Section 245 Notice — Refund Adjusted Against Demand | Savlana Init

Income Tax · Section 245

Section 245 Notice — Refund Adjustment Contested.

The department proposes to adjust your refund against an old demand. We verify the demand, review its validity, file objections where appropriate, and protect your refund entitlement.

Section 245 of the Income Tax Act, 1961 enables the Income Tax Department to adjust a pending refund payable to a taxpayer against any outstanding tax demand. Before making such an adjustment, the department is required to give the taxpayer a prior intimation, providing an opportunity to respond within 30 days.

Receiving a Section 245 notice does not mean the adjustment is automatically valid. The underlying demand may have already been paid, stayed, reversed by an appeal, or may simply be incorrect. Many taxpayers receive these notices for demands that were settled years ago but not properly updated in the department’s system. Acting within the 30-day window is essential to protect the refund.

Our process begins with a thorough verification of the demand cited in the notice — checking its origin, current status, whether it has been stayed, and whether any appeal is pending. Where the demand is invalid or already resolved, we prepare a detailed objection. Where the demand is genuinely outstanding, we advise on the most efficient resolution path.

Our Section 245 Services

Notice & Demand Review

Analysis of the Section 245 intimation and verification of the underlying demand — its origin, assessment year, current status, and validity.

Outstanding Demand Verification

Cross-checking of demand records on the income tax portal, TRACES, and assessment records to confirm whether the demand is genuine and outstanding.

Objection Filing

Preparation and filing of a written objection within the 30-day window, contesting the proposed adjustment on factual or legal grounds.

Rectification Support (Sec 154)

Filing of rectification applications to correct erroneous demands that form the basis of the Section 245 intimation.

Stay Application

Filing of stay applications against the outstanding demand to prevent the refund from being adjusted while an appeal is pending.

Refund Tracing

Monitoring of the refund status and follow-up with the department to ensure credited amounts are received promptly.

Appeal Follow-Up

Coordination with pending appeal proceedings at CIT(A) or ITAT to ensure demand status is updated following favourable orders.

Demand Clearance Assistance

Where the demand is genuinely payable, assistance in computing the correct liability and clearing it to release the refund.

Our Process

Notice Review

We read the Section 245 intimation and identify the demand being cited — including the assessment year, amount, and originating order.

Demand Verification

We check the demand on the income tax portal and cross-reference it against payment records, appeal orders, and stay orders.

Objection Drafting

If the demand is invalid, already paid, or subject to a stay or appeal, we prepare a detailed written objection within the 30-day deadline.

Submission & Follow-Up

The objection is submitted through the correct channel and we follow up to ensure the department reviews it before proceeding with adjustment.

Refund Release

We track the refund status post-objection and follow up with the department if the refund is delayed after a valid objection.

Why It Matters

✓Protects valid refunds from incorrect demand adjustment

✓Thorough demand verification across portal and records

✓Objection filed within the 30-day statutory window

✓Identifies already-paid or stayed demands

✓Rectification support to correct erroneous underlying demands

✓Stay application coordination with pending appeals

✓Refund tracking and follow-up after objection

✓Minimises risk of losing legitimately due refunds

Frequently Asked Questions

A Section 245 notice means the Income Tax Department intends to adjust a refund payable to you against an outstanding tax demand. It is not a final action — you have 30 days to respond and object to the proposed adjustment.

Verify: (1) whether the cited demand is actually outstanding or was paid earlier; (2) whether the demand is subject to a stay order from an appellate authority; (3) whether any appeal is pending against the assessment order that created the demand; and (4) whether the demand relates to the correct assessment year and PAN.

If no objection is filed within 30 days, the department can proceed with the adjustment of the refund against the demand without further notice. You then lose the refund amount and may need to recover it through rectification or appeal proceedings.

If a stay of demand has been granted by the appellate authority, the department cannot proceed with the adjustment. If no formal stay exists, the department may technically adjust the refund even if an appeal is pending. Filing for a stay order is therefore important in such situations.

This is a common situation. If the demand is shown as outstanding in the department’s system despite payment, a rectification application under Section 154 should be filed with proof of payment. A written objection to the Section 245 intimation should simultaneously cite the payment evidence.

Yes, but reversal requires a rectification order under Section 154 or a favourable appellate order. It is far better to contest the adjustment proactively within the 30-day window than to seek reversal after the adjustment has been made.

Refund being adjusted against an old demand?

You have 30 days to respond. We verify the demand, draft the objection, and protect your refund entitlement — don’t let the window close.