Answer

1. F

   Facts

   Before adjusting a refund against an old demand, the department sends an intimation under Sec 245 and gives you a chance to respond. If you do not respond, the demand is confirmed and adjusted.

2. P

   Provisions and law

   • Sec 245, Income-tax Act 1961 (now Sec 438)A refund can be set off against an outstanding demand after intimation to you.
   • Sec 220, Income-tax Act 1961A demand is payable within 30 days of service of the notice of demand; simple interest of 1% a month runs after that; the officer may allow more time or instalments, and may treat you as not in default while an appeal is pending (2025 Act number to be confirmed).
3. A

   Analysis

   If the old demand is wrong, respond with disagreement and proof before the adjustment. If it is already adjusted, you can still get it reversed by getting the old demand rectified or decided in appeal, and the excess will be refunded. For example, if ₹15,000 was adjusted for a demand later cancelled in appeal, the officer must refund it with interest.

4. C

   Conclusion

   1. 1Check for a Sec 245 notice in Pending Actions.
   2. 2Respond with agree or disagree in time.
   3. 3If disagreeing, give reasons and references.
   4. 4If already adjusted, pursue rectification or appeal for the old year.
   5. 5Claim refund of the excess once the old demand is reduced.

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.