A Section 245 notice under the Income-tax Act, 1961 is the prior-intimation communication issued by the Income Tax Department — typically through the Centralised Processing Centre (CPC) under the Assessing Officer's authority — proposing to set-off a refund due to the taxpayer for one assessment year against any tax demand outstanding for another (earlier or later) assessment year. Unlike a Section 156 notice of demand (which raises the underlying demand) or a Section 220 recovery notice (which initiates recovery), Section 245 is a set-off mechanism — it converts a refund into a recovery instrument by applying the refund against an older outstanding demand, in part or in full. Crucially, Section 245 is not a self-executing power — the statute mandates that before any such set-off is made, the taxpayer must be given an "intimation in writing" of the proposed action and an opportunity to respond. That intimation is the "Section 245 notice," and a failure to respond within the stipulated window (typically 30 days) leads to automatic adjustment, often resulting in the loss of a substantial refund to a legacy demand the taxpayer may not even remember, never received proper notice of, or that may itself be disputed / invalid.

Section 245 proceedings have multiplied sharply in the last decade because of (a) the huge legacy-demand inventory sitting on the department's systems, often decades old; (b) the CPC's end-to-end automation, which now flags every refund against an open demand; (c) the integration between CPC and the Assessing Officer's demand ledger through the PAN-based demand register; (d) the carry-over of disputed, stayed, uncollected, and partially-paid demands into the open-demand column; and (e) the significant number of taxpayers who have older demands that were never cleaned up — either because a rectification under Section 154 was never pursued, an appeal before CIT(A) was allowed but not given effect, or a stay under Section 220(6) was granted but not recorded centrally. A Section 245 notice is therefore often the first moment the taxpayer realises that an old demand is still "alive" — and it is the critical 30-day window within which the taxpayer can dispute the demand, get it rectified under Section 154, show evidence of stay or payment, or seek an appeal-pendency-based hold.

Our Section 245 Notice Response Services cover the entire lifecycle — decoding the notice to identify the proposed adjustment (which AY's refund, which AY's demand, the demand's DIN / reference, and its vintage); reviewing the demand's history on the Income Tax e-filing portal ("Response to Outstanding Demand / Notice" under Pending Actions) to check status (correct / incorrect / stayed / paid / already adjusted / appealable); drafting a structured Section 245 response on the portal citing the appropriate ground — (a) demand is incorrect (Section 154 rectification pending / to be filed); (b) demand has been paid / already adjusted (with challan / ITR-linked evidence); (c) demand is stayed under Section 220(6) / 254(2A); (d) appeal is pending before CIT(A) / ITAT / HC / SC and adjustment should be held; (e) demand is contested and the adjustment should be deferred; managing Section 154 rectification applications and Section 246A first appeals where the underlying demand is itself disputable; protecting the refund from avoidable adjustment while the real dispute is sorted; and, in egregious cases where the department proceeds with adjustment despite the taxpayer's valid objections, filing writ before the High Court under Article 226 citing the mandatory prior-intimation requirement under Section 245 — so every legitimate refund reaches the taxpayer's bank account and every illegitimate legacy demand is cleaned up at source.