Taxation
Economy & Nation Exclusive
How to reply to a demand notice for tax arrears
Here are some quick tips for taxpayers on how to file an online response to income tax demand notice, they may have received on tax arrears
 
Several people are receiving demand notices from the Income Tax department for tax arrears, despite having paid all their dues on time. Why is this happening?  We learn that this has happened because the Assessing Officers (AOs) are uploading the tax demands on the website of the Income Tax Central Processing Unit (CPU), which automatically sending out notices and causes panic among taxpayers. 
 
The outstanding tax demand in the notice may be inaccurate for various reasons. A common one is non-reporting or delayed reporting of TDS by deductors leading to mismatch between the claim and data available with the I-T department. Other reasons are: non-posting of challans, non-disposal of rectification applications and incorrect details of income or pre-paid taxes reported by taxpayer. Since the demand notice is issued, the taxpayer has no option but to respond to it without fail. 
 
One Moneylife Foundation member has received a tax demand notice for the assessment year (AY) 2008-09 that too when, he had received a refund for the same year. But this is not the first time it has happened. In the past, he had received similar notice in the past, but after noting his response, the assessing officer (AO) accepted the mismatch in tax deducted at source (TDS) and released the refund. 
 
After a hue and cry from taxpayers who have received such notices despite having paid taxes in time, the Central Board of Direct Taxes (CBDT) has brought out detailed guidelines to help taxpayers file their response online. The Circular explains various steps to be taken by the taxpayers to view and submit their response and also spells out various facilities available to taxpayers as well as responsibilities of the assessing officers-AOs to verify and take corrective actions.  
 
A demand up to Rs1 lakh for an Assessment year in case of an individual or Hindu undivided family (HUF), which has already been paid but is shown as outstanding due to mis-match or other errors, can be rectified on the basis of evidence of tax paid as submitted by the taxpayer.
 
About 95% of entries of demand involve demand up to Rs1 lakh and about 90% of such assesses are individuals and HUFs, the I-T department said.
 
Here are the steps that a taxpayer needs to take to file online reply to a tax demand notice...
 
1. Visit e-filing site of I-T department www.incometaxindiaefiling.gov.in
2. Log in using your user ID, password, date of birth and the captcha code
 
3. Go to e-file menu and select 'Response to Outstanding Tax Demand'. You will get following details... 
 
4. Here you can choose your response depending upon the situation related with your tax payments. 
 
 
In case, you select, the 'Demand is correct" and submit it, then you cannot "disagree with the demand" any further. After submitting, you will get a success message. Remember, if there is any refund due, then it would automatically be adjusted against the tax demand (plus interest) outstanding. In the other case, you will have to immediately pay the amount due.
 
If you select, 'Demand is partially correct', then you will have to enter the amount, which is correct and the amount that is incorrect. 
 
For the amount, which is incorrect, you will have to mandatorily file one or more reasons. If demand is already paid, then challan identification number (CIN), if available. You need to give details, in case, the demand is reduced, or if appeal is filed, or if rectification/revised return is filed.
 
Based on the reasons, you selected, you need to provide additional information and upload relevant documents.
 
If you select 'Disagree with the Demand', then you need to furnish details of disagreement along with reasons.
 
5. After successfully submitting the details, you will get the transaction ID. After submitting your response, you can also check the details by clicking on 'View' button. Here ends your part.
 
The AO, who had issued the demand notice, then checks, verify details submitted by you, and take necessary action. If your reply or I-T department’s record shows that the tax has already been paid and there is a challan number available for it, then the AO reduces the demand as per the case.
 
If there is a mismatch in advance tax or self-assessment tax, then the AO passes order under Section 154 of the I-T Act.
 
