Respond to I-T notice on time or risk refund adjustment

If AO doesn’t get back within 21 days, CPC may release refund or adjust it partially

Have you received a notice under Section 245 of the Income Tax (I-T) Act? If so, consult your chartered accountant and respond promptly. The Directorate of Income Tax (Systems) has now set a 21-day time limit for an assesses to respond to an intimation under section 245 (1) of the I-T Act, issued by the Centralised Processing Centre (CPC).

 “The time limit set for assesses aligns with the 21-day response period fixed for assessing officers (AOs) to respond to an assesses grievance. These timelines will facilitate prompt responses from both sides and aid in streamlining the issuance of refunds.”

Why the change?

The I-T department was informed that in many cases AOs failed to respond within the stipulated 30 days. This caused delays in issuing refunds, gave rise to grievances, and created an additional interest burden under Section 244 A on the Revenue.

Understanding Section 245

Section 245 of the I-T Act outlines the procedure for setting off refunds against any outstanding tax liability. When a refund is due, the CPC sends a prior notice, alerting the taxpayer about the opportunity to use this refund to offset any legitimate tax liabilities.

“The aim of the notice issued under Section 245 (1) is to utilise the refund amount to offset any pending tax dues before issuing the refund to the taxpayer. The notice also gives the taxpayer an opportunity to address any grievances or disputes they may have regarding the demand and allows them to approach the AO within the specified period.”

When taxpayer disagrees

In case where the taxpayer either disagrees or partially agrees with the adjustment, the CPC needs to immediately refer the matter to the AO. The AO then has 21 days to provide feedback to the CPC about whether or not the adjustment should be made. “If no feedback is received from the AO within 21 days, the CPC has the power to either release the refund without adjustment or adjust it to the adjustment by demands agreed for adjustment by the assesses.”

The AO is then held solely accountable for the consequences of no response or delayed response. “If a partial adjustment has to be made, the amount of demand to be adjusted for each year should be specified in the tax portal.”

Delays can be harmful

What happens if the taxpayer fails to respond within 21 days? “The outstanding tax demands will be adjusted against the refund due to the Revenue.”

Failing to respond to the notice can have other consequences. “They may calculate the penalty or the outstanding amount you owe for that specific assessment year without seeking your confirmation.”

What experts suggest

Read thoroughly and understand any communication received from the CPC. If you have any grievances or disputes regarding the demand stated in the notice, consider seeking professional can guide you through the process and address your concerns effectively.”

Respond within the prescribed 21-day period.

“Retain all necessary documentation, including the notice received, your response, and any supporting evidence, in case you need to refer to them in the future.” If you responded on time, then follow up and ensure that your concerns are addressed and the necessary action is taken.

Senior citizen taxpayers may struggle with the online system and should hence seek professional help.

STEPS TO CHECK FOR OUTSTANDING TAX DEMAND

You can check if there is any outstanding demand through the e-filing portal

Log in to the e-filing portal and click ‘Pending Actions’, then on ‘Response to Outstanding Demand’

If there are demands against your Permanent Account Number, the current status of each of the past or existing outstanding demands will be updated as ‘Pending payment’ or ‘Response’

You can click on ‘Pay Now’ or ‘Submit Response’

Additionally, you will receive a message on your email and mobile registered on the e-filing portal.

For More Details: Pooja Manoj Gupta, visit www.giia26.com
Email: pmgiia26.com Mobile 9868944340