What is Notice u/s 245 of Income Tax Act?
With rising number of assessees filing their income tax
returns online for the sake of better correspondence and transparency still
they face some hardships. Once such hardship is notice u/s 245 of Income tax
Act.
Now the question is what to do if you receive a notice u/s
245 of Income tax Act?
First and foremost
thing to do in case of any correspondence from Income tax department is to put
a date of receipt of notice first. Now read the notice carefully. You will it
says that there was some previous outstanding demand that is pending for
payment by the assessee and now since in the year under process there is refund
due to assessee, the tax department is going to adjust the current year’s
refund against the previous outstanding demand.
Options available to Assessee in response to above notice:
The assessee can either accept the demand or reject the
demand based on the facts and documents available with him/her.
Case 1: In case Assessee is of an opinion that the demand is
correct
Login to your Income tax efiling account, Click on my pending
cases on the home screen and proceed. When you click show outstanding demand
the system will show the demand figure. In this window you can accept or reject
the demand. If the assessee accepts the demand then the current year’s ITR
against which the previous outstanding demand is proposed to be adjusted will
get adjusted. Then the ITR will be
processed and refund due to assessee will get adjusted against the previous
outstanding demand and balance if any payable or refundable will be worked
accordingly and a separate of same will be sent to assessee.
Case 2: In case Assessee is of opinion that demand is
incorrect
In this case assessee will simply reject the demand and then
the assessee will have to approach his/her local AO. Since the notice u/s 245
is being issue for adjustment of outstanding demands for the ITR’s filed
manually. Now assessee will have to file rectification application to his local
AO and get the mistake or error rectified from the AO. Once the AO uploads the
rectification at the online income tax system, the demand won’t show again at
the online efiling portal and ITR will get processed and the refund amount due
to assessee will be paid accordingly in full.