Reply to Section 245 (Set-Off of Refund Against Demand) — Template
Ready-to-use draft reply template for intimation under Section 245 proposing set-off of refund against outstanding demand under the Income Tax Act. Includes format, legal references, and compliance notes. Illustrative only — customize based on your specific case facts and professional advice.
Response Deadline: As specified in the notice (typically 15-30 days)
Filing: E-filing portal (incometax.gov.in) → Pending Actions → Response to Notices
When Do You Receive This Notice?
intimation under Section 245 proposing set-off of refund against outstanding demand is issued by the Assessing Officer / CPC when Section 245 provisions are triggered. You must respond within the time specified in the notice — failure to respond can result in best judgment assessment, penalty, and prosecution.
Draft Reply
Subject: Response to Intimation u/s 245 dated [Date] — PAN: [PAN]
I/we have received intimation proposing adjustment of refund of Rs. [Refund Amount] for AY [Year] against outstanding demand of Rs. [Demand] for AY [Year].
Option 1 — Accept: No objection to the proposed adjustment.
Option 2 — Object: I/we object to the adjustment on the following grounds: [demand is disputed — appeal pending / demand is incorrect — rectification filed / demand pertains to old year and is time-barred].
Kindly release the refund without adjustment.
Key Compliance Notes
Key: Section 245 requires PRIOR intimation before adjusting refund. Respond within 30 days on e-filing portal. If no response: deemed consent. If you object: AO must pass speaking order on your objection before adjusting. Courts have held that refund cannot be adjusted against disputed demand where appeal is pending and 20% has been paid.
Documents to Attach
| # | Document | Purpose |
|---|---|---|
| 1 | Copy of the notice received | Reference |
| 2 | Copy of ITR filed for the relevant AY | Proof of filing |
| 3 | Computation of income with supporting schedules | Substantiation |
| 4 | All documentary evidence supporting your position | Evidence |
| 5 | Bank statements, Form 26AS, AIS for the relevant period | Verification |