Chandrayaan-2 is the second lunar exploration mission developed by the Indian Space Research Organization (ISRO). The mission was launched on July 22 2019. On September 7 2019, the day Vikram Lander was scheduled to land on the lunar surface, it lost the communication with the orbiter and then also with the control room at Bangalore. Though ISRO later traced the location of Vikram Lander on the lunar surface by capturing and analyzing a thermal image of Lander, the communication link is yet to be established.
The entire episode shows how essential is communication. ISRO succeeded 99% of the phase but in the last minute, the unfortunate event of loss of communication kept it away from achieving 100%.
The situation of a taxpayer is akin to ISRO. He works the entire year to earn income and files his income-tax return at year-end. The Income-tax department then attempts to establish communication with the taxpayers after the successful filing of the tax return. If the taxpayer ignores these communications received from the tax authorities, it could bring a lot of troubles for the taxpayer. Here, we have illustrated the types of communication sent by the Income-tax department and how Vikram (ohhh we mean taxpayers) should respond to such communications.
1. Verify Income-tax Return
If a return has been filed electronically, its verification is a mandatory step. If a return is filled but not verified within 120 days, it shall be deemed as an invalid return. The tax department regularly sends a reminder for the verification of the return of income. A taxpayer should not ignore these communications. An unverified return is treated as invalid, thus, it is not processed by the department.
A return of income can be verified with EVC, Aadhaar based OTP or by sending the signed copy of acknowledgement.
EVC is a 10-digit Unique Alphanumeric Code to confirm the identity of the person furnishing the ITR. It can be generated through Net Banking, through Bank account number, through Demat Account Number or through Bank ATM. Assessee can also opt to verify the return with the OTP sent on the mobile number registered with the Aadhaar.
If the assessee does not opt to verify the return using EVC or Aadhaar based OTP, then he can send a signed copy of ITR-V, by ordinary post or speed post to ‘Income-tax Department – CPC, Post Bag No. 1, Electronic City Post Office, Bangalore-560100 (Karnataka)’.
2. Notice for Defective Return of Income
A tax return is flagged as defective if it has not been filed with all the necessary information or documents as required under the law. If an Income-tax return is found defective then the department issues a notice to the taxpayer to intimate such defect. The taxpayer is required to rectify such defect within 15 days.
If taxpayer ignores such communication of defective return sent by the department or he fails to rectify the defect, the return shall be treated as an invalid return and the consequences shall be invoked as if the return has not been filed, i.e., penalty, prosecution, etc.
3. Intimation under Section 143(1)
A return is processed automatically to verify the correctness of arithmetical calculations, deductions claimed, etc. Once a return of income is processed, an intimation of the same is sent to the assessee on the registered e-mail ID.
Return of income is processed to ascertain if any tax or interest is due from the taxpayer or refund is due to him. It is determined after rectifying the arithmetical error or incorrect claim in the Income-tax return.
A taxpayer should not ignore this intimation as CPC shall proceed to make adjustments in the ITR, if any error is noticed while processing. However, before making any adjustment, an opportunity is provided to the taxpayer to explain and rectify the same within 30 days from the date of issue of such intimation. If the taxpayer fails to submit a response within the given time, the adjustment of the amount indicated in the intimation is made by CPC. For instance, if there is a mismatch between the TDS credit claimed in the return and the credit available in the Form 26AS (tax passbook), the CPC shall not allow the credit to the extent of mismatch unless such difference is explained by the taxpayer.
4. Intimation of refund failure
If the amount of tax paid by a taxpayer exceeds the amount of his actual tax liability, such excess amount is the ‘Income-tax refund’ which can be received by the filing of an Income-tax return only. Such refund is issued after processing of income-tax return.
At times, the department is unable to issue a refund even though after successful processing of ITR by CPC. The refund could not be processed due to various reasons, inter-alia, wrong details of bank account mentioned in the return, the address mentioned in the return where refund voucher was to be delivered is incorrect, the refund voucher expires, etc. Intimation along with the reason of the same is sent to the assessee for failure to process the refund. In such case, the assessee can raise the request on the e-filing portal for reissue of refund.
5. Selection of Case for Scrutiny Assessment
Every year the income-tax department selects a certain percentage of tax returns for scrutiny assessment. Once the return is selected for scrutiny, the tax officer can do a detailed examination of the Income-tax return submitted by the taxpayer.
Now, the CBDT has made it mandatory for the tax officers to take recourse of electronic communications for all limited and complete scrutiny. Thus, the taxpayer does not need to physically visit the tax office. All the communications are done through the ‘E-Proceeding’ functionality available at e-filing website of the Income-tax Department. One should ignore these communications as it may invite penalty. To summarize, just like we are desperate for Vikram to respond to the orbiter, Income tax department also awaits for the taxpayers to respond to the communications so that the income tax return can be processed and completed. Be the Vikram who responds timely.