Demand
Notices and their corrective actions
- What
is Demand in the terms of taxation?
The Income
Tax Department (IT Department) checks the income declarations
and tax paid to see if all these details match. Only then the
IT Department will accept the tax return filed as per Section
143(1). If the taxes paid are found to be less than what you
owe, they will issue you a demand notice.
-
Why a Taxpayer get a notice?
1.
For
delay filing IT return
2.
Misreporting
of LTCG for equity
3.
For
TDS claimed not matched with 26AS
4.
For
Non-Disclosure of income
5.
For
not declaring investment made in the name of the spouse
6.
For
filing defective return
7.
If
you done high value transactions
8.
If
your return picked up for scrutiny
9.
For
setting off refunds against remaining tax payable
10. For tax evasion of earlier years
-
TYPES
OF INCOME TAX NOTICES
-
SECTION
139(9) : Defective
income tax return
-
SECTION
142(1) : Preliminary
Enquiry before an assessment
-
SECTION
143(2) : Follow up
of notice under section 142(1)
-
SECTION
148 : Income
escaped assessment
-
SECTION
156 : Notice of
Demand
-
SECTION
245 : Refund
adjusted against the tax demand
-
Possible
resolution in case of tax mismatch:
a.
Credit
Available in FORM 26AS but not given in the intimation order
-
Invalid
TAN entered in the return
-
SAT/AT
details are entered wrongly
-
No
data error in TAN/SAT/AT details
-
No
data error in particular entered in TDS/TCS schedule
b.
Credit
not available in form 26AS
-
Mismatch
of TDS/TCS amounts claimed compared to form 26AS
-
Mismatch
of SAT/AT
This indicates that principal demand is
already adjusted/ paid, and interest demand is the only outstanding value.
For the demand against which there is "No Submit response
option" available such demand is already confirmed by the
Assessing Officer.
Outstanding Tax Demand Status
The Taxpayer can submit the response online to the outstanding
demand by either choosing to Agree or Disagree with the demand.
Perform the following steps for Responding to the Outstanding
Demand.
2. Go to the
‘e-File’ menu, Click ‘Response
to Outstanding Demand’.
3.
All outstanding demands will be displayed here. Click on 'View' hyperlink
under 'Response' column.
Intimation in SECTION 143(1)
The intimation of demand made by the income tax
department is under section 143(1) and assessee must respond it within 30days.
A copy of notice is attached below:
Reasons
for Notice under Section143(1)(a)
Many taxpayers are currently
receiving intimations under section 143(1)(a) due to a mismatch between Form
26AS and the ITR Form.
In most cases, there will be no
change in tax calculations. The department is only asking for more information.
Circumstance
under the notice of Section 143(1)
|
Reason/ Purpose
|
Action to be taken
|
Notice under Section
143(1)(a)
|
Due to
discrepancy/mismatch found and there is a tax liability
|
If you agree - Pay the taxes &
Revise the return
If you disagree - Respond on income
tax portal
|
Respond to an Outstanding Demand
The
Taxpayer can submit the response online to the outstanding demand by either
choosing to ‘Agree’ or ‘Disagree’ with the demand.
Perform the following steps
for Responding to the Outstanding Demand.
1. Logon to
‘e-Filing’ Portal www.incometaxindiaefiling.gov.in
2. Go to the
‘e-File’ menu and Click ‘Response to Outstanding Demand’
3. Click the
hyperlink 'Submit' located under 'Response' column (To respond for the
Outstanding Demand)
4. Choose any
one of the listed responses.
-
Agree
-
Not agree
-
Disagree
-
Demand is not correct but ready for adjustments
5. A success message along with Transaction ID
is displayed on successful submission of the response, in case of agree or
partially agree for demand:
If you disagree - Respond on income tax portal
Step2: Enter UserID, Password and Captcha to proceed logging in
Step3: On successfully logging in, click on the‘e-proceeding’tab
Step 4: Click on ‘Adjustment
u/s 143(1)(a)’
Step5: When the e-proceeding tab opens, click on ‘Submit’ under the‘Response’tab
Step 6: This page summarizes the discrepancies due to which the
notice has been issued.
➔ If you agree or partially agree with the department, then you must file a revised return.
➔ If you disagree,click on the ‘disagree’ response and‘Continue’
Step7A: When you disagree with the notice issued by the department, you can provide a
justification for the same on this page.
Step7B: If there is any income which has been taxed in the notice but is exempt
under section 10, you must select the option from the drop down list.
