The Directorate of Income Tax (Systems) has issued Instruction No. 7/2022 dated 06.12.2022 to prescribe the time limit for submission of response by the AO to the CPC for withholding of refund under section 241A of the Income-tax Act, 1961 (‘Act’) in a case where a notice under section 143(2) has been issued. Further, the monetary limit for withholding refunds under section 241A has been increased.
As per provisions of section 241A, where a notice under 143(2) has been issued, the refund determined under section 143(1) can be withheld by the Assessing Officer with the previous approval of PCIT/CIT, if the Assessing Officer is of the opinion that grant of refund is likely to adversely affect the Revenue.
Presently, if the amount of refund determined is more than Rs 2,000 and the case is under scrutiny assessment, then such a case is referred by CPC to the Assessing Officer to submit his response or decision on either withholding or releasing the refund. However, no time limit for intimation of the decision by the AOs to CPC (regarding whether the refund is to be withheld or released) is not stipulated.
With these Instructions, the followings are prescribed-
In case the assessment is with Jurisdictional Assessing Officer (JAO)
The JAO shall submit the response to the CPC conveying his decision to withhold or release the refund within 50 days from -
(a) the date of issue of notice u/s 143(2) or,
(b) the date of processing of refund,
Whichever is later.
In case of Faceless assessment and the assessment is with Faceless Assessing Officer (FAO)
1. The FAO shall communicate the decision to withhold or release the refund to the JAO of the assessee within 40 days from -
(a) the date of issue of notice u/s 143(2) or,
(b) the date of processing of refund,
Whichever is later.
2. On receipt of the decision from the FAO, it will be the responsibility of JAO to ensure that the decision of FAO is submitted to CPC within 10 days from the date of receipt of such communication from FAO.
Hence, in case of faceless assessment, the decision to withhold the refund or release the refund shall be taken by the FAO but the decision shall be communicated to CPC by the JAO only. Hence, FAO cannot directly communicate with CPC but has to communicate with CPC through JAO only.
Release of refund by CPC after receipt of the communication
On receipt of communication from the JAO (whether the assessment is under the faceless scheme or not) that the provisions of section 241A are not applicable, CPC will release the refund within 10 days from the date of receipt of such communication.
Even when the CPC does not receive any response within the time limit of 50 days from the JAO, refunds due to the assessee shall be released by the CPC without any further reminder to the JAO/FAO.
Enhancement of monetary limits
The monetary limit to withholding the refund under section 241A of the Act has been increased from Rs. 2,000 to Rs. 50,000.
Applicability
It is provided that these Instructions shall apply in respect of the return of income for AY 2022-23 and onwards.
Thus, if the refund amount is less than Rs. 50,000 for AY 2022-23, the same will not be subject to the provisions of section 241A.
Read the full text of Instruction No. 7/2022 dated 06.12.2022 on Section 241A
Instruction No. 07 of 2022
DIRECTORATE OF INCOME TAX (SYSTEMS)
ARA Centre, Ground Floor, E-2, Jhandewalan Extension,
New Delhi-110055
F.No.: DGIT(Systems)-1/Instruction/241A/2022-23 Dated: 06.12.2022
To
All Principal Chief Commissioners of Income Tax/CCsIT
All Principal Director Generals of Income Tax /DGsIT
All Principal Commissioners of Income Tax/CslT/CsIT(Admin & TPS)
All Principal Directors of Income Tax/DsIT
Madam/Sir,
Subject: - Revised Instruction for withholding of Refund u/s 241A in Scrutiny cases - prescribing time lines for submission of response to CPC -regarding-
Ref: - (1.) ITBA-ITR Processing Instructions No. 5 dated 14.12.2018.
(2.) ITBA-ITR Processing Instructions No.14 dated 16.02.2022.
Attention of the Assessing Officers is invited to ITBA-ITR Processing Instruction No.14 dated 16.02.2022, wherein detailed procedure to be followed by the Assessing Officers for withholding of refund u/s 241A or release of refund has been discussed. As per provisions of section 241A, where notice under 143(2) has been issued, the refund determined under section 143(1) can be withheld by the Assessing Officer with the previous approval of PCIT/CIT, if the Assessing Officer is of the opinion that grant of refund is likely to adversely affect the Revenue. The ITBA- ITR Processing Instruction No. 5 dated 14.12.2018 provides that, if the amount of refund determined is more than Rs 2,000 and the case is under scrutiny, such case will be referred by CPC to the Assessing Officer through ITBA to take action on either to withhold or to release the refund through the ITR Processing Module.
2. The time limit for intimation of decision by the AOs to CPC (regarding whether refund is to be withheld or released) is not stipulated. It is therefore decided as under:
a. The time limit for submission of response from JAOs to CPC u/s 241A of the Act, shall be 50 days from the date of issue of notice u/s 143(2), or the date of processing, whichever is later.
b. In case of Faceless assessment, Faceless Assessing Officer (FAO) shall convey the decision to JAO within 40 days from the date of issue of notice u/s 143(2), or the date of processing, whichever is later and JAO shall ensure that the decision is submitted to CPC (through ITBA/ other system functionality such as BO portal/email, as applicable) within 10 days from the date of receipt of communication from FAO.
c. In case where the JAO communicates that the provisions of section 241A of the Act are NOT invoked, CPC will release the refund within 10 days from the date of receipt of such communication from JAO, subject to other provisions of the Act.
d. In case of non-submission of response by JAO within the time limit of 50 days, refunds due to the assessees shall be released by the CPC without further notice to FAO/JAO, subject to other provisions of the Act.
e. The monetary limit for withholding the refunds u/s 241A of the Act stands increased from Rs. 2000 to RS. 50,000.
3. This Instruction is applicable for the Returns of Income (ROIs) of AY 2022-23 onwards.
4. This Instruction is issued with prior approval of the Competent Authority.
Yours faithfully,
Additional Director General of Income Tax (Systems)-5,
New Delhi
Download Instruction No. 7/2022 dated 06.12.2022 on Section 241A in PDF format
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