Respond to I-T Notice Within 21 Days

If you have any grievances or disputes regarding the demand stated in the notice, consider seeking professional help.

Have you received a notice under Section 245 of the Income Tax (I-T) Act? If so, consult your chartered accountant and respond promptly.

The Directorate of Income Tax (Systems) has now set a 21-day time limit for an assessee to respond to an intimation under Section 245 (1) of the I-T Act, issued by the Centralised Processing Centre.

Vipul Jai, partner, PSL Advocates and Solicitors, says, “The time limit set for assessees aligns with the 21-day response period fixed for assessing officers (AOs) to respond to an assessee’s grievance. These timelines will facilitate prompt responses from both sides and aid in streamlining the issuance of refunds.”

Why the change?

The I-T department was informed that in many cases AOs failed to respond within the stipulated 30 days.

This caused delays in issuing refunds, gave rise to grievances, and created an additional interest burden under Section 244 A on the Revenue.

Maneet Pal Singh, partner, I.P. Pasricha & Co., says, “The time limit has been reduced to 21 days to make AOs appreciate the significance of responding on time. Any delay now is the AO’s responsibility.”

Understanding Section 245

Section 245 of the I-T Act outlines the procedure for setting off refunds against any outstanding tax liability.

When a refund is due, the CPC sends a prior notice, alerting the taxpayer about the opportunity to use this refund to offset any legitimate tax liabilities.

Aditya Chopra, managing partner, Victoriam Legalis-Advocates & Solicitors, says, “The aim of the notice issued under Section 245 (1) is to utilise the refund amount to offset any pending tax dues before issuing the refund to the taxpayer. The notice also gives the taxpayer an opportunity to address any grievances or disputes they may have regarding the demand and allows them to approach the AO within the specified period.”

When taxpayer disagrees

In cases where the taxpayer either disagrees or partially agrees with the adjustment, the CPC needs to immediately refer the matter to the AO.

The AO then has 21 days to provide feedback to the CPC about whether or not the adjustment should be made.

Pallav Pradyumn Narang, partner, CNK, says, “If no feedback is received from the AO within 21 days, the CPC has the power to either release the refund without adjustment or adjust it to the extent of demands agreed for adjustment by the assessee.”

The AO is then held solely accountable for the consequences of no response or delayed response.

Suresh Surana, founder, RSM India, says, “If a partial adjustment has to be made, the amount of demand to be adjusted for each year should be specified in the tax portal.”

Delays can be harmful

What happens if the taxpayer fails to respond within 21 days? Surana says, “The outstanding tax demand will be adjusted against the refund due to the revenue.”

Failing to respond to the notice can have other consequences.

Narang adds, “They may calculate the penalty for the outstanding amount you owe for that specific assessment year without seeking your confirmation.”

What experts suggest

Read thoroughly and understand any communication received from the CPC. If you have any grievances or disputes regarding the demand stated in the notice, consider seeking professional help.

Chopra says, “A tax professional can guide you through the process and address your concerns effectively.” Respond within the prescribed 21-day period.

Chopra adds, “Retain all necessary documentation, including the notice received, your response, and any supporting evidence, in case you need to refer to them in the future.”

If you have responded on time, then follow up and ensure that your concerns are addressed and the necessary action is taken.

Senior citizen taxpayers may struggle with the online system and should hence seek professional help.

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