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Adjustment of Refund with Outstanding Demand-Section 245 of Income Tax

adjustment-of-refund-with-outstanding-demand-section-245-of-income-tax

Adjustment of Refund with Outstanding Demand-Section 245 of Income Tax: Section 245 of the Income Tax Act empowers the Income Tax authorities to adjust any previous year/s outstanding demand of tax liability with the refund amount due to the assessee. However, this power can be exercised only after issuing an Intimation u/s 245 to the assessee and providing an opportunity to furnish their response as to whether they agree or not and then the adjustment of the current refund with outstanding demand may or may not be carried out on merits. The issue of intimation u/s 245 is a mandatory requirement and cannot be circumvented under any circumstances.

    Intimation u/s 245 from the CPC


    When the return furnished by an assessee is processed by the CPC unit of the Income Tax Department and if any refund is found due to the assessee the refund is paid to the assessee with applicable interest u/s 244A. However, if there exists any outstanding demand against the assessee for any previous year(s), then before releasing the refund the CPC unit sends an Intimation to the assessee in his or her email.

    The assessee or taxpayer is required to submit its response within 30 days failing which the outstanding demand is adjusted with the current refund amount due to the assessee.


    If the assessee furnishes the response within the prescribed time-limit, the same is duly considered before adjusting the refund with the outstanding demand.


    It has been seen that many old years outstanding demand is uploaded to CPC portal which were already vacated by rectification by the Assessing Officers. If any taxpayer finds such wrong data of outstanding demand on their e-fling account, it is proper for the taxpayer to approach the jurisdictional Assessing Officer with requisite details and get it rectified. Alternatively, one may use the facility of the e-Nivaran facility provided on the e-filing account of the taxpayers.


    One can view the outstanding demand on their e-filing portal after logging into their e-filing account. 


    How to View Outstanding Tax Demand Status on e-filing account


    The Taxpayer can submit the response online to the outstanding demand by either choosing to Agree or Disagree with the demand.


    Perform the following steps for Responding to the Outstanding Demand.

    Step 1: Logon to ‘e-Filing’ Portal www.incometaxindiaefiling.gov.in
    Step 2: Go to the ‘e-File’ menu, Click ‘Response to Outstanding Demand’.
    Step 3: All outstanding demands will be displayed here. 
    Click on 'View' hyperlink under 'Response' column.


    How to Submit Response to an Outstanding Demand on e-filing Account


    The Taxpayer can submit the response online to the outstanding demand by either choosing to ‘Agree’ or ‘Disagree’ with the demand.

    Perform the following steps for Responding to the Outstanding Demand.

    Step 1: Logon to ‘e-Filing’ Portal www.incometaxindiaefiling.gov.in
    Step 2: Go to the ‘e-File’ menu and Click ‘Response to Outstanding Demand’
    Step 3: Click the hyperlink 'Submit' located under 'Response' column (To respond for the Outstanding Demand)
    Step 4: Choose any one of the listed responses.
    Demand is correct
    Demand is partially correct
    Disagree with demand
    Demand is not correct but agree for adjustment

    On choosing 'Demand is correct': Click on 'Submit' button to 'Confirm' and complete the response submission process.

    Note:
    1. If you confirm 'Demand is correct' then you cannot disagree with the demand again.
    2. If any refund is due, the refund will be adjusted against the outstanding demand.
    3. The taxpayer can pay the demand by clicking the link under 'Pay Tax' option. 

    On choosing 'Demand is partially correct': Enter the 'Amount which is correct' and the 'Amount which is incorrect' will be auto-filled. Select the appropriate reason(s) from the list and fill all the applicable fields, upload the necessary supporting documents and 'Submit' the response.

    On choosing 'Disagree with demand': Select the appropriate reason(s) from the list and fill all the applicable fields, upload the necessary supporting documents and 'Submit' the response.

    On choosing 'Demand is not correct but agree for adjustment': Select the appropriate reason(s) from the list and fill all the applicable fields, upload the necessary supporting documents and 'Submit' the response.

