Procedure for issue of large refunds. - Income Tax - 1889/1991

INSTRUCTION NO. 1889/1991 Dated: September 30, 1991 Attention is invited to Instruction No. 1873 (F.No. 225/122/90-ITAII) dated 4-1-1991 according to which prior approval of the Commissioner of Income-tax was to be obtained for issue of refunds over Rs. 5 lakhs in the metropolitan cities of Bombay, Calcutta, Madras, Delhi and Ahmedabad and over Rs. 1 lakh in all other places. This was to ensure that proper safeguards and controls are exercised over the issue of large refunds. 2. These instructions have been reviewed by the Board taking into account certain difficulties brought to its notice by some Chief Commissioners and Commissioners. It has now been decided that the following procedure should be followed before the issue of refunds: (i) The Assessing Officer shall carefully check and satisfy himself that the refunds amount has been correctly calculated after taking into account all relevant factors, such as taxes paid by the assessee, the amount of refunds, if any, issued to the assessee for the same assessment year, etc., (ii) he shall ensure that all outstanding demands are first adjusted against the refund and the amount actually refunded is only after all such adjustments; (iii) he shall examine the records carefully and satisfy himself that there are no reasons to withhold the refund in terms of section 241 of the Income-tax Act; and (iv) as regards refunds arising under section 143(1)(a) he shall ensure that all prima facie adjustments have been made. 3. Where the amount of refund payable, after all the steps mentioned above are taken, exceeds Rs. 1 lakh in company cases and Rs. 25,000 in other cases, The Assessing Officer (not being a Deputy Commissioner) shall refer the case to the Deputy Commissioner concerned after recording his satisfaction for issue of refund. As regards such refunds arising under section 143(1)(a), he shall refer the file to the Deputy Commissioner before the intimation is signed by him. The Deputy Commissioner shall examine the records and, after satisfying himself that the refund can be issued, give his approval to the Assessing Officer expeditiously and immediately thereafter, the Assessing Officer will issue the refund. 4. Where the amount of refund is Rs. 10 lakhs and above in the Metropolitan charges of Bombay, Calcutta, Madras, Delhi and Ahmedabad, and Rs. 5 lakhs and above in other charges, the Deputy Commissioner will, after certifying that he is satisfied that the refund can be issued particularly with reference to the conditions stipulated in paragraph 2 above, forward either the report of the Assessing Officer or his own report (where he is the Assessing Officer), alongwith the case records to the Commissioner for his approval. The Commissioner will examine the records and after satisfying himself that the refund can be issued, return the file with his approval expeditiously. 5. These instructions, which supersede Instruction No. 1873 dated 4-1-1991, may be brought to the notice of all the officers working in your region.