Many tax-payers looking forward to year-end holidays were in for a rude shock this week when a cautionary message from the Income Tax Department landed in their inboxes.
The message sought to alert tax-payers about missing income tax returns and possible non-disclosure of high-value transactions such as property sale/purchase, investment of over Rs 10 lakh in mutual funds and capital gains made on sale of equity shares.
The I-T department on December 26 clarified that the messages were sent so that the tax-payers could either provide feedback through the official return-filing portal or file revised returns before December 31 in the case they had failed to make the disclosures in while filing return.
“The objective of the communication is to provide an opportunity to taxpayers and facilitate them to provide their feedback online on the Compliance Portal of ITD and, if necessary, revise their returns already filed or to file the Return if not filed, so far. The last date for revising or filing belated return for AY 2023-24 is December 31, 2023. Taxpayers are requested to respond to the communication on priority,” the alert said.
High-value transactions under the scanner
The messages that tax-payers have received pertain to possible non-disclosure of high-value transactions such as property sale or purchase and capital gains made on sale of equity shares.
"Largely, tax-payers who have sold or purchased property have received such intimations from the I-T department. Some tax-payers who engaged in delivery-based share trading transactions and have netted capital gains have also received such messages," Mumbai-based chartered accountant Chirag Chauhan said.
If you have received the message, check your ITR to figure out whether you have disclosed such transactions. "It is likely that some taxpayers who have disclosed their ITR would also have received such messages. The I-T department seems to have sent mass messages to people whose Annual Information Statement (AIS) contained details on such high value transactions (even if they have made the disclosures in ITR),” he added.
This is likely a cautionary intimation from the tax department, say chartered accountants. "Treat this as a mini notice. Should you fail to take the message seriously, you could receive an I-T notice later," Chauhan further said.
Also read: ITR mistakes: Five return-filing errors that could trigger income tax notices
Foreign trips, investments trigger I-T intimation
This apart, hundreds of tax-payers, including minor children, have received notices on the basis of the foreign trips undertaken or foreign investment made.
"There are many minor children who have received an income tax notice under Section 143 or Section 136. Technically, minor children are not supposed to file tax returns. But these mass notices have been sent by the system because either foreign investments were made in their name or TCS has been collected against their permanent account numbers (PAN) for foreign tours," said Paras Savla, partner at KPB & Associates.
Moneycontrol has accessed copies of such notices, sent via emails. “The Income Tax department has received information on financial transactions or activities…however, as per records available, you do not appear to have filed income tax return for assessment year 2023-24 (relating to FY 2022-23),” the email stated. Details of flagged transactions have also been shared including foreign remittances or purchase of foreign currency and purchase and sale of securities and mutual funds units.
They have been either asked to file returns if not filed already or declare the income that has been missing from their tax returns. Since many are on holiday, they could miss these notices sent via email.
Do not panic, but take prompt action
While there is no need to panic, do not ignore these notices as the Annual Information Statement (AIS) captured key financial transaction data.
Any kind of mismatch with the AIS data could lead to an error and difficulty in processing the data in case the return has not yet been processed.
If you have received such a notice then you need to firstly respond to it through I-T’s compliance portal. You can using either your account on the income tax portal or through a button marked on the AIS.
"If the information belongs to another PAN then you need to submit a feedback through the AIS stating so. This is because often the information pertains to joint holders under investments," Savla said.
Alternatively, you have the option to revise returns filed earlier. The deadline for revising returns filed before July 31 or filing belated returns for the assessment year 2023-24 is December 31, 2023. One should revise the return only if any information has been missed in the original return.
If any income has escaped taxes then you would have to pay the interest on such income starting March 31, 2023, or the advance tax window when it should have been paid. Additional penalty too would be applicable.
Consequences of ignoring I-T message
If one doesn't respond to the notice then chances are that after December 31, 2023, the window to both respond to the notice and revise the return would be closed.
The only option left would be to submit an Updated Return. But if one submits an updated return then an additional tax of 25 percent would have to be paid if the return is filed within 12 month and 50 percent additional tax would have to be borne if the return is filed 24 months later.
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