Many tax payers filed their returns early, before the Annual Information Statement (AIS) was launched. Chances are there that your tax return may have attracted a demand notice if you had ignored some essential income received during the financial year.
So far, one had to refer to the annual tax statement or the Form 26AS before filing returns. The AIS was launched only on November 1, 2021. While only high-value transactions and tax deductions at source are mentioned in Form 26 AS, the AIS contains all details of savings bank interest, dividends, capital gains, share transactions, etc. tracks more than 50 transactions. Many taxpayers got lower refunds this year due to data mismatch between Form26AS (from NSDL) and the pre-filled income tax forms (maintained by the income-tax department).
The recently-launched AIS is a comprehensive document and contains a vast amount of information such as savings bank interest, dividends, etc & tracks more than 50 transactions. The existing Form 26 AS used to feature only the FD interest and wouldn’t capture the details of dividends. So, those who didn’t have the AIS information available before and filed the returns only based on Form 26 AS have been receiving notices.
Why Income tax department notice?
Our client Mr. Deepak Saxena 41, had forgotten to mention the savings bank account interest from an old account that he hardly uses. he didn’t have the passbook or online access for that account. In the rush to file the returns, He didn’t mentioned the savings interest in his ITR. Since deepak filed his return in September 2021, he didn’t have access to the AIS and has engaged a taxconsult.online team to respond to the notice.
Double reporting in Sale of Property
Buyer of property have to furnish TDS return where they have to reported full value of consideration of property, In one of such case where there were 4 buyers purchased property in equal sharing ratio (i.e. 25% each) from our client & they have reported full value of consideration while filing TDS return on property, Our client i.e. seller’s AIS reflects 4 times the actual value of property under the head ‘Sale of Land or Building’.
Differing amount mentioned
The differential in actual taxable amount and the reported transaction amount has led to many notices. There are many adjustment-linked notices that we have received for our clients. So, with regards to capital gains, the actual cost has been considered in AIS. But under capital gains, an indexed cost is to be considered. Due to the difference in the net and gross taxable income, an income tax notice has been received under Section 143 (1).
We had to respond to the notice within 30 days, but the income tax portal wasn’t permitting uploads of response, so we resorted to the manual response method.
Similarly, there is a difference in share sale transactions too. The value of actual taxable sale never matches as per the AIS as the gross amount is mentioned including brokerage and other costs. The notices are computerized, based on the AIS figures and hence even indexed costs aren’t considered. Double reporting (amount reflected under two PANs) is being done for specified financial transactions when it comes to joint holding in shares and mutual funds.
What to do?
So, if you have received such a notice via email or post then check the timeline to respond to the notice and avoid delay. Assess whether the mistake is actual or a different calculation has been considered.
For bank account interest, reporting of dividends, the tax assessee is responsible. With or without AIS, it has to be reported.
If the tax demand is valid, then go ahead and follow the due procedure. In case you need to file for rectification or report any mismatch, then the online option is available once you log into the new income tax portal.
How to avoid notices
If you are yet to file your tax return, then do check both the Form 26 AS and the AIS before filing the tax return. Do not forget to take into account all the bank accounts for the purpose of savings bank account interest and dividends. Remember, some income would not be taxable, but yet has to be declared in the income tax return.
This is critical in the current year, as there is no additional period for revising returns. If there is a mismatch issue, then this year the tax assesses do not have any option to revise the tax return as the filing due date and the window to revise one’s returns both end on December 31, 2021.
