In the realm of tax compliance, receiving notices from the Income Tax Department can be a source of concern for many taxpayers. However, it's essential to view these communications as opportunities to rectify discrepancies, ensuring smooth and transparent financial dealings. This comprehensive guide will walk you through the process of responding to notices and provide insights into the guidelines issued by the Income Tax Department to avoid further defaults and penalties.
Understanding High-Value Transaction Notices
1. The Communication: A notice for high-value transactions is often triggered when there's a disparity between your filed Income Tax Return (ITR) and certain financial transactions flagged by the department. These transactions could include, but are not limited to, substantial GST turnover.
2. Why You Receive It: The Income Tax Department aims to reconcile the information provided in your ITR with actual high-value transactions. It's crucial to understand that this communication is not punitive but rather a step towards ensuring accurate financial reporting.
3. Steps to Take:
Login to Compliance Portal:
- Visit the Income Tax e-filing Website and navigate to "Pending Actions" > "Compliance Portal."
Access e-Campaign:
- Enter the 'e-Campaign' section within the Compliance Portal and select 'High Value Transactions' to review the flagged details.
Provide Feedback:
- Thoroughly review the displayed information and provide feedback based on the options provided (A to E). This includes confirming accuracy, addressing partial inaccuracies, or denying the information.
Upload Revised ITR (if necessary):
- If inconsistencies are identified and a revised ITR is required, upload the corrected ITR on the e-Filing portal after making necessary tax payments.
How to Respond to Displayed Information:
Option A: Information is correct
- Select if all the information is accurate as displayed.
Option B: Information is not fully correct
- Choose this if there are partial inaccuracies. Update the relevant fields with correct information.
Option C: Information relates to other PAN/year
- Indicate this if the information pertains to another individual or financial year. Provide the correct details.
Option D: Information is duplicate/included in other information
- Choose this option if there is a duplication or if the information is already included elsewhere. Click submit.
Option E: Information is denied
- Select this option if you deny the accuracy of the displayed information.
Important Deadline: Ensure all necessary actions and responses are completed by the deadline for filing the Income Tax Return, which is 31st December 2023.
Consequences of Non-Compliance: Furnishing accurate returns is not just a responsibility but a legal duty, contributing to national progress and reducing compliance costs. Addressing any inconsistencies promptly is crucial to avoid potential consequences for non-compliance.
Understanding e-Verification Scheme 2021: Responding to Notices and Letters
1. Purpose of the e-Verification Scheme 2021: The e-Verification Scheme introduced by the Central Board of Direct Taxes (CBDT) aims to share and verify financial transaction information with taxpayers. Notices, particularly under section 133(6), may be issued to individuals or entities selected under this scheme.
2. Accessing 'e-Verification' Section: Taxpayers can follow specific steps on the e-filing portal to access the 'e-Verification' section, initiating a seamless and secure two-way structured communication process.
3. Navigating the 'e-Verification' Tab: Within the 'e-Verification' tab, taxpayers can find a year-wise summary view of notices and letters, providing a snapshot of their information, including PAN, Masked Aadhaar Number, Name of the Assessee, Date of Birth/Incorporation/Formation, mobile number, e-Mail address, and address.
4. Providing Responses:
Response to Notice:
- Navigate through the 'e-Verification' screen, click on the relevant row under the e-Verification list, and then click on the 'Pending' button. This initiates the process of providing responses to the displayed questions.
Response to Letter:
- Responding to letters involves accessing the 'e-Verification' screen, clicking on the 'Pending' button for the relevant row, and providing responses to the questions presented.
5. Viewing Submitted Responses:
For Notices:
- Track the status of responses by checking the information category-wise statuses, including 'Pending,' 'Partially Submitted,' or 'Submitted.' Clicking on these statuses provides a detailed view of the submitted responses.
For Letters:
- Access the 'Submitted' button to review responses provided for letters.
6. Downloading Acknowledgment: Upon successfully submitting a response, users can download the Response Acknowledgement PDF from the 'Activity History' screen, providing a record of the submission.
7. Activity History: The 'Activity History' tab displays all the responses submitted by the user, offering transparency with each activity assigned a system-generated ID (Activity ID).
Conclusion: Responding to notices from the Income Tax Department is a crucial aspect of maintaining financial compliance. By following the provided guidelines and utilizing the e-filing portal's resources, taxpayers can navigate this process seamlessly, avoiding defaults and penalties. Remember, these notices are an opportunity to ensure accuracy in your financial records and contribute to the nation's progress through responsible tax compliance
