Income tax processing:

Manual Filing of Income Tax Returns (ITR):

I would like to take up the processing of Income Tax Returns and assessment done while ITRs were filed manually. CBDT used to prescribe tax return forms and assessee used to fill the forms and strike out information that did not apply to them. In addition to this, they used to attaché tax computation, balance sheet, profit and loss account, tax challan and other documents.

Processing of ITRs through System:

Consequent upon  the changes in the accounting process, now returns are being  processed through the system and assessee are getting  notices. In most of the cases, assessee is facing  issues arising  of this process as under:

  • Return is processed with some additions which are taken due to the wrong generation of “xml” files.
  • Taxable income is  generated twice due to some technical issue. Here, business income is processed double than actual. Rental income  is taken at  100% to the person who is a part owner of the property but assessed at 100%.
  • TDS credit is deprived to the assessee which are not  appearing in form 26AS as on the date of filing of ITR and credit is not allowed after  the returns are processed. Various times rectification is not processed with corrected data.
  • Computation as per utility does not match with the processed return.
  • Assessee is not allowed to file rectification request in case income is changed in the rectification.
  • Mistakes are not being rectified  and assessee get reminders for outstanding demand.
  • Bank accounts were attached under section 226(3) of the IT Act and AO is not accepting letters and representations from the assesses, as the system is not allowing to rectify.

These issues when raised before the  help desk or “E-nivaran” tab in the e-filing web site, most of the time we get vague answers and never get the final expected result and the ticket gets closed.

Sometimes, we are asked for not quoting assessment year and then the ticket gets closed. Here, one should know that without quoting assessment year the ticket is not generated.

Now we have following  suggestions for this.

1. Let the processing be done as per the present way and allow the assessee to file rectification by filing of revised xml (as per the present case).

2. In case the return is processed under section 154 the way assessee filed then he will accept the case and do the needful.

3. In case, rectification is not processed as per expected xml filed by the assessee ,then the assessee should be allowed to file tax computation sheet in pdf form. This return will be checked manually by departmental CPC staff before processing and correct xml so that the return is processed as expected.

Most of the tax consultants and Chartered Accountants are knowledgeable and conversant with Income Tax Laws. At present  most of their time is spent on following up, filing and generating xml where they are not convergent and make repetitive mistakes. It ultimately affects assessee and the Income Tax Department.

Further, Government is advertising  that Individuals can file their ITR without taking  help of tax consultants. But in reality, most of the time either the assessee file their returns themselves or are  taking help of Cybercafe operators who does not understand anything about Income Tax Act.

This is also causing frauds and illegal allowance of deductions and exemptions for which they are not entitled for.

This results in heavy tax demand to the assessee who are then approaching tax consultants for rectification. But my personal experience says that these returns cannot be rectified online as most of the time some of  other income head is not properly calculated and thereby not allowing to file rectification. Even if it is filed, the revised processed returns do not change and we don’t get returns properly rectified.

We, therefore,  request to transfer such cases to Assessing Officers who are most of the time not taking action immediately, resulting in making assessee defaulter on account of  false demand.

Consequently, the hypothetical and unreasonable Tax Demand is never being reduced and lots of physical notices are being sent to the assessee which is a heavy cost to the Department and against the national interest of the country also it is violating the principles of Natural Justice.

Author Bio

Qualification: CA in Practice
Company: S K Kadam & Co
Location: Thane, Maharashtra, IN
Member Since: 01 Apr 2020 | Total Posts: 2

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  1. Shubham Jaiswal says:

    Article Written by you is really Useful and true.
    I have also face same issues. CPC is not considering section 89 Relief while processing income tax return. I have also file FORM 10E before filing ITR, Even after CPC had not considered section 89 relief and process ITR. Which lead to reduced Refund and increase tax liability.

  2. Suresh mehta says:

    The cpc is to take extra care and look manually in such type of returns or else accept the correct rectified return filed by a chartered accountant

  3. Ganesh says:

    Dear Sathish Sir,

    Sub : Manual Filing of Income Tax Returns (ITR):

    The article written by you is worth noting and very true.
    Hats off to you,
    Government sites/systems needs to be at place to avoid such errors

    Thanks Sir

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September 2021