ITR
Only part of the old demand is correct
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Facts
The response form has a Demand is partially correct option. You state the amount you accept and give reasons for the part you dispute.
Provisions and law
- Sec 245, Income-tax Act 1961 (now Sec 438, Income-tax Act 2025)Refund can be set off against an earlier demand only after a written intimation to the taxpayer
- Sec 154, Income-tax Act 1961 (now Sec 287, Income-tax Act 2025)A mistake apparent from the record can be rectified, on request or by the officer
Analysis
Example: the demand is ₹40,000; ₹10,000 is genuine because you missed FD interest, but ₹30,000 arises from TDS credit not given. Accept ₹10,000 and disagree on ₹30,000 with the reason demand is incorrect, and file a rectification for the TDS credit. CPC can then adjust ₹10,000 and hold the rest until the officer confirms. Keep your workings simple and attach Form 26AS (now Form 168) for the disputed part.
Conclusion
- Split the demand into the part you accept and the part you dispute
- Choose Demand is partially correct and enter the accepted amount
- Give reasons and documents for the disputed part
- File a rectification request for the wrong part where it is a processing error
- Track both the adjustment and the rectification
A Savvy can do this for you
Refund set-off, Sec 245 (now 438)
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