Introduction: The Ministry of Finance, through Instruction No. 02/2023, has introduced significant revisions to the timelines, monetary limits, and workflow pertaining to the recording of reasons before withholding refunds under Section 245(2) of the Income-tax Act, 1961. These changes aim to streamline the process and enhance transparency in handling assessments.
1. Monetary Limit Adjustment: The instruction specifies that the monetary limit triggering the application of Section 245(2) will now be set at Rs. 10 lakhs or more. This adjustment is intended to focus resources on cases with substantial refund values, ensuring a more targeted approach.
2. Communication Between Faceless Assessing Officer (FAO) and Jurisdictional Assessing Officer (JAO): When Section 245(2) is applicable, the FAO, upon receiving communication from the Central Processing Centre (CPC), is mandated to inform the JAO about the potential demand in pending assessments. This step establishes coordination between faceless and jurisdictional authorities.
3. Approval Process by Jurisdictional Principal Commissioner: The JAO, equipped with information from the FAO, is required to record detailed reasons for withholding refunds. The analysis should include factors like the assessee’s financial condition, past demands, and pending appeals. Approval from the jurisdictional Principal Commissioner of Income-tax is essential, ensuring a thorough and reasoned decision.
4. Time Limit Revisions: To expedite the process, the time limit for the Faceless Assessment Unit is now set at 20 days, while the Jurisdictional Assessing Officer is granted 30 days. These adjustments are aimed at achieving a more efficient and timely resolution of refund-related matters.
5. Workflow Chart by DGIT(Systems): The detailed workflow chart, as outlined in the instruction, will be provided by the Directorate General of Income Tax (DGIT) Systems, ensuring clarity and uniformity in the implementation of these revised guidelines.
Conclusion: The revisions introduced through Instruction No. 02/2023 mark a significant step towards enhancing the efficiency and transparency of the refund withholding process under Section 245(2) of the Income-tax Act, 1961. These changes underscore the government’s commitment to a more streamlined and accountable tax administration, benefiting both taxpayers and authorities alike. Taxpayers are encouraged to stay informed about these updates to navigate the evolving landscape of income tax regulations effectively.
Instruction No. 02/2023
F. No. 312/82/2022-0T
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
OT WT Section
New Delhi, dated 10th November, 2023
Subject : Instruction regarding revision of timelines and monetary limits as well as revision of workflow in the matter of recording of reasons before withholding of refunds u/s 245(2) of the Income-tax Act, 1961- reg.
The monetary limit for applying provisions of section 245(2) of the Income-tax Act, 1961(`the Act’) will hereinafter be where the value of refund is Rs. 10 lakhs or more.
2. In any case where section 245(2) of the Act is applicable, the Faceless Assessing Officer (FAO), on receipt of communication from CPC, shall intimate the Jurisdictional Assessing Officer (JAO) with regard to demand likely to be raised in the pending assessment(s). The JAO, based on such information shall record in writing, with proper application of mind and after analyzing the factual matrix of the case (which, inter-alia, includes the financial condition of the assessee, past demands, pendency of appeals et al) and seek approval of the jurisdictional Principal Commissioner of Income-tax. The reasons recorded shall not be cursory. Such reasons should reflect the factual analysis of the case by the JAO. The JAO will communicate the final decision regarding withholding/release of refund to the CPC.
3. To finish the above process, the time limit is hereby revised to 20 days for the Faceless Assessment Unit and to 30 days for Jurisdictional Assessing Officer.
4. The detailed workflow chart as delineated above will be issued by DGIT(Systems).
Sunil Kumar Pandey)
Deputy Secretary to the Government of India
1. Chairman and Members, CBDT
2. All Pr. CCsIT/ Pr. DOsIT for circulation in their region.
3. DGIT(Systems), New Delhi.
4. All Jt. Secretaries/CsIT/ Directors, CBDT
5. The Web Manager, gov.in with the request to upload the Instruction on website
6. JDIT, Data Base Cell for placing it on the website irsofficersonline. gov. in
7. ITBA Publisher (Publisher@incometax.gov.in) for (https://itba.incometax.gov.in) with request to upload the Instruction on the ITBA portal.
8. The Guard File