Every year, when tax season comes around, I see a familiar trend.
Many salaried folks - especially those working with reputed companies - assume that since tax is already deducted from their salary, there's no need to file an Income Tax Return.
Let me stop you right there.
That belief? It's not just a small misunderstanding - it could land you in serious trouble.
Let me tell you about Mr. Chudasama, a client I recently worked with, whose case is a perfect example of how costly this mistake can be.
What Happened with Mr. Chudasama
Mr. Chudasama is a mid-level engineer working with a well-known multinational company. In the financial year 2019-20, his gross salary was around Rs. 18.6 lakhs. His employer was deducting TDS every month. He got his Form 16 at the end of the year. Everything looked clean and in order.
So, he assumed there was no need to file his return.
"My tax has already been paid by the company. I'm not getting any refund anyway. Why go through the hassle?"
Fast forward to 2024 - he gets flagged under the Income Tax Department's INSIGHT system (which is now powered by AI to track non-filers). The department issued him a notice under Section 148 asking him to explain why no return was filed.
But here's the twist - he never received the notice. The notice went to an old email ID and his previous address.
The department didn't stop. Since there was no response, they completed the assessment ex-parte under Section 144. They assumed his gross salary was his total income, and disallowed all legitimate exemptions and deductions.
No HRA.No Section 80C.No Section 80D.No home loan interest under Section 24(b).Nothing.
By the time Mr. Chudasama randomly logged into the income tax portal (in May 2025) to check the status of something unrelated, the assessment order was already passed - and a tax demand of Rs. 14.15 lakhs (including interest and late fee) was staring at him.
Here's What Went Wrong
The law under Section 139(1) is pretty clear.
If your gross total income (before deductions like 80C, 80D, etc.) exceeds the basic exemption limit - you must file an ITR.
TDS deducted by your employer doesn't exempt you from this requirement.
Income Tax filing is a compliance activity - not just a way to claim a refund.
In Mr. Chudasama's case, not filing meant:
- All legitimate deductions were ignored
- No opportunity to be heard
- Additional penalty proceedings were started
- And now, he has to appeal against the order and file for condonation of delay
What We Can All Learn From This
This isn't about Mr. Chudasama alone. This could be anyone.
Here are some key takeaways:
1. TDS ≠ Tax Filing
Just because tax is deducted doesn't mean your part is done. Filing ITR is your legal duty.
2. No Refund ≠ No Filing
Many people think they only need to file if they're getting money back. That's false. Filing is mandatory if your income crosses the limit - refund or not.
3. The System Catches Up
With AI-powered systems like INSIGHT and NMS, the department knows if you haven't filed. And they act - even years later.
4. Professional Advice Is an Investment, Not a Cost
Many people avoid filing through professionals thinking it's "just a simple form." But when things go wrong, they end up paying much more for assessments, appeals, rectifications, and even legal representation.
Final Thoughts
There's still time. The current ITR filing deadline is around the corner. If you're someone who's sitting on the fence thinking, "I don't need to file, my tax is already deducted" - please, file it anyway.
Think of it as a legal document. Because that's what it is.
- If your gross income is above the exemption limit - you must file.
- Even if you don't owe any extra tax - you must file.
- And if you're unsure - just ask. It's better to spend 15 minutes now than 15 months later in appeal proceedings.
Filing your ITR is not about refunds. It's about staying compliant, staying protected, and staying stress-free.
I hope this real-life story saves someone from learning this lesson the hard way.
If you know someone who's delaying or skipping ITR filing because "TDS already done," please forward this to them.
You could be saving them from a very expensive mistake.
Disclaimer: This article is intended for general awareness and informational purposes only. Readers are strongly advised to seek professional advice based on their specific facts and circumstances before making any decisions or drawing conclusions based on the contents of this article.
The author and publisher are not responsible for any loss or liability incurred by any person who relies on this content without appropriate consultation.
The views expressed herein are based on the author's personal understanding and interpretation of the applicable tax laws, which are subject to change and judicial review.
The author can also be reached at support@cabhavikchudasama.com
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