The issues with the new income-tax (I-T) website, handled by Infosys Ltd, do not seem to end the harassment and agony being faced by taxpayers and chartered accountants (CAs). The latest in the 'technical glitch' of the I-T website is sending notices to taxpayers under Section 143(1); these glitches are causing hindrances while responding to those intimations.
Karnataka State Chartered Accountants Association (KSCAA) sent a letter to JB Mohapatra, chairman of the Central Board of Direct Taxes (CBDT), highlighting hardships being faced by taxpayers and CAs regarding adjustments being proposed under Section 143(1)(a) of the I-T Act.
It says, "Section 143(1) intends to provide a line of communication between the assessing officer and the assessee to provide clarification and agree on the accurate computation of total income. However, such erroneous intimations would defy the purpose of the Section by proposing invalid adjustments. The issue is further amplified on account of assessees not being able to disagree with the adjustments made due to technical problems in the new website."
Section 143(1)(a) of the Act provides that where a return has been made under Section 139, or in response to a notice under sub-section (1) of Section 142, such return should be processed after making specific adjustments as mentioned under clauses (i) to (v) of 143(1)(a) to the compute of the total income or loss. The adjustment needs to be made only after giving intimation and providing an opportunity to the assessee to respond within thirty days of issue of such intimation.
Several other CAs also point out the difficulties in an increased number of intimations sent under Section 143(1)(a) and issues while filing the response.
According to the Association, two main issues are related to the intimation under Section 143 (1)(a) and its response.
It says, "Amounts not credited to profit and loss account are reported under clause 16 of form 3CD, and the same is reflected under clause 5 of Part A – OI (other information) of ITR-6. In such cases, though, the assessee has correctly offered those amounts under other heads of income. However, the intimation issued under Section 143(1) of the Act proposes to add such amounts to total income, which would result in doubly offering the same income and also in reducing the total loss to be carried forward, in the case where there is loss."
"Statutory dues paid and allowable upon payment under Section 43B of the Act are reported under clause 26 of form 3CD, and the same is reflected under clause 10 of Part A – OI (other information) of ITR-6. In such cases, though the amounts have been reported as 'paid on or before the due date for furnishing the return of income of the previous year under Section 139(1)', the intimation issued under Section 143(1) of the Act proposes to disallow the expenses by erroneously considering that the dues have not been paid before the due date for furnishing the return of income. This would again result in invalid addition to income offered and also in reducing the total loss to be carried forward, in the case where there is loss," the Association says.
According to KSCAA, while such adjustments are being intimated to the assesses through the intimations under Section 143(1), "the glitches in the I-T portal are causing hindrances in responding to those intimations, which would ultimately result in automatic adjustment of the invalid demands proposed against future refund amounts."
Appreciating the Union government's efforts in unveiling the much-acclaimed and much anticipated enhanced technical capabilities in the new e-filing portal to process returns and to generate refunds within one day of filing, at the same time, the CA Association says, "on the other side the unguided and un-canalised return processing practice and the mechanism as followed at present under Section 143(1) of the Act without taking cognisance of responses to intimations would regrettably be leading towards violation cardinal principle of natural justice, equity and good conscience, by the tax administration, which may be avoided with necessary measures being taken."
KSCAA has requested the CBDT chairman proper and correct validation of income tax returns (ITRs) to compute total income or loss following provisions contained in sub-clause (i) to (v) of Section 143(1)(a) before issuing intimations under proviso to Section 143(1)(a) the Act.
"The patent defects in the new IT e-filing portal be rectified to enable and facilitate taxpayers to submit their responses to proposed adjustments covered in intimations being received under Section 143(1)(a). Until the request is completely resolved, no adverse notices prejudicial to the interest of taxpayers be issued on account of non-receipt of response within the statutory time limit of 30 days," KSCAA says.