Demand due to TDS Mismatch: 
a. If the taxpayer's reply or Departmental records show that the demand is on account of TDS mismatch and TDS credits are available in the system, the AO should follow steps as under:   
 
i. The AO should reduce the demand by passing rectification order u/s 154 on the system after taking into account the TDS credits available on the system. 
ii. If the demand is prior to 1 April 2010, the demand has to be net reduced directly on the CPC-FAS system after rectification u/s 154.   
 
b. If the credits are not available in 26AS: The reduction can be one only in the cases of Individuals and HUFs. Further, the amount of reduction should not exceed Rs1 lakh for that AY and AO should take following steps:   
 
i. AO should pass order u/s 154 manually after obtaining the TDS certificate from the assessee based on which claim has been made.   
ii. In case, the outstanding demand is more than Rs25,000 for that of the quantum of demand being reduced, the AO should obtain an indemnity bond.
iii. Additionally, in case the demand being reduced under paragraph 4.2.(b).(i) above, exceeds Rs50,000 for that AY for the assessee, besides obtaining the indemnity bond, approval of Range Head should be taken on file before removing/reducing the demand.
 
Demand already reduced or action is pending: 
(a) If the taxpayer's reply or Departmental records show that demand has already been reduced byway-of an order (rectification order, appeal effect order etc.), the demand has to be reduced directly on the CPC-FAS system.   
 
(b) In case where rectification or giving effect order to reduce demand is pending, the same should be completed and revised demand should be reflected.   
 
(c) It is also clarified that after taking action as per pare 4.1 or 4.2, if any refund becomes due to the taxpayer, the same may also be issued. 

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COMMENTS

YESHVANT WADEKAR

4 months ago

VERY GOOD ARTICLE. MOST INFORMATIVE.

YESHVANT WADEKAR

4 months ago

VERY GOOD ARTICLE. MOST INFORMATIVE.

Priti

1 year ago

I have always been a salaried employee and filed my returns on time. The IT dept had incorrectly raised a tax demand in year AY2009-10. I had a tax refund in year AY2012-13 which the IT dept adjusted against the incorrect tax demand. I tried to respond to my IT demand as per your post above, however I realised that the IT dept has removed the tax demand. So, I can not see any tax demand now. My question is - how do I get my tax refund back?
Can you please guide me?

Priti

1 year ago

Hello, IT dept had raised incorrect demand during year 2009-2010 due to tax credit not taken into account. For year FY11-12, I had a tax refund which they adjusted against incorrect demand. I tried to respond to the incorrect demand as per your above suggestion and realised that the IT demand has removed the incorrect tax demand. My question is - now how do I try to get my refund back from the IT dept?

I have always been a salaried employee and filed my tax returns on time!!

Pradeep R Hattangadi

2 years ago

Most of the demands pertain to the Assessment Years 2008-09 and 2009-10. In each of these Notices they say that the demand are based on Assessment made by the AO's. Surprisingly, in not a single case has the assessee received the Assessment Order. further, all these demands are in respect of Paper returns filed. There are also cases of demand relating to Assessment Year 2003-04 as mentioned by sri Rajesh Agarwal. In fact the TDS Section of the IT department does not have records of the TDS. so what is the fate of such assessees. Of course, the department has already recovered the dues from the refund due. it is better to pay interest than getting your refund adjusted from the dues which these guys have created out of nowhere. Sometimes I feel that it is a ploy to show that there is a huge demand outstanding from Assessees to the Parliament.

Rajesh Agarwal

2 years ago

i have come across, where department people are saying that, they are not aware of this scheme.there are cases, where department force fully asked the bak to pay the money and they took it directly from the bank, the amount still shows as demand. cases where ao has reduced the amount by rectification, still the old demand and the new demand for the same assessment year is reflected.

Sudhakar Ojha

2 years ago

Should the IT dedpartment not provide full detaills and records online when raising old demands ? How will tax payers specially the older ones keep such records ?

