E-mails for Facilitating Faster Tax Refund Can't Be Misconstrued as Harassment: Central Board of Direct Taxes

New Delhi, April 21: The Central Board of Direct Taxes (CBDT) on Tuesday said that its email seeking clarification from all those who are entitled to get tax refund but also have outstanding tax to pay cannot be misconstrued as harassment.

"These computer-generated emails have been sent to almost 1.72 lakh assessees which include all classes of taxpayers - from individual to HUF to firms, big or small companies including start-ups and therefore to say that start-ups are being singled out and harassed is a total misrepresentation of facts," the CBDT said in a statement.

The board was responding to some observations being circulated on social media alleging that the Income Tax Department is pursuing recovery proceedings and using arm-twisting methods by adjusting the outstanding demands of the start-ups. The CBDT said that these observations are "completely unfounded" and are a "misrepresentation of facts".

"These emails are part of the faceless communication which protects public money by ensuring that refunds are not released without adjusting against outstanding demand if any. These emails are auto-generated u/s 245 of the I-T Act in refund cases where there is any outstanding demand payable by the assessee," the CBDT said.

"In case the outstanding demand has already been paid by the taxpayer or it has been stayed by the higher tax authorities, the taxpayers are requested through these emails to provide the status update so that while issuing the refund, these amounts are not held back and their refunds are released forthwith," it added.

The CBDT said that such communications are just a request for seeking an update response from the assessee for the proposed adjustment of a refund with the outstanding demand.

In order to provide a hassle-free tax environment to the start-ups, a consolidated circular dated August 30, 2019, was issued by the CBDT, which apart from laying down the modalities for assessment of start-ups, also stipulated that the outstanding income tax demands relating to additions made under Section 56(2)(viib) would not be pursued.

"Any other income tax demand for such start-ups would also not be pursued unless the demand was confirmed by ITAT. Furthermore, a start-up cell was also constituted to redress grievances of start-ups and address other tax-related issues of such concerns," the CBDT said.

Explaining the extant procedure pertaining to recovery of outstanding demands in the case of an assessee, the CBDT said that an opportunity is provided by the department to the assessee to either clear the demand or intimate the status of said demand to the I-T Department.

The CBDT said that the assessee on its part is required to furnish details of the pending demand, whether it has been paid or has been stayed by any appellate/competent authority so that the department could keep the same in abeyance and do not deduct this amount from the refund.

Thus, following the existing procedure of recuperation of outstanding demand, similar emails have also been sent to 1.72 lakh assessees including start-ups to intimate to the I-T department, the status of the demand outstanding and whether it has been stayed by the competent authority so that appropriate action can be taken for the release of refunds without delay to the start-up.

However, it said that not providing such a response to the emails of the I-T department and raising false alarms is contrary to the spirit of the CBDT circular and is totally unjustified.

The CBDT further requested the start-ups to respond to its emails at the earliest so that further necessary action can be taken by the I-T Department to release the refunds immediately wherever due, in accordance with the extant procedure.