Rectification of mistake

[PRIYAM KHAMBHATA]

Respected Sir,

In Co. A, Income tax assessment order passed on 13.12.2018 and demand raised of Rs.10,00,000/-. Being aggrieved, the same CIT(A) filed. Meanwhile, Co. A had paid Rs.5,00,000/- against demand raised under protest. Subsequently, CIT(A) had decided appeal in favour of Co. A and passed Appellate Order on 09.03.2020. Thereafter, I.T Department had passed Order giving effect to the CIT(A)’s Order on 06.01.2021 with refund receivable of Rs.5,00,000/-. Co. A had already received refund of Rs 5,00,000/- of AY 2016-17. That apart, additionally Rs.5,00,000/- had been adjusted on 04.01.2021 against the Income Tax Refund due of AY 2019-20, by the Income tax Department, which did not know by Co. A. Now, Co. A is made reconciliation with old Income tax Refunds dues in finalization of books for the year ended FY 2024-25 and came to knowledge by Co. A, that Income tax due Refund of Rs.5,00,000/- of AY 2019-20 had been adjusted by the Income tax Department against the due demand of AY 2016-17.

Now, my question is that can file Rectification Application by Co. A, against the Order giving effect to CIT(A)’s order dated 06.01.2021 to get Income tax Refund of Rs.5,00,000/- in respect of unused credits of Income tax refund adjustment of AY 2019-20. Is there time barred for filing Rectification Application under section 154. How can get this refund from Income tax Department by Co. A.

Please guide me

[YAGAY andSUN]

Yes, Co. A can file a rectification application under section 154 of the Income Tax Act, 1961, against the Order Giving Effect (OGE) to the CIT(A)’s order dated 06.01.2021. As per section 154(7), the time limit for filing a rectification application is four years from the end of the financial year in which the order sought to be rectified was passed. In this case, the OGE was passed on 06.01.2021, falling in FY 2020-21. Accordingly, the rectification application under section 154 can be filed on or before 31.03.2025. Since Co. A identified the adjustment during finalization of accounts for FY 2024-25, it is still within the time limit and can file the rectification application before 31.03.2025.

The rectification application should clearly state that the refund due for AY 2019-20 amounting to Rs. 5,00,000/- was adjusted by the Department against the demand for AY 2016-17, which was later nullified by the CIT(A)’s order. As the demand for AY 2016-17 no longer exists post the appellate order, the refund adjustment made against AY 2019-20 should be reversed and the said amount should be refunded to Co. A. The rectification request must be filed online through the e-filing portal of the Income Tax Department, and appropriate supporting documents including copy of CIT(A)’s order, OGE, refund adjustment intimation, and bank statements should be attached. Co. A may also consider filing a grievance on the e-filing portal or raise the matter through the CPGRAMS portal if the rectification is not processed in time.

AI Summary

Taxpayer Challenges Unauthorized Tax Refund Adjustment, Seeks Rectification Under Section 154 for Wrongly Offset Demand A company discovered an unauthorized tax refund adjustment by the Income Tax Department during financial reconciliation. The company seeks to file a rectification application under section 154 of the Income Tax Act to recover a Rs. 5,00,000 refund from AY 2019-20, which was incorrectly adjusted against a nullified demand from AY 2016-17. The application can be filed before 31.03.2025, within the four-year time limit from the original order's date.