Refund should be adjusted against the outstanding demand. - Income Tax - 1919/1994

INSTRUCTION NO. 1919/1994 Dated: September 29, 1994 Section(s) Referred: 245 Statute: Income - Tax Act, 1961 According to section 245 of the Income-tax Act. 1961, where, under any of the provisions of the Act a refund is found to be due to any person the Assessing Officer 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 the Act by the person to whom the refund is due after giving an intimation in writing. Further para 49 of Chapter 9 of the Manual of Office Procedure Vol.II Part A stipulates that wherever it is found that tax for some other years either earlier or subsequent to the year to which the refund relates, are outstanding against a person the refund should be adjusted against the outstanding demand and the balance if any, alone should be returned to him in accordance with provisions of section 245. 2. In the wake of complaints regarding delay in issue of refunds on account of such verification. the Board has decided that refunds of Rs. 5000 or less shall henceforth be issued without prior verification of the records for any outstanding demand. In cases where a consolidated refund for different assessment years is issued, the limit of Rs. 5000 shall apply in respect of such consolidated amount. After issue of the refund however, a verification shall be made and steps will be taken to realise the outstanding demands if any. Also a record of such instance where arrears were found to be outstanding but refunds have been issued may be maintained so that the impact of this instruction may be studied at a latter date. This may be brought to the notice of all Assessing Officers working in your region.