One of my client received intimation for Adjusting Refund Against Outstanding Tax Demand, Section 245. The demand payable as per intimation 143(1a) for AY 2011-12. for Rs.221770/- Income Tax Return for AY 2011-12 filed was manually. As per Income Tax Intimation for AY 2011-12 u/s 143 (1) received on 08.10.2012 in this the TDS credit Rs.115962/- & Advance Tax credit Rs.85000/-not given. After that we filed the rectification request u/s 154 along with all documents (Form 26AS & advance Tax Challan & other details) on 05.08.2013 & 20.02.2015 to Jurisdictional AO. But still why the outstanding demand for AY 2011-12 is pending. We have not yet received the rectification order u/s 154 for AY 2011-12. Demand uploaded by Jurisdictional AO. Yesterday, We received the intimation us 245 in this intimation demand is still shown for AY 2011-12 and our Refund is adjusted against outstanding demand.
What can do now? Kindly suggest the same. Thanks & Regards
02 August 2024
The situation you're describing involves dealing with an outstanding tax demand that was supposed to be rectified but has not yet been resolved. Here's a detailed guide on how to address this issue:
### 1. **Understand Section 245 Intimation**
Section 245 of the Income Tax Act allows the Income Tax Department to adjust any outstanding tax demand against a refund due to the taxpayer. This means that if there is an outstanding demand from a previous year, the department can use any current or future refunds to settle that demand.
### 2. **Addressing the Outstanding Demand**
Since the demand for AY 2011-12 has been adjusted against the refund, you need to address the following steps to resolve the issue:
#### **1. Verify the Rectification Request Status**
- **Check Status**: Verify the status of the rectification request(s) filed under Section 154. Ensure that the rectification request was properly submitted and is pending with the jurisdictional Assessing Officer (AO). - **Follow-Up**: Contact the AO's office to follow up on the status of the rectification order. Sometimes rectification orders may not be processed promptly, causing such discrepancies.
#### **2. Reconcile the Demand**
- **Re-check Demand**: Review the outstanding demand details in the intimation and compare them with your records, including TDS credits, advance tax payments, and any other relevant documents. - **Form 26AS**: Cross-check the details in Form 26AS to ensure that all credits and payments are correctly reflected.
#### **3. File a Fresh Rectification Request**
- **Prepare Documents**: Gather all relevant documents including Form 26AS, proof of advance tax payments, and any correspondence related to the previous rectification requests. - **File Online Rectification**: If the earlier requests have not been processed, you can file a fresh rectification request through the Income Tax e-filing portal. Choose the appropriate section (Section 154) and upload all supporting documents. - **Update Information**: Make sure to reference the previous rectification requests and include an explanation for the delay or non-processing of the initial requests.
#### **4. Respond to the Intimation**
- **Submit a Response**: If an intimation under Section 245 has been received, respond to it through the e-filing portal or directly to the AO. Explain the situation and provide evidence that supports your claim that the demand should be adjusted or removed.
#### **5. Appeal or Write a Letter**
- **File an Appeal**: If the issue is not resolved through rectification or communication with the AO, consider filing an appeal before the Commissioner of Income Tax (Appeals) (CIT(A)). Provide detailed evidence and documentation supporting your case. - **Written Communication**: Draft a formal letter to the AO detailing the history of the rectification requests, the discrepancy, and the incorrect adjustment of the refund. Request immediate action to resolve the issue.
#### **6. Monitor and Follow-Up**
- **Track Progress**: Continuously monitor the status of your rectification request, response to intimation, and any further communications from the tax department. - **Keep Records**: Maintain a record of all correspondence, requests, and acknowledgments for future reference.
### Summary of Actions
1. **Verify the status of previous rectification requests** with the jurisdictional AO. 2. **Reconcile the outstanding demand** with Form 26AS and other documents. 3. **File a fresh rectification request** if previous ones are not processed. 4. **Respond to the intimation under Section 245** explaining the issue and providing evidence. 5. **Consider filing an appeal** or writing a formal letter if the issue remains unresolved. 6. **Monitor the situation** closely and keep records of all communications and actions taken.
By following these steps, you should be able to address the outstanding demand and resolve the issue related to the adjustment of your refund.
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