Updated ITR deadline: As the deadline for updating Income Tax Returns (ITRs) for the fiscal year 2020-21 draws near, many individuals have recently received emails from the Income Tax Department regarding significant transactions flagged in their Annual Information Statement (AIS). Here’s what you need to know about these communications and how to address them:
Who receives these communications?
As per an ET report, individuals are receiving these communications from the Income Tax Department based on discrepancies or significant transactions detected in their financial records.
The Income Tax Department contacts taxpayers through the AIS/Compliance Portal to gather feedback on information obtained from different sources. Taxpayers may need to respond or explain queries raised in the e-Campaign section to complete the process.
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What transactions are highlighted?
The e-Campaigns initiated by the Income Tax Department may focus on various issues, including non-filing of returns or significant/high-value transactions conducted by the taxpayer during the fiscal year.
Understanding the communication
Naveen Wadhwa, VP at Taxmann, explains that the messages seen in the AIS/Compliance Portal’s e-Campaign section indicate that the tax department has discovered information inconsistent with the income reported in the taxpayer’s ITR.
Deadline for updated returns
Eligible taxpayers can file an updated Income Tax Return to correct errors or omissions in their previously submitted returns. This may result in additional tax liability upon recalculating income. The deadline to file an updated return for the fiscal year 2020-21 (Assessment Year 2021-22) is March 31, 2024.
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Responding to the communication
Chartered accountant Mihir Tanna, associate director-direct tax at S.K Patodia LLP, was quoted as saying, “Since the deadline to file ITR-U is near, the tax department is sending emails pertaining to FY 2020-21 to some of the taxpayers stating that their case has been selected for e-Verification under e-Verification scheme 2021 visible under the tab “e-Campaign” after clicking “Notices” tab of the Compliance Portal.” He further stated that emails are sent to taxpayers who have either not filed their ITR or whose disclosed information in the filed ITR does not match with the information available with the Department.
Accessing the communication
On the ITR e-filing portal, go to the pending action tab and select “Compliance Portal”. Then, navigate to the e-Campaign tab, which will take you to another page. Here, you’ll find a list of transactions flagged by the tax department.
By clicking on each flagged transaction, taxpayers can view additional details about the specific transaction. Transactions marked with an “e” are those that may not need to be disclosed in the ITR according to the income tax system, typically received after recent years’ ITR processing.
The provided screenshot illustrates a communication received from the income tax department, accessible through the AIS/Compliance Portal under the e-Campaign tab.
Source: ET quoted Punit Agarwal, founder, KoinX
In the screenshot, clicking on the transaction category listed in the e-Campaign list leads to a new page displaying specific information categories marked with “e”, indicating communication sent by the tax department.
Source: ET quoted Punit Agarwal, founder, KoinX
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Alternate way to access Compliance Portal
To access the Compliance portal, log in to the e-filing ITR portal and go to the Pending Action tab. From there, click on “Compliance Portal” and then select the Notices button.
Source: Mihir Tanna, associate director, S.K Patodia LLP as quoted by ET
Tanna explains that a client received a communication regarding the purchase of a house property in the fiscal year 2020-21. However, this particular communication isn’t visible on the AIS/Compliance Portal (https://ais.insight.gov.in/complianceportal) but can be found under the “Notices” tab of the compliance portal (https://compliance.insight.gov.in/compliance/). Although both portals are named Compliance Portal, they serve slightly different purposes. The AIS Compliance portal displays newer cases, while the Compliance Portal shows cases from older assessment years, according to Tanna.
The provided screenshot depicts a notice for the fiscal year 2020-21 under the e-Campaign tab of the Compliance portal.
Source: Mihir Tanna, associate director, S.K Patodia LLP as quoted by ET
Below is the screenshot of the notice received by one of Tanna’s clients regarding a property purchase. This notice is only visible on the Compliance portal, not on the AIS/Compliance Portal.
Source: Mihir Tanna, associate director, S.K Patodia LLP as quoted by ET
Why are these communications sent?
Tax experts suggest that these communications are sent to enhance compliance and validate financial transactions. Punit Agarwal, the founder of KoinX, a specialised tax filing assistance platform, explains that the aim of these communications is to verify financial transactions based on information obtained by the tax department.
Agarwal further elaborates, stating that the tax department scrutinises data from various sources, including TCS returns, TDS returns, specified financial transactions (SFT) returns, and other relevant channels. Additionally, the department systematically collects and assesses data concerning goods and services tax (GST), import/export activities, as well as transactions involving securities, derivatives, commodities, and mutual funds. This is achieved through leveraging information supplied by diverse third-party entities.
Consequences of non-compliance
According to Wadhwa, when faced with such situations, a taxpayer has two choices: they can either provide feedback if the information provided is inaccurate or update their ITR if there’s a deadline for doing so.
“If the taxpayer does not respond to this communication or the response is not satisfactory as per the tax department’s available information, then the tax department can start scrutiny proceedings or assessment for the escaped income if the evidence is substantial,” Wadhwa further added. Regardless of the tax department’s decision, whether it be scrutiny or assessment, an income tax notice under the specified sections would be issued.
