The Income Tax Department has been expanding the scope of information collection and integration in recent years. Through various sources such as SFT (Statement of Financial Transactions), TDS returns, and third-party reports, an overwhelming volume of data now gets reflected in the Annual Information Statement (AIS) and Taxpayer Information Summary (TIS). This includes, but is not limited to:
- Salary income
- Stock market Sale and Purchase transactions
- Mutual fund Purchase and Redemptions
- Fixed Deposit Purchase and Maturity
- Sale and purchase of immovable property (sometimes duplicated due to TDS and registrar data)
- Credit card payments
- Foreign currency purchases
- Dividend and interest income (including interest on saving banks)
- Cash deposits and withdrawals
- Income from REITs and business trusts
Even for salaried individuals with otherwise straightforward income profiles, reconciling all this information with their Income Tax Return (ITR) has become a daunting task.
Due to the volume and complexity of data, inaccuracies in AIS and TIS are increasingly common. Until recently, taxpayers could provide feedback on such mismatches via the AIS portal. However, a new development has added another layer of complexity: the Income Tax Department has now begun sharing taxpayer feedback with the reporting source entities and is also sharing their responses back with the taxpayers — turning the taxpayer into a middleman in this data ping-pong.
This back-and-forth has serious consequences. Incorrect or mismatched data, even if not caused by the taxpayer, could lead to further scrutiny or even reopening of assessments. It is not inconceivable that notices may be issued solely based on such unresolved mismatches.
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Key Scenarios and What to Do:
1. If the data is correct and not disclosed in the ITR:
File a revised or rectified or updated return disclosing the correct income to avoid future notices or scrutiny.
2. If the data is incorrect:
- Doing nothing will result in persistent follow-ups from the Department.
- If you’ve already given feedback and the Department shares this with the source entity, and they reject your correction, you must respond again.
- If the source entity replies that your feedback is incorrect: Take this seriously. If the mismatch involves amounts exceeding ₹50 lakhs, it could lead to reassessment notices up to 5 years and 3 months from the end of the assessment year.
Burning Issues: Property Transactions
A common example involves property data:
- In joint ownership, registrars often report the full transaction value against each co-owner’s PAN.
- In gift/inheritance cases, transactions are wrongly reported as sales or purchases.
There appears to be no technical provision for source entities like registrars to correctly classify such transactions. The Income Tax Department must update its reporting utilities to accommodate these real-world situations.
What Can You Do?
- Submit additional feedback with a proper explanation.
- Since the AIS portal does not allow uploading documents, consider raising a grievance separately to provide references or supporting evidence.
I hope this article helps you understand the issue and provides guidance on how to address it effectively. In case of any query, you can reach out to me on sharshil323@gmail.com.
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