    List of Reasons and the additional details required on selecting each reason-

    Reasons

    Additional Details Required

    Demand paid and Challan has CIN

    BSR Code

    Date of payment

    Serial Number

    Amount

    Remarks

    Demand paid and Challan has no CIN

    Date of payment

    Amount

    Remarks

    Upload copy of Challan

    Demand already reduced by rectification / Revision/ Appellate Order

    Date of Order

    Demand after rectification/ revision/Appeal

    Details of AO

    Upload Rectification/Revision/Giving appeal effect order passed by AO

    Demand already reduced by Appellate Order but appeal effect to be given

    Date of Order

    Order passed by

    Reference Number of Order

    Appeal has been filed - Stay petition filed

    Date of filing of appeal

    Appeal Pending with

    Stay petition filed with

    Appeal has been filed - Stay granted

    Date of filing of appeal

    Appeal Pending with

    Stay granted by

    Upload copy of Stay

    Appeal has been filed - Instalment granted

    Date of filing of appeal

    Appeal Pending with

    Instalment granted by

    Upload copy of instalment order

    Rectification / Revised Return filed at CPC

    Filing Type

    e-Filed Acknowledgement Number.

    Remarks

    Upload Challan Copy

    Upload TDS Certificate

    Upload Letter requesting for rectification

    Upload Indemnity Bond

    Rectification filed with AO

    Date of application

    Remarks

    Others

    Others


    A success message along with Transaction ID is displayed on successful submission of the response.

    Note :
    To View the submitted response go to 'e-File' > 'Response to Outstanding Demand' and click on the 'View' link under the 'Response' column and in the new page click on the 'Transaction Id' hyperlink.


    For the demand which is shown to be uploaded by AO, then the rectification right is with the Assessing Officer and for the demand against which there is no 'Submit' response available is already confirmed by the Assessing Officer. Kindly contact your jurisdictional Assessing Officer for clarification.


    Provisions of Section 245 Explained


    Section 2345 of the Income Tax Act, 1961 reads as follows-

    Set off of refunds against tax remaining payable.

    Where under any of the provisions of this Act, a refund is found to be due to any person, the Assessing Officer, Deputy Commissioner (Appeals), Commissioner (Appeals) or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section.

    As per section 245, the following income tax authorities can adjust the outstanding demand of the assessee against any refund due to him-
    Assessing Officer,
    Deputy Commissioner (Appeals),
    Commissioner (Appeals) or
    Principal Chief Commissioner or
    Chief Commissioner or
    Principal Commissioner or Commissioner of Income Tax.

    It is not necessary that the entire refund amount needs to be adjusted. Any part of the refund can also be adjusted.


    There must be Outstanding Demand Payable


    The refund due can be adjusted only with any sum remaining payable under the Income Tax Act by the assessee himself. In other words, a refund cannot be adjusted where a stay is granted or where rectification is pending the effect of which will vacate the demand, etc.

    Adjustment of refund with the outstanding demand of third person not permissible

    The provision is very clear that an adjustment in respect of demand can be made relating to a person to whom refund is due. If the demand does not relate to the assessee and is related to some other person, adjustment u/s 245 cannot be made. This happens when the refund due to a partner cannot be set-off with the outstanding demand of the firm.
     
    The provision authorizes the prescribed officer to set off, after intimation to the assessee, the amount to be refunded or any part thereof against any sum payable under the Act by the person to whom the refund is due. The following consideration must exist or be fulfilled in order to set off a refund under Section 245 of the Act: 
    (a) a refund is found due to a person under the Act 
    (b) the set off against another sum payable by that person under the Act and 
    (c) the refundable amount is set off after intimation in writing of such proposed action to that person. 

    All the conditions are cumulative.

