Instruction from Directorate of Income Tax (Systems) reducing Assessing Officer’s (‘AO’)’ response time to Section 245 intimation

• The Instruction issued by Directorate (Systems) in this regard refers to its earlier instruction dt. Nov 27, 2012 regarding adjustment of refunds against outstanding demands and process to be followed by the AOs. The response mechanism in online mode was yet to be developed, when the earlier Instruction in 2012 was issued, whereas the mechanism is now well-established;
• In this regard, the Instruction specifies that when the assessee either ‘Not agree’ or ‘partially disagree for adjustment’, the CPC must immediately refer the matter to AO, who shall respond to the same within 21 days from date of such reference. Therefore, AO’s response time to Section 245 intimation for refund adjustment has been reduced from 30 days to 21 days;
• Accordingly, Directorate of Income Tax (System) also specified that where there is no response is received by CPC within 21 days, either the refund without adjustments should be released immediately or refund should be adjusted against demands, to the extent agreed to by the Assessee;
• It also mandates AOs to update the demand portal after taking into account the submissions of the assessees in response to intimation under Section 245, so as to avoid incorrect adjustments. Also, it specifies that the supervisory officers must monitor the above work of AOs on a regular basis.