Income Tax Department sending notices to taxpayers who have claimed wrongful refunds, requiring them to repay the full amount with penalty.
CPC processing an ITR does not guarantee that the refund is fully yours and cannot be taken back, the Income Tax Department can recover erroneous amounts via notices for invalid deductions.
If notice received, you may have to return back 100% of such refunds plus escalating additional tax penalties when filing ITR-U.
ITR-U allows voluntary updates to correct errors like wrong deductions, but penalties apply as follows:
If you file ITR-U within:
| Filing Window | Additional Tax Rate |
| 12 months | 25% |
| 24 months | 50% |
| 36 months | 60% |
| 48 months | 70% |
Reasons for Notices
Bogus deductions: Claims like Section 80GGC or HRA without proof or supporting documents.
Misreported income: Underreporting capital gains, wrong ITR form selection, or false expenses (e.g., unverified loans).
System mismatches: Auto-detection via Form 26AS or AIS.
Tips
For FY 2024-25, if you have claimed any wrong deductions - file a revised return to fix errors. Missing this shifts to costlier ITR-U options.
For the Assessment Year 2025-26, the revised return deadline is 31st December 2025.
Filing a revised return within the deadline typically does not incur penalties, although interest may be charged on any additional tax due.
Multiple revisions before the deadline are allowed, but excessive changes might lead to scrutiny.
If the deadline is missed, you might be able to file an "Updated Return" under Section 139(8A) involving extra tax and penalties.
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