    Adjustment in respect of demand can be made relating to a person to whom the refund is due. [Archana Shukla vs. JCIT (2000) 161 CTR (Del) 159 : (2000) 244 ITR 829 (Del)]. Refund due to the assessee cannot be adjusted with the outstanding demand of his deceased father. [Hasmukhlal v ITO (2001) 251 ITR 511 (MP)]

    Adjustment of refund of income tax cannot be adjusted only with the income tax demand

    One of the essential elements of section 245 is that any refund of income tax due under the Income Tax Act can be adjusted only with the outstanding demand of income tax remaining payable under the Income Tax Act. Thus outstanding demand under any other Act cannot be adjusted with the income tax refund.

    Refund due under the Income Tax Act cannot be set-off with the demand under the Interest Tax Act. [State Bank Of Patiala vs. CIT (1999) 239 ITR 421 (P&H-HC)]

    Adjustment is recovery of taxes

    Further, the adjustment of refund with outstanding demand u/s 245 is also a mode of recovery of taxes. It is wrong to say that an adjustment of refund u/s 245 is not a “recovery” only on the ground that s. 245 is placed in the Chapter of “Refunds”. The term “recovery” is comprehensive and includes adjustment thereby reducing the demand. [Maruti Suzuki India Ltd. [2011] 16 taxmann.com 40 (Delhi)]. 

    Further in Lease Plan India & Anr. vs. DCIT in WP (C) No. 2773/2012 the adjustment u/s 245 was held to be ‘recovery’ by the Delhi High Court in the following words-

    “It is not possible to agree with the contention of the Revenue that the word “recovery” cannot and would not include adjustment under Section 245. Recovery can be made by various modes including adjustments. Each Assessment Year is treated as separate and independent under the Act. Section 245 of the Act permits the Revenue to recover demand of one year which is pending by adjusting the refund due for another year. The term ‘refund’ has not been defined in the Act and, therefore, it has to be understood and interpreted in the manner in which it is understood in day to day life. The term ‘recovery’ in common parlance includes adjustments.”

    However, in Tata Communications Ltd. vs ACIT (2011) 130 ITD 19 (SB)(Mum)/S.A. Nos.196 to 198/Mum/2009, the ITAT Mumbai Special Bench held that the mode of recovery adopted by the Assessing Officer by way of adjustment of the refund due with the outstanding demand cannot be regarded as a coercive measure.


    Mandatory issue of Intimation u/s 245


    Further, it is mandatory on the part of the Assessing Officer to issue an Intimation before making any such adjustment. The issue of such intimation adheres to the principles of natural justice since adjustment of refund amount due to the assessee with his outstanding demand amounts to payment of taxes. 

    Response of taxpayer must be considered

    Even after issuing the intimation as per section 245 and receiving the response from the taxpayer, the assessing officer proceeds to adjust the refund with the outstanding demand where the demand has arisen out of an issue which is already covered in favour of the assessee. This action of the AOs is wholly arbitrary since the issue is already settled in favour of the assessee. On this issue,  the Delhi High Court in the case of Maruti Suzuki India Ltd. v. DCIT [2011] 16 taxmann.com 40 (Delhi)/(2012) 347 ITR 43 (Delhi)/Writ Petition (Civil) No. 2252/2011 and Bombay High Court in the case of HDFC Bank Ltd. v. ACIT [2014] 44 taxmann.com 347 (Bombay) had made the following crucial observations-

    Delhi High Court

    It was held that refunds arising in earlier years on issues cannot be adjusted against demand on the same issue in subsequent years under section 245.
    It will be odd for the Revenue to contend that if an issue or contention is decided in favour of the assessee then for the said year refund has to be paid but the refund can be adjusted under Section 245 of the Act, on account of the demand on the same issue in a subsequent year. The broad contention is specious and illogical to be accepted. Similar or same additions can be made in a subsequent year for justifiable cause including contention of the Revenue that they have not accepted the earlier decision but it cannot be accepted as a principle that the Revenue can in the ordinary course make adjustments towards a demand on an issue or contention which is already decided in favour of the assessee, though it may be a subject matter of appeal or challenge by the Revenue.

