(1) If any amount is due to an assessee for any period the provisions of this Act, the Income-tax Ordinance, 1984 (Ordinance No. XXXVI of 1984), the Gift Tax Act, 1963 (Act No. XIV of 1963) or the Gift Tax Act, 1990 (Act No. XLIV of 1990) or Wealth Tax Act, 1963 (Act No. XV of 1963), the said arrears shall be adjusted before payment of the refundable amount to the said assessee.

(2) Where a refundable amount is adjusted against any amount due for any period, the adjusted amount shall be deemed to have been paid to the assessee and the Deputy Commissioner of Taxes shall duly enter the same in the tax records of the assessee to that effect.