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CS Executive · Tax Laws and Practice · Procedural Compliance under Income Tax

Under section 438 of the Income-tax Act, 2025, a refund is due to Meera Textiles, whose reassessment proceedings are pending. The Assessing Officer wishes to withhold the refund. Which statement is correct?

The Assessing Officer may withhold the refund only by recording reasons in writing and obtaining previous approval of the Principal Commissioner or Commissioner, and only up to sixty days from the date the pending assessment or reassessment is made.

  1. AHe may withhold it for reasons recorded in writing with previous approval of the Principal Commissioner or Commissioner, up to sixty days from the date the assessment or reassessment is madeCorrect
  2. BHe may withhold it on his own satisfaction without recording reasons, until the proceedings end
  3. CHe may withhold it only if the assessee consents in writing
  4. DHe may withhold it for one year from the end of the tax year

Explanation

Section 438(3) permits withholding where assessment or reassessment is pending, for reasons recorded in writing and with previous approval of the Principal Commissioner or Commissioner, up to sixty days from the date the assessment or reassessment is made. Withholding without reasons or approval, or for an open-ended period, is not allowed.

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