REPLY

Rajesh Agarwal

In Reply to Sudhakar Ojha 2 years ago

i think yes, if this is done, than either 505 of the demands will get dropped automatically, the the department will realise their mistake or they may not be in a position to trace the papers

MDT

In Reply to Sudhakar Ojha 2 years ago

Thanks for your comment.
As stated in the article, the AOs are uploading tax arrears demand on the CPC site. This means, the taxpayer would receive the notice on his/her registered email ID or even through post. When you open, the link "Response to Outstanding Tax Demand", it will show you the details, if any. You can click on the view button to check the notice and response as required.
-MDT

Sudhakar Ojha

2 years ago

But how do we get such old details such as 08-09 case you mentioned ?

REPLY

Ameet Patel

In Reply to Sudhakar Ojha 2 years ago

The reply given by MDT is correct. All tax payers MUST maintain their tax files for at least 8 years. The IT Act empowers the tax officer to reopen past assessments. So, independent of the demand related matter, you still need to maintain your past records.

MDT

In Reply to Sudhakar Ojha 2 years ago

Thanks for you comment.
As per the law, the I-T department can ask a taxpayer for documents related to past seven years for auditing/scrutiny purpose. Therefore, it is important to retain tax related documents for past 7 years in case any audit of the tax return filed is conducted by the revenue authorities. If you had filed your returns online, then you will get the details on your ITR-V form on the e-filing site of I-T dept.

MDT

In Reply to Sudhakar Ojha 2 years ago

Thanks for you comment.
As per the law, the I-T department can ask a taxpayer for documents related to past seven years for auditing/scrutiny purpose. Therefore, it is important to retain tax related documents for past 7 years in case any audit of the tax return filed is conducted by the revenue authorities. If you had filed your returns online, then you will get the details on your ITR-V form on the e-filing site of I-T dept.

Rajesh Agarwal

In Reply to MDT 2 years ago

yes, but they are asking for 2003-04 etc, so what do u suggest

7 Things a PIO is supposed to do for you under RTI
There are clear guidelines from the CIC for the PIO. So, the next time a PIO dilly-dallies over the information you have sought use this
 
While the RTI Act does empower the citizen to procure information from public authorities, it is sometimes intimidating for him, when the Public Information Officer (PIO) to who he submits the application, does not reciprocate as per his duties, laid out in the Act.
 
Did your PIO ignore the information you sought even after the mandatory 30 days? Did he provide vague or insufficient answers? Did he not forward your application to the relevant PIO in case the information that you asked for, did not fall under his jurisdictions? For these and any other deficiency in giving you information, there is no need to throw up your hands (the government would just love if this happens). The Central Information Commission has spelt out the role of a PIO, in detail, and it is important that you, as a RTI applicant should be aware of it.
 
Time and again, the Department of Personnel and Training (DoPT) has issued circulars and guidelines to PIOs to be sensitive to the information sought. It has also repeatedly directed all public authorities to strictly abide by the Section suo motu disclosures. (check this out: http://persmin.gov.in/DOPT/RTICorner/Compendium/COMPENDIUM_Final.pdf). However, defiance to such directives continues but it would help, if the citizen is aware of what the PIO SHOULD do for him.
 
Here are some pearls of wisdom uploaded in CIC online at the website http://rti.india.gov.in/ which need to reiterated considering the common complaints of unfriendly PIOs
 
1. PIO must know the RTI Act fully: The Central Public Information Officer (CPIO) of a public authority plays a pivotal role in making the right of a citizen to information a reality. The casts specific duties on him and makes him liable for penalty in case of default. It is, therefore, essential for a CPIO to study the Act carefully and understand its provisions correctly. Following aspects should particularly be kept in view while dealing with the applications under the Act
 
2. The PIO MUST give you information in any of these formats: A citizen has a right to seek such information from a public authority which is held by the public authority or which is held under its control. This right includes inspection of work, documents and records; taking notes, extracts or certified copies of documents or records; and taking certified samples of material held by the public authority or held under the control of the public authority
 
3. Your PIO should know that you can seek information that a MP has access to: The Act gives the citizens a right to information at par with the Members of Parliament and the Members of States Legislatures. According to the Act, the information which cannot be denied to the Parliament or a State Legislature, shall not be denied to any person.
 
