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

Adjustment of refund against outstanding demand can be upheld unless the tax demand is under appeal or successfully rectified.
An assessee's refund for a later year was adjusted against an outstanding demand arising from a tax-credit mismatch for AY2009-10. A rectification request against that demand was earlier rejected in 2011 and only recently refiled; administrative power exists to withhold or deduct refunds to satisfy unpaid liabilities unless the liability is under appeal. Remedies include reminding the department on the prior rectification, seeking revision of the order subject to time limits and condonation of delay, and objecting where the matter is sub judice.