A “computer error” in the office of the income tax department is causing anxiety to scores of taxpayers across the  Mumbai city. Several salaried employees have received notices from the department demanding up to a few thousand rupees as penalty for “deferment of tax payment”. Officials admit it is a mistake and have set up a counter at the Bandra-Kurla Complex office to redress the issue.

Over the past week, at least 50 employees of a private company in south Mumbai have approached the accounts department for help. “Each of them has received a similar notice demanding a sum of Rs 1,200 towards deferment of tax payment under Section 234C,” says the accounts officer. “When a few of them visited the I-T office at Bandra seeking clarification, they were informed that this was a mistake caused by a system error and that they will not have to pay anything.”

The glitch seems to have orginated in one particular unit of the BKC wing as the name of the assessment officer is the same across a random sample of notices.

I-T chief commissioner R K Singh said the issue had not come to his attention but promised to look into the matter. “Section 234C is to do with advance tax which is paid in three instalments. Should an assessee pay less during the first two instalments and more in the final one, it is presumed that he had deliberately deferred payment until the last instalment. However, this penalty is only computed for a few months,” he said.

Experts doubted the notices as soon as they saw them, firstly because the recovery amount was uniform. “It is hardly likely that each employee would have to pay exactly the same given that the income from other sources, like interest, does vary. Moreover, Section 234C relates to the advance tax that is paid by the company and not each individual employee. Also, it governs all staff members, so how could some individual assessees receive notices in this regard?” observes a chartered accountant.

In certain cases, taxpayers have been asked to pay as much as Rs 5,000. Irrespective of the amount, they are part-angry part-relieved to know it was all a mistake. “Colleagues who visited the I-T department have been told not to worry about it, and that they may simply write a letter stating the facts,” says a senior officer of a private firm. “Yet it would be advisable for the authorities to issue a public clarification and let all the recipients of such notices know what they are supposed to do.”

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  1. TDS says:

    This is a regular and daily occurrence. The AOs expect money for rectification to give credit for TDS. The Ombudsman in every region advises aggrieved persons, who apply to him, to contact the AO after receipt of demand notice not at all caring for and totally disregarding his mandate. At least in Delhi this is common wioth the new Ombudsman. Every AO in Delhi and other metros/cities/towns await the rectification applications from the salaried and retired employees so that they can charge a minimum 40% of the relief the taxpayer will get and this is to be paid in advance. He knows Ombudsmen will ignore applications for redressal of grievances and he openly declares that he has to share with bosses and clerks! Will the Chairman of CBDT and Revenue Secretary look into this-will they advise Ombudsman to behave properly? They are taking liberties as there is no authority to remove a Ombudsman.

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June 2021