If your tax return for financial year 2019-2020 was pending for processing, do check your emails or make a quick call to your chartered accountant to assess whether a notice has been sent. Chances are that the notice would talk about declining a tax benefit to you even though you are eligible for it.
For instance, Ritesh Jain (name changed) had declared a rental income of Rs 2.24 lakh, based on the amount he received during the financial year 2019-20. Instead of taking the rental income into account, the system has assumed that Jain had asked for deduction of interest for home loan and added Rs 5 lakh to total income.
Another lady from Delhi filed a belated return. So, the rule for delayed returns state that no other losses can be adjusted except for loss from house property. “Even though she has claimed loss from house property, the notice states that since the return was filed belatedly, the loss from house property cannot be claimed,” says Karan Batra, founder of Chartered Club of India.
These are not isolated cases, as several chartered accountants have received the notices for their clients. “We are receiving so many notices under Section 143 that are erroneous in nature. These notices pertain to assessment year (one year succeeding financial year) 2020-21,” says Ameet Patel, tax partner at Manohar Chowdhary and Associates.
These notices are mostly for the complicated and belated returns that were pending processing last year and, for many of these, the refunds had been delayed by at least 7-8 months.
What is Section 143?
Section 143(1) refers to an intimation sent to a taxpayer, when the Central Processing Centre of the income tax department validates the data in your tax returns. At this stage, they try to check for inconsistencies or errors in tax calculation and inform the taxpayer of the error through a notice under Section 143.
The erroneous notices sent out this month for returns filed last year don’t just belong to house property taxes, but many other categories as well.
“We had filed the tax return for a salaried individual, with house rent allowance (HRA) claim. This week we have received a notice that states ‘The exemption for gratuity is not allowed’,” says chartered accountant Mehul Sheth.
Unable to respond
Once you receive such a notice, you are supposed to respond to it by refiling your income tax return based on the suggestions by the income tax department.
“Normally, we need to correct the error, if any, or mention why the tax claim is valid and should be reconsidered. But when we try to submit a response to the notice, the new tax portal doesn’t accept it,” says Batra.
You are supposed to respond to the notice within 30 days. But taxpayers and chartered accountants are helpless, as even though after they file the response, the submit tab isn’t functioning.
“We have received the notices, but we can’t take any action as the new tax portal is not functioning. The data is not being saved on the system and we have decided to stop taking action as we are just wasting time,” says Patel.
The number of hours being spent on responding to such notices too is high. “Where we could respond to such notices in one hour, we have wasted 10 hours in re-filling the data, saving it on the system and trying again on different days,” says another chartered accountant requesting anonymity.
The tax professionals are now waiting for the September 15, 2021 deadline offered to Infosys to ensure smooth functioning of the new tax portal.