To prevent litigation the Income tax department diminishes the time duration required for the tax officers to decide on the refunds adjustments against outstanding tax dues to 21 days.
The notice circulated by the Directorate of Income Tax (Systems) that the time limit has been reduced to 21 days, which was 30 days for the assessing officers.
“If the assessee either does not agree or partially agrees to adjustment, the matter shall be referred by CPC immediately to the assessing officer, who shall, within 21 days from the date of such reference, shall provide feedback to CPC as to whether the adjustment should be made or not,” the notice expressed.
Tax expert, refund adjustments, the Centralised Processing Centre (CPC) sees that the wrong categorisation of the demand or lack of feedback from the AO (Assessing Officer) on the answer of the taxpayers directed to the wrong adjustment of the tax refunds which rendered to the complaints as well as litigations. AO does not answer taxpayer complaints.
“This instruction clarified that the AO now has only 21 days to respond to a taxpayer’s complaints, as opposed to the 30 days previously allowed. It restricts the CPC from holding refunds beyond the allotted period. This approach will lead to a swift resolution of difficulties faced by the taxpayers,” a tax expert mentioned.
In the guidelines to field formations, the DIT (Systems) stated in some of the cases, consequent to the problem of intimation under section 245, the taxpayers would answer on the demand portal that the demands are wrong, if that the demands are restricted via assessing officer/TAT/high court.
The wrong classification of the demand as correct and collectable or not furnishing the answer via the assessing officer on the taxpayer’s answer would direct to the incorrect refund adjustments by CPC against the same demands that render the avoidable grievances and litigations.
Under Section 245 of the Income Tax Act, AO might adjust the refund against any tax demand, outstanding from the assessee. The assesses could provide the answer to the intimation notice when he or she does not agrees with the tax demand.
The Directorate of Income Tax, within 30 days the AO are mandated to furnish their answers, in various cases, the answer does not been furnished within the mentioned time which results in avoidable delays for the refund issuance directed to the grievances and litigations. An additional sort of interest load is been caused because of these delays in refund issuance.
As per the tax expert where there is no timely answer from Assessing Officers the CPC would be authorised not to hold the refund after the time window of 21 days and release or adjust the same to the extent considered via the assessee.
“The instruction also reiterates the AOs’ obligation to update the correct tax demand and collectability status based on stays granted by various authorities and instalments collected,” he stated.
Tax expert mentioned that CBDT considered the problem that the assessees faced in which the refund was managed against the wrong demands and would diminish the time of responding to the outstanding demands furnished to the assessing officers to 21 days from the current time of 30 days and would decide for furnishing the taxpayer’s refund for the late answer via levying the only responsibility on the assessing officers for the same delays.
“This is a sound resolution to address unjust blockage of funds of the assessee and would also aid tax authorities to plug additional outflow of funds issued as interest u/s 244A of the Income-tax Act, 1961,” Sehgal added.
