KSCAA writes letter to tax dept about taxpayers being wrongly charged late penalty for ITR ling
KSCAA has reported that the tax department has been erroneously processing many income tax returns (ITRs) and even imposing late ling fees of Rs 5,000 in cases where the ITR was led before the deadline expired. "Our representation to the Central Board of Direct Taxes highlights critical systemic issues in income tax return processing that are causing undue hardship to taxpayers and professionals," says CA Vijaykumar M Patel. Multiple experts have voiced their concerns about the Centralised Processing Centre (CPC) of the income ta department making errors in processing income ta returns (ITR). The Karnataka State Chartered Accountants Association (KSCAA) has sent a representation to the CBDT in this regard. KSCAA's representation says that the CPC has erred in considering the due date for ling ITR and has imposed penalties even for those who led ITR well within the deadline. A chartered accountant, who did not want to be named, also said that her own rm as well as the rm's clients got slapped with the penalty for late ling of ITR even though it was led on time. CPC Processing Errors, according to KSCAA According to the representation by KSCAA (a copy of which was seen by ET Wealth Online) the errors in processing of ITRs noticed by them are as follows: Income tax department's Centralised Processing Centre (CPC) wrongly imposing late ling penalty despite ling ITR in time, several processing errors: KSCAA writes letter to tax dept about taxpayers being wrongly charged late penalty for ITR filing Old/ New ta regime: Numerous taxpayers have received intimations from CPC erroneously calculating their tax liability under the old tax regime, despite these taxpayers having opted for the new tax regime at time of ling their returns. Incorrect due date considered: Certain taxpayers, specically partners of rms liable to tax audit, have led their income tax returns by the extended due date of November 15, 2024. However, the CPC has issued demand notices to these taxpayers, incorrectly considering the due date as July 31, 2024, and levying late ling fees of Rs 5,000 under Section 234F. Interest under Section 234A and 234B: Many taxpayers have reported receiving demand notices where the CPC has incorrectly calculated interest under Sections 234A and 234B of the Act, resulting in innated tax liabilities. Additionally, the absence of a detailed breakdown of the interest calculations in the intimation is creating difficulties for taxpayers to verify and address discrepancies. Late fees for revised Return under section 234F: In certain cases, taxpayers have received demand notices imposing a late fee of Rs 5,000 under Section 234F on ling of revised returns under section 139(5) of the Act. This is erroneous, as in such cases the original return was led within the due date specied under Section 139(1) of the Act and accordingly no late fee should be levied for ling a valid revised return. Proportionate TDS credit allowed:In cases where TDS is deducted on non-income components like GST or other reimbursements, the credit of TDS is not allowed in total, though the assessee has suered the deduction. This creates an unjust situation where the taxpayer has to forego the TDS credit forever. Defective ITR Notices issued incorrectly: Classification of Income Head Based on TDS Deduction Section: Certain taxpayers have received defective notices incorrectly suggesting that income should be classified under the head "Prots and Gains from Business and Profession" rather than "Income from Other Sources" solely based on the section under which tax was deducted (such as Sections 194J or 194C of the Act), says the representation. This treatment of income overlooks the fact that classification of an income item by the deductor cannot override/overshadow the true nature of income as received and recorded by the taxpayer. The representation adds: "Further, such an exercise requires application of mind which is often debatable and outside the domain of the adjustments stipulated under section 143(1). Therefore, such issues cannot be subject matter of automated proceedings by CPC under Section 143(1) of the Act.'' Many taxpayers have received notices for ling defective ITR after ling their Income Tax Return (ITR) in Form ITR-1, where Tax Deducted at Source (TDS) on interest income was initially, and erroneously, shown under Sections 194J and 194C in Form 26AS. Subsequently, form 26AS was corrected/ updated to reflect these deductions under the appropriate section for interest income (Section 194A of the Act). Despite this correction, the CPC has issued defective notices, disregarding the updated and accurate classification in Form 26AS at the time of return filing. KR IRS 41224 -- You received this message because you are subscribed to the Google Groups "Thatha_Patty" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. To view this discussion visit https://groups.google.com/d/msgid/thatha_patty/CAL5XZorbAP4ENrfRUpfH7HgHqDWh5T4CGwfpD%3Dk7b-%3DdykTa-g%40mail.gmail.com.
