Income Tax Department: Double Standards

An amount of Rs. 1,293/- was deducted by ICICI Bank during the Financial Year 2023-24 as Income Tax at Source (TDS) from the interest payable to me on my investment in senior Citizen Savings Scheme and the bank issued Form 16A to me for this deduction. This figure of Rs. 1,293/- was shown in my form 26AS as well as in AIS as the TDS by the Bank u/s 194A on 20-Mar-2024. The deduction was actually made on 1-Jan-2024 since the interest, after applying TDS, was paid to me on that date. The e-filing portal of the IT Department was also showing this TDS on dashboard in my login.

However, I made a mistake in writing the TAN of the bank in Schedule TDS 2 of my IT Return. The correct TAN was MUMI10473B (ICICI Bank) but I mistakenly mentioned it as MUMH03189E (HDFC Bank). The IT Deptt. did not give me credit for this amount. They simply ignored it and did not give me the refund of this amount which was due.

I, therefore, filed a rectification request (grievance). In that grievance, I correctly quoted the TAN of ICICI Bank. I wrote the following in my rectification request:

“Total tax paid by me (TDS + Advance tax) was Rs. 26,588/- but in my assessment order only Rs. 25,295/- has been shown. Thus, there is a shortfall of Rs. 1,293/- in my tax credit. This figure of Rs. 1,293/- has been shown in my form 26AS as the TDS by ICICI Bank (MUMI10473B) u/s 194A. Date of booking is 20-Mar-2024. This TDS has been ignored by the deptt. Your own portal is showing on the dashboard that I have paid Rs. 26,588/-. Kindly rectify the error and issue a refund of Rs. 1,293/-”.

However, I specifically could not mention that I have made a mistake in writing TAN in my IT Return since I had not noticed it by then.

Even with this rectification request in which I correctly mentioned the TAN of the deductor bank, the IT Deptt. did not give me any credit for this amount and gave no refund. The rectification order said – “Form 26AS does not contain amount of TDS with respect to the TAN mentioned in schedule TDS 2. There is no payment due.”

They just did not read the rectification request at all. They simply sent a copy of their original Assessment Order calling it Rectification Order.

In the next financial year, i.e. in 2024-25, I again made the same mistake. Actually, I have very little changes in my ITR data from year to year. I, therefore, do not fill the whole return again every year in order to save my effort. I, instead, pick-up the previous year’s JSON file, open it using a text editor, change the assessment year, and save it (JSON files which are created by the IT Return software of the IT Deptt. are human readable text files unlike binary files which can be read only by computer). I, then, open this modified JSON file with the current year’s offline JSON utility of the IT Deptt., make necessary changes, save it, and upload it on the e-filing portal. This is the reason that the mistake committed by me in 2023-24 was carried forward to 2024-25 also. However, this time my mistake caused me a bigger loss as described below.

During the financial year 2024-25, I had the following taxes deducted at source from my interest payments:

1. By ICICI Bank (TAN MUMI10473B) – Amount Rs. 16,432/-

2 By HDFC Bank (TAN MUMH03189E) – Amount Rs. 47,495/-

Total TDS = Rs. 63,927/-

As usual, both the banks issued me Form 16A for these deductions. My form 26AS and AIS were showing these figures as TDS by my Banks u/s 193 and 194A. The e-filing portal of the IT Deptt. was also showing these amounts on the dashboard in my login.

As I have written above, I made mistakes in quoting the TAN’s of the deductor banks and filled the schedule TDS 2 as given below while filing my return:

1. TAN – MUMH03189E (instead of MUMI10473B) – Amount Rs. 16,432/-

2. TAN – MUMI04813E (instead of MUMH03189E) – Amount Rs. 47,495/-

MUMI04813E is another TAN of ICICI Bank.

Due to this mistake, I was given credit of only Rs. 16,432/- and the second amount was disallowed. My income during the Financial Year 2024-25 was non-taxable and, therefore, the whole TDS was due for refund. But IT Deptt. issued me a refund of only Rs. 16,432/- instead of Rs. 63,927/-.

Now, compare the TDS in IT Deptt.’s records v/s my reporting in Schedule TDS 2.

Now the question arises – When their own record shows that ICICI Bank (MUMI10473B) has deducted Rs. 16,432/-, why they are taking it as Nil? Because I have mistakenly specified it as Nil?

Similarly, when their record shows that HDFC Bank (MUMH03189E) has deducted Rs. 47,495/-, why they are allowing only Rs. 16,432/-? Because I have specified it as Rs. 16,432/- by mistake?

They have so much faith on me? They believe me more than themselves?

However, their faith on me completely evaporates as we proceed to the last (3^rd) row. Now they just don’t believe me at all and accept their own records.

Why this double standard?

All this is not even necessary. When the income is non-taxable, the full TDS shown in their records can/should be refunded. Simple. No complicated math required. No need to even compare what is in IT Deptt.’s records and what is reported by the taxpayer.

Now consider a case in which the taxable income of a taxpayer in their records differs with what he reported in his ITR. Let us assume that their record shows the income as Rs. 20 Lakh whereas the income reported in ITR is Rs. 15 Lakh. They will not lose even a single second and send a notice to the taxpayer with additional demand.

Not only this, if the actual income of a taxpayer in their records is Rs. 15 Lakh but by mistake he reports it as Rs. 20 Lakh, they will immediately send notice demanding extra tax.

Such double standards are not beneficial for anybody.

Nor the trait of issuing rectification orders without trying to understand why the rectification is being requested!