Step7C: If you do not find your reasons in the options specified,then specify it in the tab for‘any other reason’
The Dynamic Reconciliation Statement will auto populate, then click on ‘Submit’.
Above
mentioned steps in a nutshell:
-
STEP
1:Ascertain
the Outstanding Tax Demand
-
STEP
2: Draft a
letter for cancellation of Demand
-
STEP
3: Send to Income tax department and get the Acknowledgment Number
-
STEP
4: Scan the above letter, draft grievance and prepare the attachments.
PRECAUTIONS WHILE
DRAFTING GRIEVENCE
Ø While drafting Grievance for the
letter NO SPECIAL CHARACTERS can be used (%,*.#,+,-,@ etc.)
Ø
Attachments
: one file –
one name -No space and no special characters and must be upto 50MB.
-
STEP
5: Scan the
Documents and upload on e-filing portal.
Notice
of under Section 245
Why
did Assessee receive Intimation under Section 245?
This intimation is received when you
have a tax demand pending from the IT department or when you have claimed a
refund from them for some other assessment year. Section 245 of the Income Tax
Act empowers the assessing officer (AO) to adjust the refund (or a part of the
refund) against any tax demand that is outstanding from the taxpayer. In simple
words, the IT department wants to adjust the refund due against a demand due
from you. This demand may pertain to an earlier assessment year.
Adjustments against Refund under section 245
-
Section 245 Notice
-
Adjustment under section
143(1) of another year
-
Adjustment against demand
in Refund Vouchers
1.
Section 245 Notice
-
Generally,
the response of notice of section 245 shall be filed within 15days.
-
Response
to the notice must be either:
·
Agree
·
Disagree
·
Partially
agree
·
Not
agree but ready for adjustments
i.
If
assessee agree to the notice and demand,then the assessee simply login
to the portal and submit the demand and pay the amount.
ii.
If
the assessee disagree then s/he will respond to the reasons for
being Disagree to the Demand raised.
iii. Partially Agree: in this case the assessee must submit
the XML or may revise the return and submit it again. Or
The Assessee must file rectification
in such a circumstance.
iv.
Not
agree but ready for adjustments
: In such an assessee is not Agreed with the demand raised by the
department but assessee just for a way-out take such decision for not to block
the entire refund with the department.
Rectification request under section 154
A rectification
request under section 154(1) is allowed by the Income Tax Department for
correcting mistakes when there is an apparent mistake in your Income Tax
Return. an error due to overlooking compulsory provisions of law.
Order rectified under section 154.
Mistake apparent from records, and
income tax department may-
-Amend any order passed under any provisions of the
Income-tax Act
-Amend any intimation or deemed intimation sent under section
143(1)
- Amend any intimation sent under section 200A (1)- TDS
return
- amend any intimation under section 206CB- Processing of TCS
statement
Submitting the request for Rectification
The
return filed by the taxpayer will be processed by Income Tax Department (ITD)
and intimation will be sent to the assessee under section 143(1) based on
details disclosed by the taxpayer and rules deployed at the processing centre
of ITD. In case if the taxpayer wants to seek rectification of a mistake in an
order or intimation, which is apparent from the record, then the taxpayer can
seek ‘Rectification under Section 154’.
STEPS:
1.
Logon to ‘e-Filing’ Portal www.incometaxindiaefiling.gov.in
2.
Go to the ‘e-File’ menu and Click ‘Rectification’ link
3.
Choose the options of ‘Order/Intimation to be rectified’ and ‘Assessment
Year’ from the dropdown list. Click ‘Continue’
4.
Select any one of the following options of ‘Request Type’ from drop down
list.
5. To ViewthesubmittedRectificationRequest
:
-
Go to the ‘My Account’ menu located at upper-left side of the page ↓
Click ‘View e-Filed Returns/Forms’
-
Select ‘Rectification Status’ from drop down list¯Click ‘Submit’
View Refund/ Demand
Status
To check the refund status, follow the steps:
Step1: Login to e-Filing website with User ID,
Password, Date of Birth / Date of Incorporation and Captcha.
Step2: Go to My Account and
click on "Refund/Demand
Status"
Step3: following details would be displayed
-
Assessment year
-
Status
-
Reasons for refund failure (if any),
-
Mode of payment is displayed
APPEALS
A taxpayer
aggrieved by various actions of Assessing Officer can appeal before
Commissioner of Income Tax (Appeals). Further appeal can
be preferred before the Income Tax Appellate Tribunal. On
substantial question of law, further appeal can be filed
before the High Court and even to the Supreme Court.
Compiled By : Abhilasha at Sandeep Ahuja & Co
