Representation in respect of Returns processed u/s.143(1) of the Income-tax Act, particularly at Mumbai.

Subject : Representation in respect of Returns
processed u/s.143(1) of the Income-tax Act, particularly at Mumbai.

We refer to the returns being processed by the income-tax
authorities u/s.143(1) of the Income-tax Act, 1961.

In this regard, we appreciate the steps taken by the Hon’ble
Finance Minister and the Department in trying to ensure that the returns are
speedily processed and the refunds are issued to assessees in a reasonable time
of their filing the returns.

However, the intimations recently issued u/s.143(1) of the
Income-tax Act, 1961 to various assessees contain many errors causing great
hardship to the assessees. Some of the common errors are listed below :

Due to the various errors, the assessees are under a burden
to prepare and submit an application u/s.154 of the Act for rectification of
the intimation issued to them so as to avoid making unnecessary tax payments.

Further, past experience of processing applications filed
u/s.154 by the Income-tax Department is not encouraging. Though the law states
that the applications filed u/s.154 have to be disposed of within six months
from the end of the month in which the applications are received, very few
orders u/s.154 are passed by the income-tax authorities within the time
prescribed and majority of the orders are not passed even after a considerable
period of time. It is very painful for the assessees to get an order u/s.154
passed by the income-tax authorities. Even after rigorous follow-up at the tax
offices, the orders u/s.154 are not passed in many cases.

Further, with the commencement of processing of returns for
assessment year 2009-10, the refunds if any may get adjusted against the
wrongful demand raised in processing the returns of assessment year 2008-09.

As per Explanation (a)(i) to S. 143(1) of the Act, an
incorrect claim apparent from any information in the return shall be an item
which is inconsistent with another entry of the same or some other item in the
return of income. In this regard, we would like to bring to your kind
attention that the new income-tax forms issued for filing of the returns do
not allow attachment of any documents/evidence for claim of taxes paid and
deductions claimed. Thus, the returns filed will have only entries in the
return of taxes paid and deductions claimed and no supporting documents will
be available with the income-tax authorities while processing the returns of
income. Accordingly, the claim for advance tax paid, self-assessment tax paid,
taxes deducted/collected at source will be shown only at one place in the new
forms and accordingly, there cannot be any inconsistency and thus, denial of
credit in this regard is bad in law.

(a) Further, in few cases, the intimation states that an
application u/s.154 is to be made to the Centralised Processing Centre at
Bangalore, which has only a Post Box Number. The postal authorities do not
accept registered post to a post box number and thus the assessees have no
knowledge as to when the application is received by the income-tax
authorities.

(b)     In Mumbai, the Salary Section have started accepting the applications u/s.154 of the Act, however, considering the errors in number of cases, it would take lot of time to accept the application u/s.154 and dispose of the same. There are number of small assessees who are not very conversant with the process as well as the working of the Department. In such cases, a suo moto action by the Department would be advisable.

Our request:

a) We understand that the errors mentioned above are due to software error in the computer programme. Accordingly, we request your good-self to kindly:

   b)  direct the income-tax authorities to suo moto pass an order u/s.154 of the Act after rectifying the errors mentioned above or in the alternative, to reprocess all the returns and issue a fresh intimation after rectifying the errors.

   c)  We request you to issue a Notification/Circular in this regard stating that all such intimations issued during the said period will be treated as null and void and that fresh intimations would be issued.

If such reprocessing is done, the whole exercise of writing letters by a large number of assessees to the Income-tax Department for rectification could be avoided and huge burden of receiving letters from the assessees and then dealing with the same can be dispensed with. It will also create goodwill in the minds of the general public.

Accordingly, we would really appreciate if a Circular/Notification is issued in this regard and fresh intimations are issued or orders u/s.154 of the Act are suo moto passed by the income-tax authorities rectifying the mistakes in the intimations issued.

Hope you would consider the above and issue a public clarification by way of a Notification/Circular and let all the recipients of such notices know what they are supposed to do. It is further requested that a copy of the said Notification be sent to the Bombay Chartered Accountants’ Society.

Thanking You,

Yours faithfully

For Bombay Chartered Accountants’ Society

Mayur Nayak           Kishor Karia                    Rajesh Shah
Vice-President    Chairman, Taxation     Co-chairman, Taxation Committee
                              Committee