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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.
ITR
Refund adjusted against a demand notice
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Provisions
Sec 245, Income-tax Act 1961 (now Sec 438); Sec 220, Income-tax Act 1961
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.
Close
- Check for a Sec 245 notice in Pending Actions.
- Respond with agree or disagree in time.
- If disagreeing, give reasons and references.
- If already adjusted, pursue rectification or appeal for the old year.
- Claim refund of the excess once the old demand is reduced.
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