Tax Refunds Can't Be Withheld Without Notice; Revenue Must Notify Before Adjustments Per Income Tax Act Sections 245(1) & 245(2.

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....Revenue cannot set off or withhold a refund without issuing an intimation u/s 245 of the Income Tax Act. Section 245(1) mandates that before setting off a refund against a demand, an intimation in writing must be given to the person about the proposed action. Section 245(2) allows withholding of refund if assessment/reassessment proceedings are pending and granting refund may adversely affect Revenue, but only after recording reasons and obtaining approval. Unilateral adjustments without prior intimation are contrary to the statute and settled court decisions. Stay applications and rectification applications must be disposed of promptly. The High Court made the rule absolute, directing Revenue to process and pay refunds within four weeks, and decide rectification applications within eight weeks.....