The credit for OLTAS payments are considered to extent claimed in the return and available in 26AS as on the date of processing is allowed subject the details of payments in the return being correct. We have noticed tax payment (Advance Tax, SAT) mismatch due to following mistakes:
1. Date of credit is entered in MM/DD/YYYY or YYYY/ MM/DD format where it is required in DD/MM/ YYYY format in the return.
2. The amount paid is rounded off to nearest 10, where the amount should be exact. Many people pay-7,899 to Bank and claim 7,900 or 7,890 which is not allowed. Amount should correct.
3. BSR codes are quoted incorrectly.
4. Date of deposit of cheque is mentioned while date of credit is required.
BCA: Also, in certain cases, the credit for taxes paid as per Form 26AS have also not been granted. Thus, there is no clarity amongst tax payers as to on what basis credit is granted by the CPC for tax payments
CPC: The difference when there is payments shown in 26AS but not considered in processing is mainly due to incorrect entry of points mentioned in 1(i) above. Many times it is noticed that payments claimed are made in respect of incorrect PANs, for different assessment year, for different purpose (people make payment under minor code 400 (tax on regular assessment) even before an intimation or assessment is made. Actually they are paying SAT(Minor code -300). Considering the magnitude of mismatch pertaining to Minor Code 300 and 400, changes are being made to take into consideration credits available in either minor codes. Rectifications may be filed and credit would be given to SAT wrongly paid as Regular tax (minor head 400)
BCA: Further, in certain cases, credit has been given as per Form 26AS. However, the TDS credit claimed by the assessee based on the original certificates available with him/her is greater than that seen in Form 26AS, which might be due to the errors/ non-filing of the TDS return on part of the deductor. In such cases, the only way that remains for claiming the TDS credit is to produce the original TDS certificates for the said amount to the relevant Authority. However, there is lack of clarity regarding the location (regional jurisdiction or CPC – Bangalore) where the said certificates need to be produced.
CPC: AO can pass further rectification based on the verification of TDS certificates. CPC has processed cases only where TDS credit is covered by TDS guidelines.
BCA: There could be a difference in the year of deduction of TDS, and the year in which credit for TDS is to be granted. This could arise in the case of advances received, where TDS is deducted at the time of receipt, but credit is available in the year in which the income is offered to tax. This could also arise in a situation where the Deductor is following the mercantile system of accounting and the recipient is following the cash method of accounting, or vice versa. In such cases, the tax credit for the said period as per Form 26AS becomes irrelevant. Thus, in such a case, it becomes necessary for the department to understand the manner in which the income is offered to tax and the TDS credit to be given. However, once again, the problem persists as to where the rectification/explanation needs to be given – to the jurisdictional Assessing Officer or to the CPC.
CPC: AO can pass further rectification based on the verification of TDS certificates. CPC has processed cases only where TDS credit is covered by TDS guidelines.
BCA: Consequent to the above, there is incorrect calculation of interest u/s 234A/ 234B/ 234C/ 244A.
CPC: Consequential but once rectification is completed the computations are set right.
2. Adjustment of incorrect demands of earlier years:
In certain cases, certain erroneous demands for the previous years have been incorrectly adjusted against the refund for the year for which intimation is issued. Following are the issues relating to the same:
Arrear demand adjustment will continue to happen as per update uploaded by AO. Assessee will be able to get his refund from the AO who had uploaded the arrear. Eg. For a record of A.Y. 2009-10 where refund arose, if there is a arrear for A.Y. 2003-04, the amount of arrear has been paid by the refund of A.Y. 2009-10, so the assessee can get his refund for A.Y. 2003-04 once the demand if any is nullified by rectification which has to be done by the AO since A.Y. 2003-04 records are available with AO.
