Simplified Laws Guide to Taxation and Legal Concern Traditionally, when Income Tax Department (ITD) found mismatch in information shown in the Income Tax Return with the information submitted by third parties in the form of Annual Information Return (AIR), TDS Statement etc., the cases were selected for scrutiny. Till last year only very few cases ie less than 1% of cases used to be selected for scrutiny under CASS.
The information so collected were also used to identify cases of non filer and sending notices to non filer by Non-filers Monitoring System (NMS)
Now income tax department has found new ways to tackle information received from AIR, CIB, TDS statement. Income Tax Department (ITD) has launched a new initiative e-Sahyog project to tackle mismatch in the income tax return with the information available from AIR etc
In contrast to scrutiny assessment, e-Sahyog project will reduce compliance cost, especially for small taxpayers.
e-Sahyog project provides an online mechanism to resolve mismatches in income Tax return without requiring taxpayers to attend the Income Tax Office. The taxpayers in whose cases mismatch has been found have been informed by SMS, e-mails and letters.
If you have not declared or incorrectly declared in any of the below transactions in the previous years, be prepared to get notice from the income tax department.
- Transfer of property reported in AIR but capital gains is not declared in Return of Income:
Taxpayer has filed the Return of Income in ITR 1/4S which does not contain the details of any transfer of property by the taxpayer. While the Income Tax Department has received the details about the transfer of the property by the taxpayer from the Sub Registrar of the properties by way of AIR return.
- Value of property transferred as reported in AIR is higher than the value of property transferred as reported in Return of Income
The value of property transferred during the year as reported in the AIR return filed by the Sub Registrar office, is higher than the Full value of consideration adopted as per section 50C for the purpose of Capital Gains as declared in the capital gains schedule of Return of Income.
- Payment of compensation on acquisition of immovable property as shown in TDS return filed by acquirer is more than sale consideration reported in the Return of Income
The value of property transferred during the year as reported in TDS return filed by the Government under section 194LA, is higher than the full value of consideration received/receivable as declared in the capital gains schedule of Return of Income.
- Payment of compensation on acquisition of immovable property is shown in TDS return filed by Government but capital gains is not declared in Return of Income.
Taxpayer has filed the Return of Income in ITR 1/4S which does not contain the details of any transfer of property by the taxpayer. While the Income Tax Department has received the details about the transfer of the property by the taxpayer from the TDS return under section 194LA filed by the Government.
- Amount paid/credited as per 26 AS (194C and/or 194J) but no income from business/profession declared in Return of Income
Taxpayer has filed the Return of Income in ITR 1/2/3 which does not contain the details of any income from business/profession, while the Income Tax Department has received the details about amount paid/credited u/s 194C and/or 194J to the taxpayer during the year as reported in the TDS return filed by the deductor(s).
- Amount paid/credited as per Form 26 AS (Section 194C and 194J) is more than the gross turnover or gross receipts shown in Return of Income
Amount paid/credited as per Form 26 AS (Section 194C and 194J) is more than the gross turnover or gross receipts shown in Return of Income filed in ITR 4S
- Amount paid/credited reported in Form 26 AS (Section 194I) is significantly more as compared to the income from house property as shown in Return of Income
- Amount paid/credited in Form 26 AS (Section 194I) is significantly more as compared to the rent/annual lettable value as shown in Return of Income
- Amount paid/credited as interest and winnings from lottery, crossword puzzle, races in Form 26 AS is more than the Income from other sources shown in Return of Income
- Amount paid/credited as interest in Form 26 AS is more than the interest income shown in Return of Income
Gross Interest shown in Return of Income is less than Interest paid/payable during the year reported in the TDS return filed by the deductor(s).
- Turnover from services reported in Service Tax Return but no income from business/profession declared in Return of Income
Assessee has declared turnover from services in its service tax return(s) submitted to the Service Tax Department while the Income Tax Return is filed in ITR 1/2/3 which does not contain the details of any income from business/profession.
- Higher turnover reported in Service Tax Return as compared to gross turnover or gross receipts reported in Return of Income
Amount of turnover from services during the year, declared by the assessee in the service tax return submitted to the Service Tax Department is higher than the amount of turnover reported in ITR 4S.
How to handle mismatch notice received from Income tax department
The taxpayers in whose cases mismatch has been found have been informed by SMS, e-mails and letters. The taxpayer needs to follow these basic steps
The taxpayer just needs to visit the e-filing website and log in with their user-ID and password for the e-filing portal, click on “My pending action”, the taxpayer will get the information about the Return Information Mismatch under eSahyog tab, The taxpayer will be provided the information submitted by the taxpayer to the ITD in the Return of Income as well as the information received by the ITD from the third party. Tax Payer can then submit online response. If he need more information on the mismatch or clarification he can send query to esahyog@incometax.gov.in.
The responses submitted online by the taxpayers will be processed and if the response and other information are found satisfactory as per automated closure rules, the issue will be closed. The taxpayer can check the updated status by logging in to the e-filing portal.
Failure to submit online response to mismatch notice may result getting notice for scrutiny assessment from the tax department.
How to file response to mismatch notice?
Tax payer can respond to the mismatch notice by clicking the link “response” to open “Return Mismatch Response”
The mismatch related information (relevant value in the ITR and third party information) will be displayed in “Return Mismatch Response”. He has to choose whether he has knowledge about “mismatch related information” or don’t have knowledge about “mismatch related information”. If he chooses the option in Part A that he has knowledge about the mismatch, then he has to submit a detailed response in Part B relating to mismatch.
The tax payer will have to provide detailed response to explain each mismatch.
There are different types of responses that the tax payer can give depending on the fact of the each case. The different types of response are.
- The value shown under third party information is wrong
- The mismatch is on account of information relating to different PAN or Assessment Year
- The information or transaction was not correctly declared in the return of income and revised return u/s 139(5) has been filed.
- Explanation other than the above
If he choose point no 3 above, he has to ensure that he has calculate correct tax liability and filed revised return before submitting response.
After submitting the response, a response id will be generated. The first submission of one or more mismatch issues will generate an Original” pdf in “View my submission” tab. After that each submission will generate a “Revised” pdf. The latest pdf (whether original or revised) will be valid for e-Sahyog and the same will be referred by the department for further reference with the taxpayer
The responses submitted online by the taxpayers will be processed and if the response and other information are found satisfactory as per automated closure rules, the issue will be treated as closed. Hence it is important to study mismatch notice carefully and submit a proper response. The taxpayers can check the updated status by logging in to the e-filing portal.
We would be glad to know your doubts or queries. In case you need our assistance in relation to “e-Sahyog” notice from income tax department, please feel free to post your comment below or email it to team@simplifiedlaws.com
Read :
- “e-Sahyog” a pilot project of the Income-tax Department.
- How to handle notice received for Non-Filing of Income Tax Return – Asst Year 2013-14
- Limited Scrutiny selected under Computer Assisted Scrutiny Selection (CASS)
- Step by Step procedure to handle notice received u/s 245 of Income Tax
- Selection of Income Tax returns for scrutiny during the Financial Year 2014-15
Click here to read step by step guid for return mismatch verification
