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The same refund set-off section also lets the officer withhold a refund where a scrutiny notice is pending and releasing it may hurt revenue. The refund is then decided after the assessment.
ITR
Refund withheld because scrutiny is pending
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Provisions
Sec 245, Income-tax Act 1961 (now Sec 438, Income-tax Act 2025); Sec 536, Income-tax Act 2025 (repeal and savings)
Analysis
If your return is selected for scrutiny under Sec 143(2) (now Sec 270(8)), the refund can be held back with reasons recorded and approval. Example: AY 2025-26 refund of ₹80,000 shows as withheld after a scrutiny notice; it is released or adjusted once the order is passed, with interest under Sec 244A (now Sec 437) for the eligible period. Respond fully to the scrutiny so it ends sooner.
Close
- Check e-Proceedings for a scrutiny notice for that year
- Reply to the scrutiny on time
- Ask the officer for the reason the refund is withheld, if not stated
- After the order, check the refund or adjustment shown
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