BCA: The main reason for such incorrect adjustment seems to be that the demands have been uploaded by Assessing Officers as per their records without proper verification as to the correctness of the outstanding demand. It is essential that all such demands uploaded in the system be reversed, and demands be uploaded only after verification by the Assessing Officer and certification of correctness of demand by the Additional Commissioner. In case of demands raised in the future, they should be uploaded after certification by the Commissioner that there are no pending rectification applications/appellate effects to be given in respect of such demands.
CPC: All arrear demands are adjusted based on data uploaded by respective Assessing Officers. Sufficient training has been given to them to make sure only correct data is uploaded. We are continuously training them appropriately.
BCA: No advance intimation is given to the assessee before making the adjustment as required by section 245. Such adjustment is therefore not in accordance with law. It is therefore suggested that an e-mail be sent to the assessee before such adjustment, giving him an opportunity as required by the section. In case the assessee points out that there is a pending rectification application/appellate effect to be given with proof in support thereof or that he has not received the relevant notice of demand so far, then no adjustment should be made, and the matter should be taken up by the CPC with the concerned CIT.
CPC: The AO has been given clear instructions to completely verify and authenticate the arrear demand before upload. As a part of this process the AO is expected to contact the taxpayer and confirm the arrear position. Only subsequent to this the arrear demand is uploaded by AO to CPC. Therefore, CPC (having concurrent jurisdiction over the taxpayer along with AO) intimates the taxpayer about the arrear demand adjustment. AOs will be instructed to clarify to the taxpayer that arrear demand (communicated by AO to taxpayer shall be treated as intimation u/s. 245 and CPC (having concurrent jurisdiction) shall adjust this demand against any refund due.
BCA: In some cases, the assessee has not received any intimation/notice of demand raising the above-mentioned demand. As a result of this, the manner in which the amount of demand is computed is not known to the assessee. Also, the assessee does not have access to the database of the income – tax showing the said demand. Thereby the assessee has to go through hardships of establishing the reasons/ records for the aforesaid erroneous demand.
CPC: The intimation in all the cases is sent by email, in case of failure due to bouncing of email, the intimation is sent by speed post. In all cases of demand the intimation along with demand notice is sent by email and paper intimation through speed post. It is important that all assessee fill up the email correctly, so that these intimations are received.
BCA: In certain cases, intimation/order for the year in which the demand is raised has been received by the assessee. In most cases, the demands have arisen on account of non granting of credit for TDS, Advance Tax and/or Self Assessment Tax. In most cases, the assessee would have already filed a rectification application against the said incorrect demand. It appears that the various Assessing Officers have, without considering these pending rectification applications, uploaded these erroneous demands onto the Income Tax Database.
CPC: Answered as above.
BCA: In some cases, intimation for the year in which the demand is raised has been received by the assessee. Subsequent to this, the case is taken up for scrutiny and an order under section 143(3) has been passed which shows a ‘Nil’ demand. However, the department has not made the required changes in the data base and accordingly an incorrect demand appears which is wrongly adjusted.
CPC: Same as above. It is the AO’s responsibility to upload only ‘correct’ arrears. In fact AO’s have been clearly instructed not to upload any demand that is stayed or covered by instalments.
BCA: Further, the delay in attending to rectifications of up to 6 months results in incorrect demands being adjusted.
CPC: Online rectification is much faster to process than request received through mail. Rectifications are being expedited
3. Wrong adjustments while computing income:
BCA: In cases where the assessee has business income and income from other sources, income from other sources is deducted from the Profit and Loss a/c and taken separately under the head ‘Income from Other Sources’ by the assessee. However, as per the intima-tion u/s 143(1), the said income is taxed twice as it is included in the Profit & Loss A/c as well as Income from Other Sources. Similar is the position as regards capital gains, which forms part of profits as per Profit & Loss Account, but which is treated as exempt income or is taxed under the head “Capital Gains”. Such capital gains is also taxed as profits and gains of business.
