Erroneous Outstanding Demand for AY2009-10 adjusted against refund for AY 2019-20

[Abhishek Baheti]

Dear Readers and Members

In one particular case, a demand was raised for AY 2009-10. The demand arose due to mismatch of Tax Credit i.e., there was a difference in Advance Tax Paid by the assessee and advance tax showed under intimation issued u/s 143(1) on 17.09.2010.

In response to the same, rectification request was filed on 26/03/2011. After that both the client and his consultant forgot about the matter.

After so many years for the first time there was a refund for the AY2019-20. But to the assessee's surprise the same was adjusted against the demand of AY 2009-10 and he did not receive any refund. Even after adjusting the refund against the demand, the same demand is being displayed under Details of Outstanding Demand..

In this case what is the remedy available to the assessee to rectify the mistake made by AO for AY 2009-10 and receive the refund of AY 2019-20? Can he go for revision of order under sec 264?

Thanks in advance.

AI Summary

Taxpayer Challenges Refund Adjustment Against Old Demand Due to Tax Credit Mismatch; Considers Section 264 Revision. A taxpayer faced an issue where a demand from Assessment Year (AY) 2009-10, due to a tax credit mismatch, was adjusted against a refund for AY 2019-20. The taxpayer had filed a rectification request in 2011, but it was rejected without notice. Years later, the demand was still shown as outstanding despite the refund adjustment. The discussion explores potential remedies, including filing a reminder for rectification or seeking a revision under Section 264 of the Income Tax Act. Experts suggest that the taxpayer may face challenges due to the elapsed time and previous rejection but could consider revision if justified by sufficient cause.