It just happens so often that tax demand is raised on account of processing u/s 143(1) or scrutiny order u/s 143(3) of the Income Tax Act. You are convinced that the demand raised by the income tax department is wrong or bogus for any reason and has filed either 154 petition or made an appeal to authorities.Suddenly , you see that refund of earlier year or subsequent year is adjusted without your knowledge. Can A.o do that?
Section 245 of the I T Act empowers him to adjust refund with demand . While he has power to adjust the refund of earlier year or subsequent year with demand raised , he can not do so unless he intimates his action of adjustment of refund with demand to you. Read te relevant section 245
Where under any of the provisions of this Act, a refund is found to be due to any person, the Assessing] Officer, Deputy Commissioner (Appeals)] , Commissioner (Appeals)] or Chief Commissioner or Commissioner], as the case may be, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section.
If any A.O adjust refund without intimating you his intention to do so, it is an illegal action on which you can appeal.