CPC: The assessee is expected to offer income from Part A P&L Profit before tax in schedule BP and in schedule BP he has to reduce the income offered for taxation under heads of income as provided Sl. 3. When this is not done, there will be taxation twice for all other heads of income which form part of Part A P&L. If depreciation schedules (DEP/DPM/ DOA) are not filled then depreciation is not allowed, depreciation claimed in P&L but not in schedule is not allowable, Depreciation claimed in P&L is supposed to be added back in Schedule BP and depreciation as per IT RULES must be taken into account. This is not done in many cases leading to addition of depreciation from P&L. In schedule BP profit before tax (PBT) should be taken but assessee took Profit after tax so income tax is added back to reach on PBT.
4 No column in ITR forms for set off of unabsorbed Depreciation of earlier years
It has been provided in schedule CFL, which is the place where Carried forward losses in the column: Unabsorbed Non Speculative are to be mentioned for adjustment in Schedule BFLA.
BCA: There is no distinction made between unabsorbed losses and unabsorbed depreciation in the CFL schedule in the ITR. Thus, the assessee faces a problem when he wants to claim only unabsorbed depreciation, which is not time bound.
CPC: Under e-filing, total of unabsorbed depreciation (beyond eight years) has been advised to be entered in the earliest year permissible in CFL schedule. This will allow system to compute adjustment correctly.
5 Wrong computation of interest u/s 234A/ 234B/ 234C/ 244A:
BCA: In some cases, there is incorrect computation of the interest u/s 234A/ 234B/ 234C/ 244A.
CPC: Needs to be looked at case by case.
6 Correspondence with the staff:
BCA: Since the CPC appears to be manned by a call centre, there is no option available to a tax payer in terms of corresponding with anyone in particular at the CPC office. The executive attending queries changes every time the assessee calls and thus a follow up for anything becomes impossible and tiresome as one has to explain the same case all over again. It is therefore suggested that a ticket number should be allotted for each complaint, and record of that complaint and follow up thereon be maintained by the call centre in its system, which will facilitate follow up by the assessee in subsequent calls.
CPC: Ticketing system is already in place and is used by the call center. A call center agent has access to data on all past interactions with the assessee.
BCA: Also, the call centre staff are not fully conversant with the intricacies of the tax returns, and therefore are able to answer only very basic queries. It is suggested that in case a taxpayer is unable to get his queries resolved by the call centre staff, he should be given the option of escalating the issue to a tax officer, who is aware of the intricacies of e-filed returns.
CPC: We have three levels of ticketing praticed by the Call Center.
- Level 1 – Consists of queries which are handled directly by the agents.
- Level 2 – Consists of queries which are handled by the respective process owners.
- Level 3 – Gets escalated to the income tax officer.
7 Special rates of tax:
BCA: In certain cases, where there is Long Term Capital Gain which is set-off against Long Term Capital Losses of earlier years and the Net Long Term Capital Gain becomes NIL, the software used by the CPC for processing the returns has still levied special rate tax on it, without considering the set-off.
CPC: This is due to incorrect entry of section codes in schedule SI. Use of wrong section codes is one of the main reason for income being increased.
8 Rectifications:
BCA: Online Rectifications are not carried out promptly, with time taken from three to sixmonths.
CPC: Initially there were problems in processing them quicker than three months. Now the process has stabilised and the processing is much faster. The delay is largely due to non receipt of Response sheet which has to be filed by taxpayer to complete rectification process in case of any change in bank account particulars. Many people are filing rectification in case of refund failure or due to change in bank details.
BCA: Very often, the rectified order is received without any corrections, except for additional interest being charged.
CPC: In case rectification is due to tax payments mis-match, then the taxpayer is required to file rectification after confirming the credit position and also should re verify the details provided in the return as there could be an issue with both. No additional interest is being charged.
BCA: Once a rectified intimation is received, there is no provision for further rectification of this intimation, as the system does not permit such further rectification applications. The system should be modified to permit such further rectification within the specified time limit permitted by law.
CPC: The multiple rectification facility will be available shortly.
