INCOME TAX

INSTRUCTION NO. 1969/1999

 Dated: August 20, 1999

Subject : - Issue of refund orders Instruction regarding.

I am directed to state that after considering the suggestions made by Central Vigilance Commissioner and various Trade Organisations, the Board has decided that following steps must be taken while issuing refund to assessees in order to issue reduce refund related grievances.

1. i) Issuance of Bank Advice

- In a case where bank advice is required to be sent to assessee, it must be ensured that it is invariably enclosed alongwith the refund voucher.

- In a case where bank advice is required to be sent to the Bank, it must be ensured that advice is sent to the Bank within a week of issue of the refund voucher.

- CCITs receive from RBI periodical return of advice send to the Bank after presentation of refund voucher by the assessee. This information should be used by the inspecting authorities while inspecting the work of a ward / circle / special range in so far as timely issue of refund advice is concerned.

- The regular inspection report should incorporate comments on the practice followed in this regard and the lapses noticed, if any.

1. ii) Correctness of Address :

It is the responsibility of LDC / UDC as the case may be to write the correct address on the refund despatches. While inspecting the work of a ward / circle / special range, the inspecting authority must also check this aspect and offer its appropriate comment.

1. iii) Adjustment of refund with outstanding demand

It has already been prescribed vide Instruction No. 1952 dated 14.8.98 that as per section 245 of Income tax Act, 1961, a written intimation regarding proposal for adjustment of refund is required to be issued to the refundee. It is reiterated that in all cases a written intimation must invariably be send before adjusting refund with outstanding demand.

1. iv) Administrative approval by IT Authorities before issue of refund.

As per existing instruction if the refund is more than Rs. 1 Lakh prior approval of Jt. CIT/Add'l CIT is required to be taken before issue of refund. In supersession of all existing instructions in this behalf it has now been decided by the Board that henceforth, CCIT/DGIT shall lay down the monetary ceiling in respect of respective regions above which the approval of Joint CIT/Addl. CIT shall be taken by the assessing officer before issuance of the refund. In respect of Multi CCIT region, uniform monetary ceiling should be adopted. The CCIT/DGIT is free to laydown separate monetary ceiling for corporate and non-corporate refunds.

1. v) Wherever approval of a superior authority (Joint CIT/ Addl. CIT) is required before a refund is issued, it must be ensured that interest under section 244A is given to the assessee till the date, the assessing Officer signs the refund voucher (after obtaining approval of superior authority). For the time lag between submission of proposal and actual grant of refund, the assessing officer shall work out the amount of interest and grant the same to assessee. No separate approval needs to be taken for the same.

2. The above may be brought in the knowledge of all officers and officials working in your charge.

F. No. 212/113/99/ITA.II

(Kamlesh C. Varshney)
Under Secretary to Govt. of India