IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.W.P. No.1323 of 2010 (O&M) Date of decision: 16.8.2010 M/s C.T. Educational Society. -----Petitioner. Vs. Commissioner of Income Tax (Appeals) & another. -----Respondents CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Akshay Bhan, Advocate for the petitioner. Mr. Vivek Sethi, Standing Counsel for the respondents. --- ADARSH KUMAR GOEL, J. 1. This petition seeks direction for refund of the amount of tax, which has been paid but has been found to be not due. 2. Case of the petitioner is that vide order dated 16.8.2002, the Commissioner of Income Tax registered the petitioner as Public Charitable Institution under Section 12AA of the Income Tax Act, 1961 (for short, “the Act”) w.e.f. 1.4.2002. For the assessment year 2005-06, the Assessing Officer accepted the petitioner as charitable organization and did not raise any demand of tax. However, for the assessment year 2006-07, demand of tax was wrongly raised, against which C.W.P. No.1323 of 2010 appeal of the petitioner was accepted vide order dated 14.10.2009, Annexure P-6. As a result of the said order, the petitioner became entitled to refund of the tax paid in view of provisions of Section 240 of the Act. The petitioner made representation for refund but vide impugned order dated 30.12.2009, instead of granting refund, the amount was adjusted against liability for the assessment year 2002-03 by reopening the assessment. 3. Contention raised on behalf of the petitioner is that the amount having been deposited against demand for the assessment year 2006-07, on appeal being accepted, the amount should have been refunded to the petitioner. As regards liability for the assessment year 2002-03, contention on behalf of the petitioner is that no tax is payable in view of reasons given for the assessment year 2006-07. It has been further submitted that the provision of Section 245 of the Act could not be invoked without giving intimation to the petitioner. Even though order of assessment has been passed, the petitioner has filed appeal against the said order and stay has been granted against the amount remaining balance after adjustment. But for adjustment, the petitioner would have got complete stay. 4. In the reply filed on behalf of the revenue, only stand taken is that adjustment was only a precautionary measure as earlier recovery had been effected by attaching bank accounts and through instalments. 2 C.W.P. No.1323 of 2010 5. In view of facts noticed above, it is patent that the petitioner has been accepted as a charitable institution under Section 12AA of the Act. Even though it is stated that an appeal is pending in the matter, the position which stands today is that the assessee is entitled to be treated as a charitable institution. In these circumstances, action of adjusting tax deposited by the petitioner, for the year for which its liability has been struck down, towards demand for an earlier year in respect of which appeal is pending and stay has been partially granted, is not justified, particularly without following the procedure laid down under Section 245 of the Act. 6. In view of above, we set aside the order of adjustment and direct passing of a fresh order in accordance with law within one month from the date of receipt of a copy of this order. The petition is disposed of. (ADARSH KUMAR GOEL) JUDGE August 16, 2010 ( AJAY KUMAR MITTAL ) ashwani JUDGE 3