Tax notices + litigation · Income Tax Notice
Section 245 (now 438): Refund adjustment without notice (what to do)
Updated . Every paid answer is checked by a CA. Free AI answers are labelled until a CA verifies them.
Facts
Sec 245 (now Sec 438, Income-tax Act 2025) allows the IT department to adjust your pending refund against an outstanding demand from a previous year, without first getting your consent, but after giving you prior intimation.
Provisions and law
- IT Act 1961, Sec 245 (now 438) | Time limit: prior intimation required
Analysis
Common scenario: AY 2024-25 refund of ₹50,000 is due. But there's an old 143(1) demand from AY 2021-22 for ₹30,000 that was never addressed. The department issues 245 notice saying they'll adjust ₹30,000 from your refund. You get ₹20,000 instead of ₹50,000. Action: You have 30 days to respond agreeing or objecting to the adjustment. If the old demand was wrong, file 154 rectification simultaneously and respond to 245 objecting to adjustment until rectification is settled.
Conclusion
Talk to a Savvy for the exact next step on your case.
A Savvy can do this for you
Income tax refund not received, status check and refund reissue request
₹999
Get this doneAsk a Savvy on WhatsAppGeneral guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.