4. The PIO should give you information in the format you want: The information to the applicant should ordinarily be provided in the form in which it is sought. However, if the supply of information sought in a particular form would disproportionately divert the resources of the public authority or may cause harm to the safety or preservation of the records, supply of information in that form may be denied.
 
5. PIO is duty bound to assist you: The Central Public Information Officer has a duty to render reasonable assistance to the persons seeking information. As per provisions of the Act, a persons, who desires to obtain any information is required to make a request in writing or through electronic means in English or Hindi or in the official language of the area in which the application is made. If a person seeking information is not able to make such request in writing, the Central Public Information Officer Should render reasonable assistance to him to reduce the same in writing. Where access to a record is required to be provided to a sensorial disabled person, the Central Public Information Officer should provide assistance to such person to enable him to access the information. He should also provide such assistance to the person as may be appropriate for the inspection of records where such inspection is involved.
 
6. You can insist that the PIO follows Section 4 suo motu disclosures: The Act makes it obligatory for every public authority to make suo motu disclosure in respect of the particulars of its organisation, functions, duties and other matters, as provided in section 3 of the Act. The information so published, according to sub-section (3) of section 3, should be easily accessible with the CPIO in electronic format. The CPIO should, therefore, make concerned efforts to ensure that the requirements of the Section 3 are met and maximum information in respect of the authority is made available on the internet. It would help him in two ways. First, the number of applications under the Act would be reduced and secondly, it would facilitate his work of providing information inasmuch as most of the information would be available to him at one place.
 
7. The PIO has no right to ask you, the reason for your seeking information: An applicant making request for information is not required to give any reason for requesting the information or any other personal details except those that may be necessary for contacting him. Also, the Act of the Rules does not prescribe any format of application for seeking information. Therefore, the applicant should not be asked to give justification for seeking information or to give details of his job etc. or to submit application in any particular form.
 

 

 
(Vinita Deshmukh is consulting editor of Moneylife, an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte and is the author of “The Mighty Fall”.)
 

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COMMENTS

allzwell

2 years ago

Look at this case. A CIC order was passed on Dec 30, 2015.

===================================
Relevant extracts :

The matter was heard by the Commission. The appellant stated that the CPIO, NCW vide letter dated 26.6.2014 that too after seven months had not provided information on Point 5(a) & (e), stating that the copy of NCW Inquiry Committee order dated 26.10.2012 was available with Maharashtra State Commission for Women (MSCW) as all records were kept in custody of MSCW. The
appellant requested the Commission to initiate penalty proceedings u/s 20(1) of the RTI Act against the CPIO. The respondents stated that the file relating to the case
was in the custody of the Maharashtra State Commission for Women. Therespondents regretted for the delay in responding. The respondents further stated
that the matter in the Bombay High Court had been concluded and they will call their file back from Maharashtra State Commission for Women and provide information on
Point 5(a) & (b) to the appellant.
5. In view of above submissions of the respondent, the Commission directs the CPIO, NCW to get the file back from Maharashtra State Commission for Women
and provide information with reference to Point 5(a) and 5(e) to the appellant within
one month of receipt of this order. The Commission warns the CPIO for the delay in providing information to the appellant and advises him to ensure timely disposal of the RTI applications in future. The appeal is disposed of.
===================================
After 30 days, the reply received is that Files are missing and that they would write to the Chief Minister of Maharashtra. Till date nothing is done. Aother RTI filed on March 28, 2015 with the WCD Ministry that governs NCW, seeking action taken report. WCD sends it to NCW on April 1, 2015 It is now June 1, 2015 but there is no reply from the PIO of NCW. This is after the warning by CIC In earlier order. So, why would the PIO fear anything ? Let the RTI applicant be harassed.

allzwell

2 years ago

I think most PIOs are well informed but choose to delay as they can get away. How many cases are there since inception of RTI where the CIC has levied a penalty on the PIO ? It would interesting to have some statistics on this.

