The obligation of an individual/HUF taxpayer (whose accounts are not required to be audited under section 44AB) doesn’t just end by paying tax. There are three important steps which needs to be completed before the game end.

The first step is to prepare and submit income tax return on income tax filing portal (https://www.incometaxindiaefiling.gov.in) and this happens only after assessee overcome the dilemma of which ITR form to be submitted amongst ITR1, ITR2, ITR3 & ITR4.

The second step is to verify the income tax return within 120 days of filing income tax return. This is a simple process but at times, becomes complicated due to several reasons, such as oversight, overburdened tax professionals, Aadhar, mobile number not updated, delay in sending hard copy of ITR-V

Few years ago, the only way to verify your tax return was to take a printout of the acknowledgement form (ITR-V), sign the form ITR-V and send it to the Centralized Processing Centre located in Bengaluru.

However, over the years the income tax department has incorporated several additional ways of getting the verification done. Most of them are electronic modes reducing manual work leading to filing of tax returns quickly.

The third and hopefully, last step is that the income tax department process your income tax return.

The preliminary stage of processing income tax returns is done through computerised processing. Income tax returns are processed to correct arithmetical mistakes, internal inconsistencies, tax calculation and verification of tax payment. There is no human interference. Here, an intimation u/s 143(1) is issued by income tax department if there is any refund/demand/increase in loss/reduction in loss.

As an advice to the assessees, it is suggested to pay higher self-assessment tax in excess of the total tax liability. This way assessee will be eligible for refund and once the refund is processed, intimation u/s 143(1) is issued and hence the processing of income tax return is deemed to be completed.

However, this is not the end of the story. There are several other scenarios leading to notice u/s 142(1), 143(2), 148, 156, 139(9), 245 which are not discussed in this article for the ease of understandability of the reader.

CBDT announced an important measure for the ease of taxpayers.

CBDT vide circular No. 13/2020 dated 13th July 2020, has provided one time relaxation for verification of Income tax return for the assessment years 2015-16 to 2019-20 which are pending due to non-filing of “ITR-V Form”.

This relaxation is given for those persons who has filed their returns during the last 5 assessment years (i.e, step 1 is performed by the taxpayer) but had not completed the authentication process either electronically or by sending a signed physical copy of the same to the department at Centralised Processing Centre, Bengaluru (i.e, step 2 of the above explained process).

As a consequence of non-filing of ITR-V form, the income tax return is deemed not filed by person and hence is rendered invalid or non-existent.

Now such assessees can verify their ITR-V for earlier five financial years i.e, FY 2014-15, 2015-16, 2016-17, 2017-18, 2018-19. This verification process must be completed by 30th September 2020.

The following are various methods of ITR-V e-verification out of which assessee can choose any one method to verify income tax return.

a) Through Aadhaar OTP

b) By logging into e-filing account through net banking

c) EVC through Bank Account Number

d) EVC through Demat Account Number

e) EVC through Bank ATM

f) By sending duly signed physical copy of ITR-V through post to the Centralised Processing Centre, Bengaluru

However, this relaxation shall not apply where income tax department has already taken recourse to any other measure as specified in the income tax act for ensuring filing of tax return by the taxpayer concerned.

CBDT has also relaxed the time-frame for issuing the intimation under section 143(1) whereby such returns shall be processed by 31st December 2020 and intimation of processing of such returns shall be sent to the taxpayer.

DGA Comments : This facility provides a great opportunity to taxpayers for regularising their past income tax returns. This may help them in several ways some of which are as follows:

a) Processing of refund, if any

b) Waiver of penalty of non-filing ITR, i.e, Rs. 10,000 u/s 234F

c) Loss declared in ITRs could be carried forward

d) Obtaining loans wherein filing of ITR is a mandatory requirement

e) Benefit under section 194N, Cash withdrawals, by way of application of higher limits of INR one crore and lower TDS rate of 2% instead of lower limit of INR twenty lacs and subsequently higher TDS of 5% beyond withdrawals of INR one crore.

f) Establishing income proof in insurance compensation cases

g) Hassel free visa applications

h) Becoming a law abiding citizen

It is further expected that CBDT may take necessary course of action against those taxpayers who fail to regularize their pending returns of income by the specified date, i.e, 30th September 2020.

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About the Author: The Author, Deepanshu Gupta, is Managing Partner of DGA which is a multi-disciplinary audit and advisory firm providing gamut of services including audit, income tax, consulting and outsourcing services and can be contacted at deepanshu@dgaglobal.in

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