Recently several taxpayers have received notices from the Income-tax Department for old tax demands, some dating back over 15 years, instructing them to settle these old tax liabilities within a week.
This unexpected development has left many taxpayers at a loss, as they are certain that these demands were already paid or closed; however, they no longer possess payment receipts or rectification orders to prove their compliance with these demands. Some of these notices pertain to assessment years as far back as 2003-04 and 2004-05.
The root of these errors is believed to be the department's transition to a new system. Further, these old demands are being set off against the refunds taxpayers are entitled to for the current year.
Some taxpayers, who have received notices for smaller amounts, are opting to pay the demands without contesting the department's claims. For others, it may involve navigating the complexities of an appeal.
Last month, the Income-tax Department via its official account on X (formerly known as Twitter) said, "There are a few cases in which refunds are due to the taxpayer, but previous demands are outstanding. Section 245(1) of the Income-tax Act, 1961, mandates providing an opportunity for the taxpayer to make a representation before adjusting the refund against an existing demand. Accordingly, taxpayers with existing demand(s) in the previous years are being intimated of the same. Taxpayers are requested to avail this opportunity and respond to such intimations to enable cleaning up/reconciliation of pending demands and facilitate timely issue of refunds."
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