(Last Updated On: November 16, 2023)
Section 245 Income-tax Act 1961
1[Set off and withholding of refunds in certain cases.
245. 2(1)Where under any of the provisions of this Act, a refund becomes due or is found to be due to any person, the Assessing Officer or Commissioner or Principal Commissioner or Chief Commissioner or Principal Chief Commissioner, as the case may be, may, in lieu of payment 4 of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this sub-section.
(2) Where a part of the refund is set off under the provisions of sub-section (1), or where no such amount is set off, and refund becomes due to a person, and the Assessing Officer, having regard to the fact that proceedings for assessment or reassessment are pending in the case of such person, is of the opinion that the grant of refund is likely to adversely affect the revenue, he may, for reasons to be recorded in writing and with the previous approval of the Principal Commissioner or the Commissioner, as the case may be, withhold the refund up to the date on which such assessment or reassessment is made.]
_________________________________________________________
Notes on Section 245 Income-tax Act 1961
2. Refer also Circular No. 3D(LXXII-21), dated 29/31-1-1968 (Permissible set-off), Instruction F.No. DIT(S)-III/CPC/2012-13/Demand Management, dated 21-3-2013 (Opportunity to assessee), Instruction No. 6/2013, dated 10-7-2013 (Past adjustment of refunds against arrears where procedure under section 245 was not followed) and Instruction No. 12/2013, dated 9-9-2013 (Compliance of section 245 before making any adjustment of refund)
1. Substituted by the Finance Act, 2023, w.e.f. 1-4-2023. Prior to its substitution, section 245, as amended by the Finance (No. 2) Act, 1977, w.e.f. 10-7-1978, Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988 and Finance (No. 2) Act, 2014, w.r.e.f. 1-6-2013, read as under :
“245. Set off of refunds against tax remaining payable.—Where under any of the provisions of this Act, a refund is found to be due to any person, the Assessing Officer, Deputy Commissioner (Appeals), Commissioner (Appeals) or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section.”