The Income Tax Department sends notices to the taxpayer for a variety of reasons. The Intimation under Section 245 of the Income Tax Act is sent in case of outstanding demand. In simple words, if a taxpayer has an outstanding tax liability of a previous financial year, the Assessing Officer (AO) can adjust such a refund against the outstanding tax liability.
Intimation under section 245 is issued by the IT Department to intimate the taxpayer that their previous year’s pending tax dues are being offset with the current year’s refund. The details of such intimation reflect in the income tax login account of the taxpayer. The taxpayer has an option to pay the outstanding demand if they agree with the notice or submit a response if they disagree with the notice. If the taxpayer does not respond, the AO can adjust the refund against the outstanding tax demand.
Taxpayers can view the details of their outstanding tax demands on the Income Tax eFiling portal. Taxpayers simply need to login and navigate to e-File > Response to Outstanding Tax Demand. Hence, details related to the same would be available under this view. The taxpayer also has to submit a response to the IT Department. This action can also be carried out from under this view.
It is important to go through the details of the notice after receiving it from the department. Along with the details, it is also important to realize how long does one have to respond back to this notice. Moreover, if you miss the deadline to respond to such a notice then the outstanding demand as on that date will be considered for adjustment against your refund. Following are the three possibilities:
The taxpayer has to submit a response to the notice u/s 245 within 30 days of receiving this notice. Failing to do so will result in outstanding demand considered for adjustment against your refund after considering interest on demand. The interest is chargeable on principal demand pending of relevant AY. Therefore, the demand of interest will be adjusted against the refund without any confirmation of the assessee.
Follow the steps given to submit a response to the IT Department
Visit the e-Filing portal and login using valid credentials.
Click on “Pending Actions > e-Proceedings“
Click on the option to view the notice under the “Self” tab.
Click on the notice/letter pdf option.
Click on the option to submit response.
Details of Outstanding Demand related to 245 demand will be displayed. You can either select Demand is correct or Disagree with Demand (Either full or Part) or Demand is not correct but agree for adjustment.
If you select Demand is correct, you will be required to select the checkbox and provide an answer to Have you already paid the demand amount and add the challan details, if already paid and click Save.
If you select Disagree with Demand (Either full or Part), you will have to add reason(s) for disagreement and click Save.
If you select Demand is not correct but agree for adjustment, click Continue and add a reason for disagreement.
Enter Set Priority for the order in which the adjustment is favoured and click Submit Response.
Select the Declaration checkbox and click Proceed to e-Verify.
On successful e-Verification, a success message is displayed along with a Transaction ID and Acknowledgment Number.
No, section 245N(a) is applicable to non-resident. It is only applicable to a certain category of residents (including public sector units)
Applicability of a penalty is possible if there is no submission of response within the 30 day limit.