How to handle the notice under section 245 of Income Tax regarding refund amount is adjusted against outstanding demand?

What is the provision section 245?

Section 245 of Income Tax Act empowers the Assessing Officer to adjust the amount of refund against tax remaining payable. If a refund is due to taxpayer, the Assessing Officer, in lieu of payment of the refunds, set off the amount against previous outstanding dues. But Assessing Officer can adjust the refund amount against the liability only after
giving intimation in writing to such person under this section.

Say, Mr. PQR filed his return of income for A.Y.2013 – 14 after payment of tax due. But as per intimation under
section 143(1)
the tax payable is Rs. 10,000. Mr. PQR is unaware of this outstanding demand.

Mr. PQR has filed his income tax return for A.Y.2014-15 and the refund is due to him Rs. 1,10,000.

Now while processing the income tax refund of Rs.1,10,000 to Mr. PQR, the Assessing Officer deducts the tax payable, which is outstanding for A.Y. 2013-14 and will play the remaining Rs. 1,00,000 to the assessee. But the department can do so, only after intimate the same to the assessee by giving intimation u/s 245.

How check / know of previous liability details?

Login to income tax e-filing website with your PAN and password, and then go to “Work List” in that selects “For Your Action”.  Here you will find details of outstanding demand, click on the same. Submit with your PAN. You will see outstanding demand for all previous years. You can get the details of demand on clicking the view button. If you want the intimation for that year you just click on Note No. 5 on “Resend of intimation request” link, select Assessment Year properly you will get the intimation on your email ID.



What action needs to take by taxpayer?

After getting the intimation for that year taxpayer is require to verify the tax dues and try to find the reason for tax liability.

If as per the opinion of the taxpayer, tax liability is not correct he can contact the assessing office, along with all documentary evidences and can confirm the tax liability.

If as per the opinion of the taxpayer, tax liability is correct (or amount of liability is very small) he can accept the same online.  For accepting the same just click on the submit button shown in above snap shot.  You can choose the appropriate option out of three as shown in snap shot given below.

When will taxpayer get the refund of current year?

Once taxpayer accept / confirm the previous tax liability, then his balance refund will proceed accordingly.

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