    Bombay High Court

    It was held that demand on covered issues cannot be recovered by adjustment of refunds under section 245.

    The manner in which and the ground on which an adjustment of the refund was made is arbitrary and contrary to law. The stay order states that the assessee would not be treated as an assessee in default in respect of covered issues. Yet the department has proceeded to adjust the refund due and payable to the assessee merely on the ground that the department’s appeal is pending. The adjustment of a refund is a mode of effecting recovery. Once an issue has been covered in favour of the assessee in respect of another assessment year on the same point, it was wholly arbitrary on the part of the department to proceed to make an adjustment of the refund. If the adjustment was not made, there can be no manner of doubt that the assessee would have been entitled to a stay on the recovery of the demand. The demand cannot be adjusted by the department in this manner merely because it is in possession of the funds belonging to the assessee to which the assessee is legitimately entitled to and has been granted a refund. The making of an adjustment in these facts is totally arbitrary and contrary to law. As regards the other issues, the assessee has made out a strong prima facie case for a stay of the recovery of the demand. As the action of the department in adjusting the refunds due to the assessee was contrary to law, the interests of justice would be served if the department is permitted to make an adjustment to an extent of Rs.60 crores and refund the balance with interest.

    Simply issuance of intimation is not sufficient, the response of the assessee should also be properly dealt with

    It is settled law that mere service of notice under Section 245 is not sufficient and the taxpayer must be given a fair opportunity to put across his objections, if any, in the matter.

    In the case of Hindustan Unilever Limited v. Dy. CIT [2015] 60 taxmann.com 326, the Bombay High Court held that the Assessing Officer can't proceed to adjust the refund against demand without taking assessee's objections into consideration. Adjustment of refund against outstanding demand without taking into consideration of the assessee's objections in response to intimation issued u/s 245 is unsustainable.

    The following paras of the decision of the Bombay High Court are noteworthy-

    14. Section 245 of the Act, empowers the revenue to adjust refunds due to an assessee against any tax payable (of the same character as the refund due) by him. The exercise of this power is discretionary as is evident from the use of the word "may'' therein. Besides the requirement of giving notice/intimation of the proposed action of adjustment out of the refund due is also an indication of discretionary nature of power not mandatory. This notice/intimation is required to be given so as to enable a party to point out not only factual errors but also point out why such a power should not be exercised in the facts of the case, such as the demand sought to be adjusted is still a subject-matter of appeal and the issue is covered by decisions of higher forums etc. On consideration of the same, it is open to the officer of the revenue concerned to exercise its discretion, to adjust or not. This giving of prior intimation has been held by this Court in A.N. Shaikh, Sixteenth ITO v. Suresh B Jain [1987] 165 ITR 86/[1986] 29 Taxman 191 to be mandatory before any adjustment can be made. The exercise of powers under Section 245 of the Act being discretionary has also been so held by the Delhi High Court in Glaxo SmithKline Asia (P) Ltd. v. CIT [2007] 290 ITR 35/160 Taxman 259. We respectfully concur with the above view of the Delhi High Court that the power under Section 245 of the Act is discretionary. Thus the exercise of a power of adjusting demands out of refunds due would depend upon the facts and circumstances of each case.

    15. In view of the above, as held by this Court in A.N. Shaikh, Sixteenth ITO's case (supra ) the giving of prior intimation under Section 245 of the Act is mandatory. The purpose being to enable the party to point out that there are factual errors or some further developments, if any, for example a stay of the demand, Supreme Court decision covering the demand which is still a subject-matter of a pending appeal etc which would warrant not adjusting the refund against the pending demand. Thus when a party does raise such issues in response to a prior intimation, the officer of the revenue exercising powers under Section 245 of the Act must apply his mind to it and must record reason why the objection is not sustainable and also communicate it to the party. This before or at the time of adjusting the refund. This alone would ensure that that the power of adjustment under Section 245 of the Act is not exercised arbitrarily. Such a procedure would cause no prejudice to the revenue as the occasion to grant the refund would not arise till the objection to the intimation is disposed of. Of course the objections should be disposed of expeditiously as undue delay in granting of refund would cause prejudice to the party entitled to the refund.

