ITR not filed for 2007-08
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
28 October 2010
Dear Mr Bhagat,
Thank you for your reply to my query under subject "ITR not filed for 2007-08", which I had posted on October 28.
I will appreciate it if you could give your opinion on this case: the employee received a letter from the IT dept a couple of months back saying she had spent over 4 lakhs on her credit card and that she should furnish proof of submission of ITR.
The employee, a UK national with a PIO status, had not filed returns as she was not aware that ITR is mandatory even after TDS has been deducted by the employer.
When another letter from the dept arrived, she contacted a person doing a CA course for help in filing returns for 2007-08, 2008-09 and 2009-10.
The employee gave the CA “power of attorney” to facilitate the process.
The CA got back saying ITR for 2008-09 and 2009-10 had been filed but the IT dept had sent a notice under Sec 148 for 2007-08. The penalty, he said, would be over Rs. 4 lakhs (Rs 2 lakhs as the tax liability for that yr after TDS was deducted by the company + Rs. 2 lakhs as penalty + interest for the subsequent months till Oct this year).
Here’s the reason why the employee did not file ITR for 2007-08 and 2008-09 -
1) The employee, a UK national with a PIO status, was not aware that filing of IT returns is mandatory in India even after TDS has been deducted by the employer.
2) The employee had worked for 7 months in 2007-08 before quitting her job to return home (London) after the birth of her son. Also, she would not have been able to pursue IT issues as she was staying alone in India at that time. Her income for the 7 months was around Rs. 8 lakhs and TDS around Rs. 66,000.
She has been told by the CA that the IT dept officer dealing with her account is ready to close the case for a huge sum (bribe).
Kindly advice as to what should be done and whether the reasons mentioned above (1 & 2) can be used to get the Sec 148 NOTICE recalled.
If the Notice cannot be revoked/changed, does the IT dept allow paying of the penalty amount in installments?
Thank you for your reply to my query under subject "ITR not filed for 2007-08", which I had posted on October 28.
I will appreciate it if you could give your opinion on this case: the employee received a letter from the IT dept a couple of months back saying she had spent over 4 lakhs on her credit card and that she should furnish proof of submission of ITR.
The employee, a UK national with a PIO status, had not filed returns as she was not aware that ITR is mandatory even after TDS has been deducted by the employer.
When another letter from the dept arrived, she contacted a person doing a CA course for help in filing returns for 2007-08, 2008-09 and 2009-10.
The employee gave the CA “power of attorney” to facilitate the process.
The CA got back saying ITR for 2008-09 and 2009-10 had been filed but the IT dept had sent a notice under Sec 148 for 2007-08. The penalty, he said, would be over Rs. 4 lakhs (Rs 2 lakhs as the tax liability for that yr after TDS was deducted by the company + Rs. 2 lakhs as penalty + interest for the subsequent months till Oct this year).
Here’s the reason why the employee did not file ITR for 2007-08 and 2008-09 -
1) The employee, a UK national with a PIO status, was not aware that filing of IT returns is mandatory in India even after TDS has been deducted by the employer.
2) The employee had worked for 7 months in 2007-08 before quitting her job to return home (London) after the birth of her son. Also, she would not have been able to pursue IT issues as she was staying alone in India at that time. Her income for the 7 months was around Rs. 8 lakhs and TDS around Rs. 66,000.
She has been told by the CA that the IT dept officer dealing with her account is ready to close the case for a huge sum (bribe).
Kindly advice as to what should be done and whether the reasons mentioned above (1 & 2) can be used to get the Sec 148 NOTICE recalled.
If the Notice cannot be revoked/changed, does the IT dept allow paying of the penalty amount in installments?
30 October 2010
If the relation is like employer and employee , no matter a person is working under a contract term , the amount will be taxable under the head of salary.
Just file the late return, Since TDS was alraedy deducted . Donnot pay any interest initially.
Just file the late return, Since TDS was alraedy deducted . Donnot pay any interest initially.
Querist : Anonymous
Querist :
Anonymous
(Querist)
08 November 2010
Dear Mr Bhagat,
Thank you for your reply to my query under subject "ITR not filed for 2007-08", which I had posted on October 28.
I will appreciate it if you could give your opinion on this case: the employee received a letter from the IT dept a couple of months back saying she had spent over 4 lakhs on her credit card and that she should furnish proof of submission of ITR.