Rajesh Premani null

2 years ago

One of the commonest weapon used by the PIO of the Brihanmumbai Municipal Corporation, when not desiring to give information is by replying, that "You can take inspect the files and take photocopies of the information sought by you, chargeable at the rate of Rs. 2 per copy, during 9am to 6pm." Now, paying is not an issue, but the issue is, that the information sought is not strictly included in the reply, in black and white. Also to add to the hardship, when the query has been posted in English,the revert is purposely given in Marathi or Hindi, to cause inconvenience to the respondent. How does one tackle this?

Lokesh Batra

2 years ago

There is typographic error.

In case the information sought for concerns the life or liberty of a person, the same shall be provided within forty-eight (48) hours of the receipt of the request.

Ramesh B Mhadlekar

2 years ago

The CPIO of RBI should take lessons from Madam vinita Deshmukh,because it rejects every information under Sec 7 (9)The information being spread over various files and not available in compiled form and would disproportionately divert the resources of the Bank or "No information is available" specifically to those information which it should normally be holding.In one of the recent Private and secretive recruitment of class IV employee contrary to SC decisions and Indian constitution's Art 14 & 16,it does not know how many of the recruited employees are posted in Mumbai ,how many of them are posted out of Mumbai, when Written test was conducted,when inter view was conducted,the age criteria followed,whether advertisement was given in newspaper etc. etc. etc a long list,but yet RBI is functioning without any information inits record -Satya Mev Jayte.

Delhi contests home ministry notification, HC hearing on Friday
The Arvind Kejriwal-led Delhi government on Thursday moved the Delhi High Court, challenging the union home ministry's May 21 notification that said Lt. Governor Najeeb Jung has discretionary powers for appointments and transfers to key bureaucratic posts in the capital.
 
The Delhi government mentioned the matter before a division bench of Justice B.D. Ahmed and Justice Sanjeev Sachdeva, which posted the hearing for Friday. 
 
Challenging the "constitutional validity" of the notification, the city government sought its quashing by the high court.
 
The high court bench also posted for Friday a similar plea filed by law student Vibhor Anand, who challenged the home ministry notification and contended the appointment of senior bureaucrat Shakuntala Gamlin as the acting chief secretary by the Delhi Lt. Governor was a "illegal".
 
"There is already a similar petition filed by the Delhi government. We will hear both on Friday," the bench said.
 
The petitions, filed within days of a high court order terming the May 21 notification as "suspect", have contended that it was "ultra vires" of the constitutional provisions, i.e. Article 239 AA (4), and that the Centre does not have the jurisdiction over matters connected with services of bureaucrats in the national capital.
 
"Additional Solicitor General (ASG) Sanjay Jain informed the high court that the Centre had also approached the Supreme Court to challenge the high court order that termed 'suspect' its notification barring Delhi government's anti-corruption branch (ACB) from acting against its officers in criminal offences."
 
Law student Vibhor Anand in his PIL said: "Delhi is neither a full state nor a union territory and Delhi is governed by Articles 239-AA and 239-AB of Constitution of India (which deals with union territories) introduced by a constitutional amendment in 1991."
 
"As per Section 41 of the GNCT Act, 1991, the Lieutenant Governor does not have any discretion to appoint Gamlin as the chief secretary and other such posts, nor any special law granted him this discretion," the petition read. 
 
The petitioner also said that the Lt. Governor is "dutybound by the aid and advice of the council of ministers and the chief minister in all matters that concern the legislative assembly as per Article 239 AA (4) of the Constitution of India and Section 41 of the Government of National Capital Territory of Delhi Act, 1991."
 
The petition highlighted a Supreme Court constitutional bench judgment in which the phrase "aid and advice" as used in Article 239-AA has been interpreted "to mean that the aid and advice of the council of ministers and the chief minister is binding on the Governor, it is not just advisory." 
 
The turf war between Chief Minister Arvind Kejriwal and Lt. Governor Najeeb Jung over the control of key bureaucratic appointments was sparked by the appointment of Gamlin as acting chief secretary of Delhi by the Lt. Governor on May 15. 

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