    16. In the present facts, intimation dated 31 July, 2013 under Section 245 of the Act was received by the petitioner on 2 August, 2013. The Petitioner filed its objections on 5 August, 2013 inter alia pointing out that no demand is outstanding for A.Y. 2004-05 and stay of the demand granted under Section 220(6) of the Act in appeals pending before the Commissioner of Income tax (Appeals) for A.Ys. 2007-08 and 2008-09. These objections of the petitioner were not considered as is apparent from the fact that even though no demand was due for the A.Y.2004-05 yet adjustment took place from the refund due and a demand for interest was also made by order dated 22 August, 2013. The entire object of giving prior intimation as provided under the Act has been rendered superfluous. Thus the decision making process was flawed and the adjustment of the refund against the demands due as well as the consequent demand for interest are unsustainable.

    20. However it is the contention of the Revenue that grant of stay by the authorities under the Act is immaterial as it would not obliterate the demand which is payable under the Act. It is submitted that the Revenue has jurisdiction to adjust the demands which are payable under the Act and as of today the demands for A.Ys. 2007-08 and 2008-09 are payable. The grant of stay under Section 220(6) of the Act only to prevent the Revenue from recovering the amounts which have been confirmed by the Assessing Officer. However the amount continues to be payable under the Act by the petitioners to the Revenue. Thus it is submitted that no interference is warranted.

    21. Section 245 of the Act provides that when refund is due to any person then in lieu of payment, the revenue can set off/adjust the amount to be refunded against any sum remaining payable under the Act by the person concerned. Therefore in the present facts, we would have to examine whether any demands/sums were remaining payable under the Act. Normally under the Act after orders of Assessment is passed, a notice of demand is issued to the party concerned under Section 156 of the Act. This notice under Section 156 of the Act specifies the period (normally 30 days) within which the payment is to be made failing which the person concerned is treated as an Assessee in default. It is only after the expiry of time-limit to make the payment is the recovery provision triggered under Section 220 onwards of the Act. However where a stay is granted under Section 220(6) of the Act, in view of pending appeal before the CIT(Appeals) then such an assessee would not be treated in default even after the expiring of the period of 30 days. It therefore follows that the time to make the payment stands extended and the person is not to be deemed to be an Assessee in default for the recovery provisions to be set in motion. The words "remaining payable under the Act" would mean where the assessee has not paid within the time available and has becomes an Asseessee in default. In this case in view of the stay under Section 220(6) of the Act, the time to make the payment stands extended till the disposal of the appeal by CIT (Appeals).

    22. Thus as on 31 July, 2013 the demand was "not remaining payable under the Act", because of the unconditional stay granted under Section 220(6) of the Act. Therefore Section 245 of the Act will not be invocable. The stay order could have excluded any set-off/adjustment out of any refund due to an Assessee. Such is not the case in the present facts. An adjustment under section 245 of the Act is also a mode of recovery of the tax. It is an unilateral action on the part of the Revenue to recover the amounts due from a party by adjusting the refund due to it.

    23. By virtue of orders of stay passed under Section 220(6) of the Act for the Assessment Years 2007-08 and 2008-09, no amount are payable under the Act. This protection would continue till such time as the CIT (Appeals) before whom the appeals are pending disposes the appeals or the Assessing Officer in exercise of its power under Section 220(6) of the Act varies the order of stay granted to the petitioners. The orders of stay are undisturbed till this date. Consequently, it is not open to the Revenue to adjust the recovery of amount which has been stayed by orders of stay.

    25. Therefore the Revenue should have approached the appellate authority before whom the appeals were pending to expedite the hearing or alternatively seek to vary the order of stay after giving a hearing to the party concerned before the adjustment under Section 245 of the Act is carried out. This has admittedly not been done.

