Intimation u/s 245 of the Income Tax Act-Notice for Old Demand

What is Intimation u/s 245?

Intimation u/s 245 is issued by the Income Tax Department to inform you that they are adjusting your previous year’s pending tax payable with the current year’s refund.

Section 245 gives the Income Tax Department power to adjust any previous year’s demand of tax payable with the current year’s refund. But to exercise this power, it’s mandatory on their part to send intimation u/s 245 to the taxpayers and allow them to submit their response on it whether they agree with it.

For example, Income Tax Department had raised a demand for tax of Rs 21,000 from Mr. Sharma in the F.Y. 2012-13 after he filed his return. Mr. Sharma did not agree with the demand as the department did not consider his TDS. So, he simply filed for rectification u/s 154 and lived peacefully thereafter.

Then came F.Y. 2016-17; Mr. Sharma, like every year, filed his return, but this time with a refund of Rs 15,000. But instead of getting a refund, he got an intimation from the Income Tax Department u/s 245 stating that his refund of Rs 15,000 was being adjusted with the demand raised by the department in the F.Y. 2012-13. This gave Mr. Sharma the goosebumps of the F.Y. 2012-13 when he struggled with that dreaded demand of Rs 21,000 and, after consulting with professionals, filed a rectification u/s 154. Apparently, Income Tax Department did not agree with the rectification u/s 154 at that time, and the demand still remained.

How to respond to the intimation u/s 245?

Once you receive the Intimation u/s 245, read it in and out and check all the details along with the time mentioned within which you can take any action (generally, it’s 30 days) because if you do not take any action, then the outstanding demand as on that date will be considered for adjustment against your refund.

There are two possibilities, either you agree to the outstanding demand, or you do not.

1. If you agree with the Outstanding Demand:
   If you agree with the outstanding demand, simply log onto www.incometax.gov.in with your user id and password.
   Go to Pending Actions tab - > Response to outstanding demand - > Submit response - > Demand is correct - > Submit.
   Even if you do not act within the stipulated time, the demand will be automatically adjusted with your refund.
2. If you do not agree/partially disagree with the Outstanding Demand:
   If you do not agree with the outstanding demand, simply log onto www.incometax.gov.in with your user id and password.
   Go to the 'Pending Actions ' tab - > Response to outstanding demand - > Submit response - > Disagree with demand(Either in full or part) - > Submit.
   In these cases, you’ll also have to submit the reasons for our partial/full disagreement with the demand, like Demand Paid, Demand already reduced by rectification/revision, Appeal has been filed, etc.
   Your work is done; now it's up to the department whether it agrees to your reason or not.

In any case, it’s advisable that you take the advice of a Chartered Accountant before taking any action.

What is the process for checking/verifying details of Outstanding Tax Demand?

Step 1 : Login into your income tax portal with your user id and password.

Step 2 : Go to the 'Pending Actions ' tab-> Response to outstanding demand

Step 3 : Given below screen will display, and you can check the details from here.

What is the detailed procedure for filing an online response?

Step 1 : Login into your income tax portal with your user id and password.

Step 2 : Select the option of Pending Actions -> Response to Outstanding Tax Demand

Step 3 : Click on submit a response

Step 4 : After submitting, you will be taken to the given below screen, and 2 options will be displayed.

Option 1: Now, if you click on Demand is correct

If the assessees select “Demand is correct,” a pop-up is displayed below. Click on submit button, and a confirmation message is displayed on the screen for accepting the demand and –
If a refund is due, the outstanding amount and the interest will be adjusted against the refund due. Otherwise, you must pay the demand immediately.

Option 2: If you Disagree with the demand (Either in full or in Part)

Step 1 : If the assessees select “Disagree with Demand,” Then Click “Add Reasons”.

Step 2 : Select from the options and click Apply. (You can select one or more options.)

Step 3 : After selecting the appropriate reasons for your disagreement, select each reason you listed in Step 2 on the Response to Outstanding Amount page and enter the appropriate details for each reason.

Note: Completed status will be displayed against the reason for which you have submitted the details.

What are the consequences of not responding to the notice intimation u/s 245?

If no action is taken within 30 days of this notice u/s 245, the outstanding demand will be considered for adjustment against your refund after considering interest on demand. Interest shall be charged on principal demand pending of relevant assessment year. The interest demand will be adjusted against the refund without any confirmation from the assessee.

How to find Jurisdictional Assessing Officer?

Step 1 : Login into your income tax portal with your user id and password.

Step 2 : Select the My Profile in Profile Icon

Step 3 : Click on Jurisdiction details, and given below screen will appear

How to Respond to the Assessing Officer?

Since the response is being made online, separate compliances in responding to the Assessing Officer are only required if and when specifically asked to do so by the Income Tax Department.