CBDT has vide Notification No. 3/2013, dated 15-1-2013 introduced  ‘Centralised Processing of Statements of Tax Deducted at Source Scheme, 2013′ for centralised processing of statements of tax deducted at source. Vide clause 7 of the notification CBDT has specified that an adjustment of refunds against outstanding tax demand can be done u/s 245 of the Act only after issuing prior intimation to the taxpayer.

Extract of above Circular is as Follows :-

“Adjustment against outstanding tax demand

7. Where a refund arises from the processing of a statement under this scheme, the provisions of section 245 of the Act shall, so far as may be, apply. “

Extract of Section 245 of the Income Tax Act is as follows :-

“Set off of refunds against tax remaining payable.

245. Where under any of the provisions of this Act, a refund is found to be due to any person, the [Assessing] Officer,[Deputy Commissioner (Appeals)] [, Commissioner (Appeals)] or [Chief Commissioner or Commissioner], as the case may be, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section.”

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October 2021