The Income Tax (I-T) department recently sent e-mails to 1.72 lakh assessees such as individual taxpayers, corporate and start-ups, who have outstanding tax demands as well as tax refunds asking them to provide an update on the payment.

Since April 8, the apex body regulating income tax matters, the Central Board of Direct Taxes (CBDT) has been fast-tracking refund payments to help taxpayers in the COVID-19 pandemic situation and has till date issued nearly 14 lakh refunds involving an amount of over Rs 9,000 crore to various taxpayers including individuals, Hindu Undivided Families (HUFs), proprietors, firms, corporate, start-ups, and micro, small and medium enterprises (MSMEs).

In a statement, the CBDT clarified that the e-mails seeking clarification from all those who are entitled to get tax refund but also have outstanding tax to pay cannot be misconstrued as harassment.

“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. Invariably, such communication is made by the department by sending an e-mail to the assessee informing it of the quantum of outstanding demand and providing an opportunity to pay the demand or respond with evidence regarding payment of the same if already made, or update the status of any other action on it,” it said.

The CBDT said these e-mails are part of the faceless communication and are auto-generated under Section 245 of the I-T Act in refund cases where there is any outstanding demand payable by the assessee.

“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 said.

It also said that the assessees are 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,” it added.

With reports in certain sections of social media, that alleged the CBDT of “pursuing recovery proceedings” and “using arm-twisting methods” by adjusting outstanding demands of the assessee. The department 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 and cannot be misconstrued as a notice of recovery or be perceived as so-called arm-twisting by the I-T department because the department is duty-bound to protect public money by adjusting the outstanding demand before releasing the refund.