IT Department sends partly faulty communication specifying High Value Information

Too much of digitisation has its ill effects and now with the communications sent by Income Tax departments after digital review of the assessees data, it seems that the ill effects are going to cost a lot to the common man. These communication are going to increase the compliance costs of many assessees and will bring more troubles for the masses who are still struggling to overcome the COVID-19's adverse impacts. COVID-19 has played havoc with the ecomy and also have taken the jobs of many persons.

The communications from Income Tax department seem to be unwarranted at these time. If it was must, the communications should have been sent after proper review at their end.

Different communications are being sent for different types of transactions primarily High Value transactions of different nature. In this article we will discuss with regard to the “other incomes”.

Communications are being received in the following format:

Attention NAMEXXXXXXXX (PANXXXXXX),The Income Tax Department has identified high value information which does not appear to be in line with the Income Tax Return filed for Assessment Year 2020-21 (relating to FY 2019-20). Please revise ITR / submit online response under e-Campaign tab on Compliance Portal (CP). Access CP by logging into e-filing portal and clicking on 'Compliance Portal' link under 'My Account' or 'Compliance' tab - ITD

After going through communication, one can easily understand that as communicated by the , department, it has got some information with regard to High Value Transaction from other sources pertaining to an assessee which is not in line with the Income tax returns filed with the department by that assessee.

Once any assessee reaches at the compliance portal through My account, he is welcomed with a screen having different Menus

1. One menu in row showing the following

1. e-campaign
2. e-Verification
3. Requests
4. Resources
5. Feedback
6. Help

2. Another menu is shown as tiles and has the following headings

1. Annual Information Statement
2. e-Campaign
3. e-Verification
4. e-Communications
5. e-Campaign history
6. e-Verification History
7. Resources
8. Insight Virtual Assistant
9. e-Verification History

3. Under e-Campaign, there are three different menus

i. e-Campaign - Significant Transactions

Certain transactions of the taxpayer reported in their ITR which have been found to be inconsistent with the information received from the third party for a specified Assessment Year are displayed to the taxpayer for feedback.

ii. e-Campaign - Non-Filing of Returns

Transactions of the taxpayer who have not filed return of income for a specific assessment year and have potential tax liability or who are under obligation to file return of income, are displayed for feedback

iii. e-Campaign - High Value Transactions

Certain transactions of the taxpayer reported in their ITR which have been found to be inconsistent with the information received from the third party for a specified Assessment Year are displayed to the taxpayer for feedback

The explanations as available on IT website are given above for reference

Most of the menu items under B are not working presently but the e-campagin menu shows the number of communications i.e 1 and when one opens that, a tab with name High Value Transactions gets opened up. Within that a menu shows as Information summary and the year 2019-20 and at the bottom the specific head of c) the incoem is mentioned, in the instat case it was Other Source income.

The case which I was dealing showed an amount of approx Nine Lacs there, One should download the itemised data from there and compare the same withh the returns filed.

While performing the same activity, it came to the notice that the Income Tax Department has mistakenly summed up the transactions as shown below:

1. Itemised Interest as per 26 AS
2. Interest as shown through the TDS returns

So practically the interest was shown twice in the communications sent by the department.

A simple check could have saved lacs of assesses from undergoing the trauma of having received communication from Income Tax department.

Few issues which have come to the fore while reviewing the communications from the Income Tax Department are:

1. Income Tax department issued notices with cross verifying at their end
2. Banks did not deduct TDS on all the Deposit accounts under the Same PAN
3. The transaction reported by the Banks to the Income Tax departments did not match with the transactions reported in the TDS returns filed by them and getting reported in the form 26AS of the assessees
4. Some time banks make wrong entries and then reverses the same in the accounts of the assessees, however the same are getting reported to Income Tax Departments through Annual Information Statements and getting reflected in the e-compliance menu for the assessees putting him under unnecessary botheration

However, these communication have a very positive impact on the way the assessees file the Income Tax Returns. Now, as most of the transactions are getting mapped, the assessees are bound to exercise utmost caution which will on the one side increase the compliance and on the other side revenue may see an upward trend in the long run.

For handling such communications, for the relevant Previous year,

1. The assessees should generated Itemised details from the e-compliance portal
2. The data from the 26AS must be generated again
3. Itemised mapping must be done
4. The transactions can be confirmed, denied, corrected while submitting response as itemised response needs to be given.

The department has given us chance to modify the returns, if required.

The author can also be reached at navneetic@yahoo.com

Disclaimer: The article has been prepared based on the experience at the portals and it may vary from person to person. The readers are requested to go through the relevant provisions in this regard