The employee, a UK national with a PIO status, had not filed returns as she was not aware that ITR is mandatory even after TDS has been deducted by the employer.
When another letter from the dept arrived, she contacted a person doing a CA course for help in filing returns for 2007-08, 2008-09 and 2009-10.
The employee gave the CA “power of attorney” to facilitate the process.
The CA got back saying ITR for 2008-09 and 2009-10 had been filed but the IT dept had sent a notice under Sec 148 for 2007-08. The penalty, he said, would be over Rs 4 lakhs (Rs 2 lakhs as the tax liability for that yr after TDS was deducted by the company + Rs 2 lakhs as penalty + interest for the subsequent months till Oct this year).
Here’s the reason why the employee did not file ITR for 2007-08 and 2008-09 -
1) The employee, a UK national with a PIO status, was not aware that filing of IT returns is mandatory in India even after TDS has been deducted by the employer.
2) The employee had worked for 7 months in 2007-08 before quitting her job to return home (London) after the birth of her son. Also, she would not have been able to pursue IT issues as she was staying alone in India at that time. Her income for the 7 months was around Rs 8 lakhs and TDS around Rs 66,000.
She has been told by the CA that the IT dept officer dealing with her account is ready to close the case for a huge sum (bribe).
Kindly advice as to what should be done and whether the reasons mentioned above (1 & 2) can be used to get the Sec 148 NOTICE recalled.
If the Notice cannot be revoked/changed, does the IT dept allow paying of the penalty amount in installments?
Thank you for your reply to my query under subject "ITR not filed for 2007-08", which I had posted on October 28.
I will appreciate it if you could give your opinion on this case: the employee received a letter from the IT dept a couple of months back saying she had spent over 4 lakhs on her credit card and that she should furnish proof of submission of ITR.
The employee, a UK national with a PIO status, had not filed returns as she was not aware that ITR is mandatory even after TDS has been deducted by the employer.
When another letter from the dept arrived, she contacted a person doing a CA course for help in filing returns for 2007-08, 2008-09 and 2009-10.
The employee gave the CA “power of attorney” to facilitate the process.
The CA got back saying ITR for 2008-09 and 2009-10 had been filed but the IT dept had sent a notice under Sec 148 for 2007-08. The penalty, he said, would be over Rs 4 lakhs (Rs 2 lakhs as the tax liability for that yr after TDS was deducted by the company + Rs 2 lakhs as penalty + interest for the subsequent months till Oct this year).
Here’s the reason why the employee did not file ITR for 2007-08 and 2008-09 -
1) The employee, a UK national with a PIO status, was not aware that filing of IT returns is mandatory in India even after TDS has been deducted by the employer.
2) The employee had worked for 7 months in 2007-08 before quitting her job to return home (London) after the birth of her son. Also, she would not have been able to pursue IT issues as she was staying alone in India at that time. Her income for the 7 months was around Rs 8 lakhs and TDS around Rs 66,000.
She has been told by the CA that the IT dept officer dealing with her account is ready to close the case for a huge sum (bribe).
Kindly advice as to what should be done and whether the reasons mentioned above (1 & 2) can be used to get the Sec 148 NOTICE recalled.
If the Notice cannot be revoked/changed, does the IT dept allow paying of the penalty amount in installments?
02 August 2024
Handling a situation involving a tax notice under Section 148 and significant penalties requires careful consideration and action. Here’s how you can approach the issue:
### **Steps to Handle the Situation:**
1. **Understanding Section 148 Notice:**
- A **notice under Section 148** is issued when the Income Tax Department believes that income has escaped assessment for a particular assessment year. This typically means the department is reopening the case to reassess the income and taxes due.
2. **Filing the Return:**
- **File the ITR for 2007-08**: It’s essential to file the return for the year in question, even if it is overdue. This will help in assessing the actual tax liability and any applicable penalties. Since the case is already under Section 148, it’s crucial to file the return as soon as possible to comply with the notice.
3. **Provide an Explanation:**
- **Write a Detailed Response**: When submitting the ITR, include a detailed explanation about why the return was not filed initially. The reasons you provided (unawareness of the requirement and personal circumstances) can be included in your response to the tax department. However, these reasons do not absolve you of the responsibility but may help in understanding your situation better.
