Adjustment of refunds due to assessee with dues - Income Tax - 622/CBDT

INSTRUCTION NO. 622/CBDT Dated : September 26, 1973 Section(s) Referred: 245 Statute: Income - Tax Act, 1961 A reference is invited to recommendation No.432 of the Wanchoo Committee Report wherein it was suggested that section 245 of the I.T.Act may be suitably amended to give the tax payer the right to set off the amount, or any part thereof, of any refund due to him, in consequence of an order of assessment, appeal or revision, against any sum payable by him under the I.T.Act, after giving an intimation to the ITO of the proposed adjustment. It was further suggested that to begin with this adjustment may not be allowed against payment of advance tax. 2. The suggestion has been carefully examined by the Government and it is felt that there is no need to introduce any specific provision in law enabling the tax payer to set off the amount of refund due to him against any sum payable by him under the Act. The purpose of introducing such a provision can only be to prevent any coercive action being taken against a tax payer in respect of any demand covered by an amount refundable to him. This object cannot be achieved by providing for any action on the part of the tax payer; on the other hand, this can be ensured by the exercise of due care on the part of the I.T.O. 3. As per the provisions of section 245 of the I.T.Act where under any of the provision of the Act, a refund is found to be due to any assessee, the ITO, AAC or CIT as the case may be, may set off the amount to be refunded against the tax payable by the assessee under this Act, after giving him an intimation to this effect in writing. As such, even under the present provisions of the law, coercive action is to be taken against a tax-payer only if he is found to be in default even after taking into consideration all amounts refundable to him. Since the assessee is also being intimated of the proposed action, the discrepancy if any, in this regard can be brought to the notice of the ITO by the assessee. 4. These instructions may please be brought to the notice of all the officers working in each charge and this may also be widely publicised for information of tax payers.