    In a landmark judgment, Hon’ble  Delhi High Court in Court on Its Own Motion vs. Union of India' in W.P.(C) 2659/2012 & W.P. (C ) 5443/2012 issued the following guidelines and directions to the income-tax department to end the TDS credit & refund adjustment harassment by the income-tax department-

    Uploading of wrong or fictitious demand: The CBDT has accepted that incorrect and wrong demands have been uploaded on the CPC arrears portal. In his letter dated 21.08.2012, the CIT, CPC, has expressed his concern and anguish on account of uploading incorrect and wrong data in the Central Processing Unit (CPU) and the problem faced by them and by the assesses. The CBDT has issued Circular No. 4 of 2012 in which the burden is put on the assessee to approach the AOs to get their records updated and corrected by filing s. 154 applications. While this may be the easiest option available, it should not be a ground for the AO not to suo motu correct his records and upload correct data. Each assessee has a right and can demand that correct and true data relating to the past demands should be uploaded. Asking the assessee to file s. 154 applications entails substantial expenses and defeats the main purpose behind computerisation. Also, the AO’s do not adhere to the time limit prescribed for disposal of the s. 154 applications. To ensure transparency (and accountability), a register must be maintained with details and particulars of each application made u/s 154, the date on which it was made, date of disposal and its fate. The s. 154 application has to be disposed of by a speaking order and communicated to the assessee. There must be full compliance of the said requirements.

    Adjustment of refund contrary to s. 245: S. 245 postulates two stage action; first a prior intimation to the assessee and then, if warranted, the subsequent adjustments of the refund towards arrears. This is not being followed by the CPC because the computer itself adjusts the refund due against the existing demand. To prevent this breach of the law, the department must follow the procedure prescribed u/s 245 and give the assessee an opportunity to file a reply which should be considered by the AO before giving the direction for adjustment. As regards the cases where such (illegal) adjustment has been made in the past, the cases must be transferred to the AOs for issue of notice to the assessee seeking adjustment of refund. The assessees will be entitled to file a reply to the notice and the AO will then pass an order u/s 245 allowing the refund. The CBDT has to fix a time limit and schedule for completing the said process. Though the process involves expenditure and paper work, the situation has arisen due to the lapses on the part of the AOs and the assessees cannot be made to suffer for the wrong uploading of arrears and wrong adjustment of refund. The question of the assessee’s entitlement to interest on the SA tax is left open though when the delay is due to the fault of the Revenue, interest should be paid u/s 244A. False uploading of past arrears and failure to follow the mandate of s. 245 is a lapse on the part of the AO.

    In another case of Vijay Singh Kadam vs. CCIT (2016) 384 ITR 69 (Delhi)(HC), the Delhi High Court held that the approach of the department of adjusting refund against demand without serving a prior section 245 intimation to the assessee and without providing the opportunity of hearing to assessee & without arriving at satisfaction to the effect that such adjustment of refund can only be the mode of recovery of demand is bad in law.

    Madras High Court in the case of Cognizant Technology Solutions India P. Ltd. vs. DCIT in W.P.No. 8571 of 2013 has taken similar views and held as follows-

    “20. From a reading of the above Section, it is crystal clear that the Assessing Officer, Deputy Commissioner (Appeals), Commissioner (Appeals) or Chief Commissioner or Commissioner, as the case may be, may, in lieu of payment of the refund, set-off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under the Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under that Section. (emphasis supplied).

    21. On a perusal of the entire material documents including the impugned order, it is clearly evident that there is no intimation in writing to the petitioner-assessee before making such an adjustment of refund. No doubt, the respondent is empowered to make the adjustment of refund, but the same can be done only in the manner as contemplated under the provisions of the Act. It is conspicuous from the records that there is no intimation in writing to the petitioner before making such adjustment of refund. As the respondent has not followed the procedures prescribed under the provisions of the Act while adjusting the refund amount with the outstanding amount, the impugned order is vitiated in law and is liable to be set aside.”