4. **Respond to the Notice:**
- **Submit a Reply**: Respond to the Section 148 notice with the filed ITR and any supporting documentation. Explain the circumstances, including TDS details and any communications with the CA or tax authorities.
5. **Penalty and Interest:**
- **Understand the Penalty**: Penalties and interest for late filing are determined based on the delay and outstanding tax. The tax department follows specific rules regarding penalty calculations, and they can be substantial.
- **Paying in Installments**: You can request the tax department for installment payments of the penalty and interest if the amount is significant. This request should be made formally to the concerned assessing officer or through the department’s online grievance redressal system.
6. **Avoiding Corruption:**
- **Do Not Engage in Bribery**: It’s crucial to deal with the situation legally and ethically. Paying bribes is illegal and could lead to further legal complications. If you’re advised that a bribe is required, report this to the appropriate authorities.
7. **Seeking Professional Help:**
- **Consult a Qualified CA or Tax Expert**: Since this is a complex situation, continuing to work with a professional Chartered Accountant or tax consultant who is experienced with such issues can be beneficial. Ensure they are reputable and knowledgeable about dealing with the tax department.
8. **Future Compliance:**
- **Ensure Future Compliance**: To avoid such issues in the future, ensure timely filing of returns and proper maintenance of records. Be aware of tax laws, especially if you are a non-resident or working in multiple jurisdictions.
### **Summary:**
- **File the overdue ITR** for 2007-08 promptly.
- **Provide a detailed explanation** about why the return was not filed.
- **Address the penalty**: Request installment payments if the penalty amount is large.
- **Avoid illegal actions**: Do not engage in bribery or unethical practices.
- **Consult a qualified professional** for handling the case.
Handling tax issues with honesty and prompt action can help mitigate penalties and resolve the situation more effectively.
### **Steps to Handle the Situation:**
1. **Understanding Section 148 Notice:**
- A **notice under Section 148** is issued when the Income Tax Department believes that income has escaped assessment for a particular assessment year. This typically means the department is reopening the case to reassess the income and taxes due.
2. **Filing the Return:**
- **File the ITR for 2007-08**: It’s essential to file the return for the year in question, even if it is overdue. This will help in assessing the actual tax liability and any applicable penalties. Since the case is already under Section 148, it’s crucial to file the return as soon as possible to comply with the notice.
3. **Provide an Explanation:**
- **Write a Detailed Response**: When submitting the ITR, include a detailed explanation about why the return was not filed initially. The reasons you provided (unawareness of the requirement and personal circumstances) can be included in your response to the tax department. However, these reasons do not absolve you of the responsibility but may help in understanding your situation better.
4. **Respond to the Notice:**
- **Submit a Reply**: Respond to the Section 148 notice with the filed ITR and any supporting documentation. Explain the circumstances, including TDS details and any communications with the CA or tax authorities.
5. **Penalty and Interest:**
- **Understand the Penalty**: Penalties and interest for late filing are determined based on the delay and outstanding tax. The tax department follows specific rules regarding penalty calculations, and they can be substantial.
- **Paying in Installments**: You can request the tax department for installment payments of the penalty and interest if the amount is significant. This request should be made formally to the concerned assessing officer or through the department’s online grievance redressal system.
6. **Avoiding Corruption:**
- **Do Not Engage in Bribery**: It’s crucial to deal with the situation legally and ethically. Paying bribes is illegal and could lead to further legal complications. If you’re advised that a bribe is required, report this to the appropriate authorities.
7. **Seeking Professional Help:**
- **Consult a Qualified CA or Tax Expert**: Since this is a complex situation, continuing to work with a professional Chartered Accountant or tax consultant who is experienced with such issues can be beneficial. Ensure they are reputable and knowledgeable about dealing with the tax department.
8. **Future Compliance:**
- **Ensure Future Compliance**: To avoid such issues in the future, ensure timely filing of returns and proper maintenance of records. Be aware of tax laws, especially if you are a non-resident or working in multiple jurisdictions.
### **Summary:**
- **File the overdue ITR** for 2007-08 promptly.
- **Provide a detailed explanation** about why the return was not filed.
- **Address the penalty**: Request installment payments if the penalty amount is large.
- **Avoid illegal actions**: Do not engage in bribery or unethical practices.
- **Consult a qualified professional** for handling the case.
Handling tax issues with honesty and prompt action can help mitigate penalties and resolve the situation more effectively.
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