income for a spread-over period, settlement of the entire period should be allowed and not bifurcated in the mariner sought to be suggested by the Commissioner's objections. This objection the appellant should have an opportunity to make. In exercise of our power of judicial review of the decision of the Settlement Commission, we are concerned with the legality of procedure followed and not with the validity of the order " (p. 175)
15. In [PRECEDENT], the Madras High Court has observed as under:
"One principle which is now well-settled by a catena of authorities is that even if the statute is silent with regard to grant of hearing to the person affected but the decision taken by the authority involves civil consequences or adverse consequences, at least a minimal hearing is essential, and not only desirable. An order suffering from non-observance of the principles of natural justice would, under the circumstances, be void and a nullity " (p. 114) From the observations referred to above, it is clear that before any order under [SECTION] the opportunity of being heard should be given to the assessee; without notice/intimation to the assessee before adjustment under [SECTION] it is nullity.
16. Dr. [ENTITY] further submits that after adjustment if any intimation has been given under [SECTION], that has no meaning. If the provision provides for any right of any parties affected, hearing should be given to the party before any such order is passed. He placed reliance on the decisions of the Apex court in [PRECEDENT] and [PRECEDENT] 1.
17. In the case of the Institute of Chartered Accountants of India (supra), their Lordships have observed as under:
"16. It is next pointed out on behalf of the appellant that while [SECTION] requires the Council, when it proceeds to act under [SECTION], to furnish to the member a copy of the report of the Disciplinary Committee, no such requirement is incorporated in [SECTION] which prescribes what the Council will do when it receives the report of the Disciplinary Con-ittee. That, it is said, envisages that the member has no light to make a representation before the Council against the report of the Disciplinary Committee. The contention can be disposed of shortly. There is nothing in [SECTION] which excludes the operation of the principle of natural justice entitling the member to be heard by the Council when it proceeds to render its finding. The principles of natural justice must be read into the unoccupied interstices of the statute unless there is a clear mandate to the contrary." (p. 55 1)
18. Their Lordships, thus, observed that even if the statute does not provide for pre-decisional hearing, even then the principles of natural justice should be complied with to give the hearing or opportunity before any order is passed against any person unless there is clear mandate to the contrary. In the case at hand the provisions of [SECTION] require that opportunity should be given to the assessee before any adjustment is made.
19. In the case of [PRECEDENT] (supra), their Lordships have observed as under:
"The learned counsel, in support of his arguments that the defect is not curable, has placed reliance on the decision of this court in [PRECEDENT] It was, no doubt, laid down in this case that a post-decisional hearing cannot bean effective substitute of pre-decisional hearing and that if an opportunity of hearing is not given before a decision is taken at the initial stage, it would result in serious prejudice, inasmuch as if such an opportunity is provided at the appellate stage, the person is deprived of his right of appeal to anotherbody." (p. 752)
20. The admitted fact is that provisions of [SECTION] require that an intimation should be given in writing to a person if the tax authorities want to set-off any refund due against any sum payable by the assessee under this Act. No such intimation was given. All the decisions of various High Courts are in favour of the assessee that opportunity should be given to the assessee if any refund is set-off against the tax liability under [SECTION]. The order without intimation is nonest and their Lordships even have observed in some cases that unless the statute prohibits, the predecisional hearing should be given to the person whose right is affected by that order.
21. It is also pertinent to note that there is no provision of appeal against the set-off order under [SECTION]. Therefore, it is all the more necessary to give intimation to the assessee before set-off of the amount of refund due.
22. in the light of the above observations, we found no infirmity in the impugned order of the learned Single Judge dated 28-1-1999. In the result, the appeal is dismissed.