Tag: Section 245

Section 245 Income Tax Demand Notice: The Role of the Demand Facilitation Centre

Section 245 of the Income-tax Act, 1961 gives the income tax department the authority to adjust outstanding dues from past years’ income tax with the present year’s income tax refund. Issues arise when the department sends a section 245 notice for an old income tax return (ITR) that individuals may not remember. To expedite the resolution of pending section 245 income tax notices, the Income-tax department has established the Demand Facilitation Centre (DFC) in select states, offering free assistance under specific conditions.

The DFC aims to help individuals comprehend the reasons behind receiving a section 245 income tax demand notice and the necessary steps to mitigate it. If an individual disputes the notice, they can seek assistance from the DFC or directly approach the income tax Assessing Officer (AO). The DFC is available in Karnataka, Punjab, Haryana, Himachal Pradesh, Tamil Nadu, Goa, Chandigarh, Puducherry, Ladakh, Jammu and Kashmir, Delhi, and Mumbai.

DFC assistance is beneficial in cases where mistakes are evident from the records, such as errors in challan numbers or TDS amounts. Additionally, the DFC can intervene when the rectification rights of a section 245 notice lie with the Centralized Processing Centre (CPC). To seek DFC support, individuals can contact them directly by phone or email, without sharing sensitive information. The DFC operates from 8 AM to 8 PM, Monday to Saturday.

DFC agents aid individuals by elucidating the section 245 income tax notice details, mediating, and facilitating communication with the Assessing Officer if necessary. They guide individuals through the resolution process and may coordinate conference calls with the AO or the individual’s appointed CA. If a person needs to access the actual section 245 notice, they should approach the jurisdictional assessing officer.

In essence, the Demand Facilitation Centre serves as a valuable resource for individuals encountering section 245 income tax demands, providing crucial support and guidance through the resolution process, ultimately ensuring a smoother and more efficient resolution of such tax matters.

Read more at: Income Tax Demand Notice

Procedure to Respond to the Assessing Officer Regarding Intimation under Section 245

There are four ways in which you can file your response to the Assessing officer regarding intimation under Section 245. Procedure is as mentioned below:

Step 1: Log in to your e-filing portal https://eportal.incometax.gov.in/iec/foservices/#/login

Step 2: Under ‘E-file’ head, choose ‘Response to Outstanding Tax Demand’

Step 3: After clicking on ‘Submit Response’, a new page will open where you have to choose from the following four options:

Option 1: Demand is Correct

If you submit your response as ‘Demand is Correct’, then you will be given a confirmation message showing the adjustment. If you have any outstanding amount, you have to make the payment right away.

Option 2: Demand is partially correct

If you choose ‘Demand is partially correct’, you have to choose from four options:

  • Demand has already been paid – provide challan number, BSR code, payment date and amount.
  • Demand has already been reduced by rectification – provide date of order, demand amount, details of AO etc.
  • The appellate order has already paid demand, but the appeal effect has to be given by the department – provide appellate order and appellate order details
  • An Appeal has been filed- choose whether the rectification is filed at CPC or AO, or others. Submit the relevant information as needed for either of these options as shown on the website

Option 3: Disagree with demand

If you choose this, then select the appropriate reason for the same, which is similar to the options available under ‘Demand is partially correct.

Option 4: Demand is not correct but agrees to adjustment 

If you select this option, you have to choose from the reasons for disagreement, similar to ‘Demand is partially correct’.

Penalty for Not Paying Taxes after Intimation under Section 245

If you do not take any action even after getting the intimation notice under Section 245, the IT department will make the adjustments, and the penalty for the outstanding amount for that assessment year will be levied. This will be done without any confirmation from you as there was no response. 

Final Word

It is advisable to keep your tax demands on a check and claim the refund or pay dues on the given timeline. But if you get any intimation notice under Section 245 of the Income Tax, you should respond to the same within the deadline stating proper reasons, if any. Since most of the actions are accessible online, there is no reason to notify your Assessing Officer separately unless you need to do so. 

Read more at: Got an income tax notice for an old incorrect tax demand? Call this new helpline of tax dept for free help

What happens if we do not respond to Income Tax Notice?

Income Tax Notice is a correspondence sent by the Income Tax (IT) Department when they want to raise an inquiry against the returns filed by the taxpayer. There are various reasons that the department may send a notice; they may ask the taxpayer for additional information or documents or indicate that the taxpayer owes additional taxes. If the taxpayer does not respond to the Income Tax Notice promptly and accurately, they may have to face penalties or other taxes.

Penalties under the Income Tax Act

The following consequences can be levied on a taxpayer if they do not respond to Income Tax Notice.

Section 139 (9)

Suppose a taxpayer does not respond to the defective notice within the required time frame, i.e. 15 days after the Assessing Officer’s (AO) notification date. In that case, their return may be deemed invalid and be subject to penalties, interest, non-carry forward of losses and loss of specific exemptions.

Section 245

The AO may send a notice if a taxpayer requests a refund for a specific assessment year but still owes taxes. The outstanding demand as of the notification date will be considered for adjustment against your return if the communication is not responded to within 30 days of notification.

Section 143 (1)

A tax notice u/s 143 (1) is an intimation letter sent by the AO. Suppose a taxpayer fails to respond to a notice under section 143 (1) within the required time. In that case, the Income Tax Return (ITR) will be processed after making the necessary adjustments mentioned in the income tax notice.

Section 143 (1a)

A notice under section 143(1a) is a computer-assisted notice sent to the taxpayer per this provision if there is any discrepancy in the income stated in the ITR. If a taxpayer fails to respond to a notice under section 143 (1a) within the required time, the department will raise a penalty against the taxpayer.

Section 143 (2)

A notice u/s 143 (2) is a follow-up notice. The AO is dissatisfied with the taxpayer’s response or has not received the required documents. If a taxpayer fails to respond to a scrutiny notice, i.e. notice under section 143 (2), within the required time may lead to a penalty.

Section 148

A notice u/s 148 is issued by the AO if they suspect that some income has escaped assessment. If a taxpayer fails to respond to a notice under section 143 (1a) within the required time, the department raises a non-compliance penalty against the taxpayer.

Section 234 (F)

Under section 234 (F) of the Income Tax Act, if a person is obligated to file an ITR form per the terms of the Income Tax Law but fails to do so within the allotted time frame, they must pay late fees while completing their ITR form. The overall revenue and the time it takes to file the return will determine the number of fees.

When filing one’s Income Tax Return, it is necessary to conduct a thorough check of all the details and documents and have a CA recheck the said details and documents. By doing so, the taxpayer can avoid the possibility of receiving notice.