Instruction No. 02/2023, dated 10-11-2023
Section 245(2) empowers the Assessing Officer (AO) to withhold the income tax refund. The AO can pass such an order if the proceedings for assessment or reassessment are pending in the case of such person, and he believes that the refund grant is likely to adversely affect the revenue. After recording the reasons in writing and with the previous approval of the Principal Commissioner or the Commissioner, as the case may be, AO may pass an order to withhold the refund up to the date on which such assessment or reassessment is made.
The Central Board of Direct Taxes (CBDT) has released instructions prescribing the monetary limit of refund to attract provisions of section 245(2). The board has said that the monetary limit for applying provisions of said section will be where the refund value is Rs. 10 lakhs or more.
The board also prescribed the procedure to withhold refunds.
On receipt of communication from CPC, the Faceless Assessing Officer (FAO) shall inform the Jurisdictional Assessing Officer (JAO) of the demand likely to be raised in the pending assessments. Based on such information, the JAO shall record in writing and seek approval of the jurisdictional Principal Commissioner of Income-tax.
The reasons recorded should reflect the factual analysis of the case by the JAO. The JAO will communicate the final decision regarding withholding/releasing the refund to the CPC.
To finish the above process, the time limit is revised to 20 days for the Faceless Assessment Unit and 30 days for JAO.
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