Have you ever received intimation from Income Tax department u/s 245? If you are seeking refund on tax paid, there is a good chance of receiving notice from Income Tax department u/s 245 of Income Tax Act 1961. Are you wondering what is it related to? In simple terms, section 245 empowers assessing officer (AO) to set off refunds claimed by a tax payer against any remaining tax payable.
After receiving the notice, tax payer gets a window of 30 days to respond as to why such adjustments shall not be made. If the tax payer does not respond within the given time frame then AO is free to adjust the refunds against remaining tax payable. However, if the assessee contested but did not receive any response from the AO within 30 days then former is entitled to the refund claimed. The current financial year is going to end soon but there are several refund related disputes yet to be resolved. Around 1.49 lakh tax payers have pending tax demand disputes worth Rs. 16,000 crores out of which most are time barred by 31st March, 2016.
Central Board of Direct Taxes (CBDT), a part of Department of Revenue in the Ministry of Finance, which provides inputs for policy and planning of direct taxes in India, has expedited tax refunds process. The window of 30 days available to both tax payer and Assessing Officer has been reduced to 15 days due to rise in grievances. It has been done for cases where refunds exceed Rs. 5,000. This is a temporary measure under which reduced timeline will be valid till 31st March, 2016.