Time for tax officers to take decisions regarding income tax refunds/ dues reduced to 21 days from 30 days

5 Dec 2022 , 12:11 PM

The income tax department has shortened the timescale required for tax officers to make decisions regarding adjustments of refunds against outstanding tax dues to 21 days to reduce litigation. The time period provided to the assessing officers, initially 30 days, has been shortened to 21 days, according to a notice from the Directorate of Income Tax (Systems).

According to the notice: If the assessee refuses to agree to an adjustment or only agrees in part, the CPC must report the case immediately to the assessing officer, who must decide whether or not to adjust within 21 days after receiving the referral.

Rajat Mohan, Senior Partner at AMRG & Associates, stated that the Centralized Processing Centre (CPC) observed that in many cases involving the adjustment of refunds, incorrect demand categorization or a lack of feedback from the AO (Assessing Officer) on the assessee’s response resulted in incorrect adjustment of refunds, leading to needless complaints and litigation. Another issue was that the AO took a while to address the assessees’ objections.

The AO may offset the refund (or a portion of the refund) against any tax demand still owed by the taxpayer under Section 245 of the Income Tax Act. If the taxpayer disagrees with the tax demand, he or she may submit a response to the intimation notice.

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