    In J.K Industries vs. Commissioner of Income Tax, [1999] 238 ITR 820 (Cal) the Calcutta High Court held that “… quite clearly the Revenue has no jurisdiction to make an adjustment of a refund without following Section 245 and without giving a prior intimation to the assessee as required by that section.”
    The Bombay High Court reiterated the same opinion in Suresh Jain vs. A.N Shaikh[1987] 165 ITR 151 (Bom).

    Section 245 empowers the Revenue to set off or adjust the amounts to be refunded against any amounts remaining payable by the person concerned under the Act is a discretionary remedy. However, before the adjustment is done, intimation would u/s 245 of the Act to the party is mandatory. This intimation enable a party to point out any factual errors or any other development which would warrant non-adjustment of the refund against the demand payable for the consideration of the Assessing Officer.

    This procedure laid down u/s 245 has been completely ignored by the Assessing Officer and also by the Pr. CIT.

    The desire to collect more revenue cannot be at the expense of the Rule of law. [Bombay High Court in Milestone Real Estate Fund vs. ACIT (WP No. 543 of 2019) decided on 26.03.2019]

    FAQs on Notice u/s 245 Related Queries
    (Issued by Centralized Processing Center, Income Tax Department)

    1. Why am I receiving Notice u/s 245?

    2. How do I view my outstanding tax demand?

    3. How do I respond to outstanding demand/ what is the action points needed to be taken up from my end for the outstanding demand? What should I do next after receiving the Notice u/s 245?

    4. How to know the detail procedure to file online response?

    5. How to know my Jurisdictional Assessing Officer details?

    6. What are the Consequences for not responding to this communication?


    1. Why am I receiving Notice u/s 245?

    Your return has been processed at CPC and the same has resulted in refund. The refund so determined is liable to be adjusted against the outstanding demand. Notice u/s 245 informs you of such demands against which your refund would be adjusted within 30 days from date of the notice u/s 245.


    2. How do I view my outstanding tax demand?

    You can view outstanding demand by logging onto https://www.incometaxindiaefiling.gov.in with your user id and password. Go to ‘e-file’ tab-> Response to outstanding tax demand. 


    Alternatively, you can also check the demand after login select “My pending actions” in “DashBoard” or click “For Your action” in Worklist tab on the menu bar.


    3. How do I respond to outstanding demand/ what are the action points needed to be taken up from my end for the outstanding demand? What should I do next after receiving the Notice u/s 245?

    Response can be made by logging into https://www.incometaxindiaefiling.gov.in with your user id and password. 

    Go to ‘e-file’ tab-> Response to outstanding demand.


    i. In case the demand shown is correct:-

    a) Against the Outstanding Demand- click on ‘Submit response’ and then select->’Agree with Demand’. On receipt of the confirmation, demand will be adjusted against the refund and the balance of refund, if any, will be issued.

    ii. In case the demand shown is partially correct

    a) Against the Outstanding Demand- click on ‘Submit response’ and then select->’Demand is partially correct’. Enter the amount of Demand that is partially correct 

    b) For the incorrect demand, please follow the steps mentioned in step 3 below.

    iii. In case the demand shown is incorrect

    a) Against the Outstanding Demand- click on ‘Submit response’ and then select->’Demand is incorrect’

    b) Give detailed reasons and attach relevant documents to show why the demand is incorrect in your view. This will be reviewed by the Department.


    4. How to know the detail procedure to file online response?

    To know the detail procedure for filing online outstanding demand response-> Please log onto https://www.incometaxindiaefiling.gov.in ->Go to ‘Help Tab’ -> ‘Response to Outstanding tax Demand’


    5. How to know my Jurisdictional Assessing Officer details?

    To know your Jurisdictional Assessing Officer details -> Please log on to

    https://www.incometaxindiaefiling.gov.in and click on “Know Your Jurisdictional AO” under “SERVICES” menu.


    6. What are the Consequences for not responding to this communication?

    If no action taken by you within 30 days of receipt of the notice u/s 245, the outstanding demand as on that date will be considered for  adjustment against your refund.


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