Step-wise procedure for adjustments of refunds
Instruction [F.NO. DIT(S)-III/CPC/2012-13], dated 27-11-2012 was issued by the Central Board of Direct Taxes on 27 November 2012. Its subject is Step-wise procedure for adjustments of refunds.
Lays down a step-by-step drill before a refund is adjusted against an outstanding demand. Demands from every source are first verified physically, covering arrear demands from IRLA, TMS and manual demands prior to 1 April 2010 and demands from AST, TMS, manual records and CPC. The Assessing Officer must communicate the actionable demands to the assessee and give an opportunity of being heard, modify them on the documents produced, and then have the correctness certified by himself and the Range head before uploading them to CPC-FAS, from where they also appear in the assessee's My Account on the e-filing website. Where a refund is due, CPC issues a prior intimation under section 245 and tells the Chief Commissioner concerned fortnightly; the assessee may take a grievance to the Assessing Officer within fifteen days of that intimation, the Assessing Officer must rectify or confirm the demand within thirty days of the grievance and report the crystallised figure to CPC, and CPC holds the refund in the meantime and adjusts it only after that confirmation.
It continues a line of earlier communications on uploading and reconciling demand, and was issued to mitigate the problem of demands raised because of mismatch of tax and TDS credits.
Step-wise procedure for adjustments of refunds
Instruction [F.No. DIT(S)-III/CPC/2012-13], Dated 27-11-2012
Kindly refer to the above.
2. With regard to the adjustment of refunds against the outstanding demands, various communications have been issued in the past. A brief reference of the same is as under:
i. AST Instruction No. 82 on the subject 'Functionality for uploading arrear demands to CPC accounting system', dated 13.8.2010, issued from F.No. CPC/l/l/2007/02-DIT(S) III- Part File.
ii. Departmental Instruction addressed to all CCsIT/DGsIT on the subject 'Instructions to Assessing Officers-Rectification in case of Demand adjusted against refund at CPC and assessee disputing such adjustments -reg', dated 19.11.2011, issued from F.No. DGIT(S)/Misc./2011-12.
iii. DO letter from Member CBDT to all CCsIT/DGsIT on the subject 'Reconciliation of demand on CPC Portal, IRLA, CAP-I and Dossier - reg', dated 14.3.2012, issued from F.No. DIT(S)-III/CPC Portal/2011-12.
iv. Letter from CBDT to all CCsIT/DGsIT on the subject 'Uploading of demand and/or correction of demand already uploaded on CPC Portal - Instruction to Assessing Officers - reg', dated 20.3.2012, issued from F.No.401/01/2012/ITCC.
v. Letter from DIT(S)III to all CCsIT/DGsIT on the subject 'Reconciliation of Demand on CPC Portal, IRLA, CAP-I and Dossiers', dated 23.3.2012, issued from F.No. DIT(S)III/CPC Portal/2011-12.
vi. AST Instruction No. 105 on the subject 'Current and Contemporary Figures of demand in IRLA for a PAN-AY or for a defined period - Identification of demands yet to be uploaded on to CPC Portal', dated 4.5.2012, issued from F.No. SW/3/9/2010-ll/DIT(S) III.
vii. Letter from DIT(S)III to all CCsIT/DGsIT on the subject 'Reconciliation of Demand on CPC Portal, IRLA, CAP-I and Dossiers', dated 5.6.2012, issued from F.No. DIT(S) III/CPC Portal/2011-12.
viii. Letter from DIT(S)-III to all CCsIT (CCA) on the subject 'Clean-up of demand uploaded to CPC FAS before issue of refund in cases- processing of e-returns of A. Y 2012-13', dated 05.11.2012, issued from F.No. DIT(S) III/CPC /2011-12.
3. In furtherance of the subject and in continuation of the above mentioned communications and to mitigate the problem of demand raised due to mismatch of tax and TDS credits, the step by step procedure for adjustment of refunds to be followed by Assessing Officers and Centralized Processing Centre (CPC) is as under:
i. Physical verification of Demands from all sources- Arrear Demands from IRLA, TMS and Manual Demands prior to 01-04-2010 ; and Demands from AST, TMS, Manual and CPC.
ii. The Assessing Officers have to communicate the legitimate actionable demands to the assessees and provide an opportunity of being heard to the assessees for verification and confirmation of the genuineness of the demands. Modifications of the demands to be made by the AO following verification of documents submitted by the assessees.
iii. The Assessing Officer and the Range head to certify the correctness and genuineness of the actionable demands.
iv. The Assessing Officer to upload the above genuine demands on the CPC-FAS.
v. The Demands are also uploaded by system in the "My Account" of the Assessees on the www.incometaxindiaefiling.gov.in website.
vi. In case of refunds due, on the basis of the demand so uploaded on CPC-FAS, CPC shall issue a prior intimation u/s. 245 of the IT Act, 1961 to the assessee to adjust the refund against the correct and legitimate actionable demands due. Simultaneously, CPC will inform the Chief Commissioners of Income-tax (CCsIT) concerned regarding the intimation sent for his charge fortnightly. The assessees can approach Assessing Officer regarding grievance relating to demand, if any, within 15 days of receipt of intimation.
vii. The AO within 30 days of receipt of grievance in response to the notice u/s 245 shall either rectify or confirm the demand. The demand so crystallized shall be communicated back to the CPC in reference to the same communication vide which the AO was initially communicated regarding the demand. Functionality will be developed within the next six months to intimate CPC online by AO. In the interim period AO will intimate the CPC within 30 days from the date, the assessee approaches the AO.
viii. CPC to hold the refunds (refunds may be determined but kept on hold) in the interim period and following confirmation from the AO carry out adjustment of refund against the demands.
4. This instruction may be brought to the knowledge of all the officers working in your charge for necessary action.
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You meet it on an intimation under section 245 proposing to adjust a current-year refund against an arrear demand for an old year that the assessee says was never validly raised.
A refund is determined for a year and CPC issues a section 245 intimation proposing adjustment against an arrear demand from a pre-2010 manual record. The assessee writes to the Assessing Officer within fifteen days producing challans. The Assessing Officer must rectify or confirm within thirty days and report to CPC, and until then CPC holds the refund rather than adjusting it.
Source: the Income Tax Department’s own published text — its page for this instrument.