A taxpayer should regularly check the status of his income tax return to ensure that the ITR has been accepted and processed by the Income Tax Department as it is.
Even after filing your income tax return, your worries may not end. Taxpayers are expected to verify their returns and the Income Tax Department is supposed to process them. If nothing has been suppressed from disclosing in the ITR and the I-T Department doesn’t find any error or omission in the return, one can heave a sigh of relief.
Verification of income tax return is a declaration by the taxpayer that the details have been furnished in the ITR with his consent and he approves of its submission to the Department for processing. Verification of return is mandatory to get it accepted and processed by the Centralized Processing Centre (CPC) of the Income-Tax Department.
Once a return is verified, the Income-Tax Dept would process the return. If the details furnished are accurate and no discrepancies are found, the Dept shall determine the amount of tax refundable to or recoverable from the taxpayer. However, if the CPC finds any inconsistency or discrepancy in the return, it shall be notified to the taxpayers vide e-mail and status of the same is displayed at the taxpayer’s account at e-filing website.
A taxpayer should regularly check the status of his income tax return to ensure that the ITR has been accepted and processed as it is. If some discrepancies are found or some changes are proposed by the CPC, Bengaluru, the taxpayer can timely provide a suitable reply to the Dept. The following are the 5 terms which you need to understand to know the status of the income tax return:
1. Refund Not Determined
If any income tax refund is due to the taxpayer, it can be claimed only by filing of the income tax return. The tax refund is paid only when the return is processed and refund is determined by the Income Tax Dept. If the status of ITR is ‘Refund not determined’, then it would mean that the ITR isn’t yet processed by the CPC.
The income tax return is required to be processed within 1 year from the end of the financial year in which the return is filed. Hence if you have filed ITR on 31-07-2018, processing of ITR will be done by 31-03-2020. However, generally, it is processed within a couple of weeks after its verification.
If ITR has been pending for a long period with this status, the taxpayer can submit a grievance at the e-filing portal. For this, login to your e-filing account, go to e-Nivaran> Submit Grievance. Give grievance description and then preview and submit.
2. Outstanding Tax Demand
If the status of income tax return is ‘Outstanding tax demand’, it means tax liability is pending for payment. Here you need to access the intimation issued by the Dept. under Section 143(1) to know the reasons as to why the tax demand has been raised.
This intimation is a Computer Generated PDF document that makes the correction in the income tax return for any arithmetical mistakes, errors in tax calculation and tax credit. This processing is done without any human interference. It is sent to the taxpayer on his registered e-mail ID.
The reasons for outstanding tax demand can be various, inter-alia, self-assessment tax was not paid at the time of filing of return, additional deductions claimed in ITR, mismatch in tax credits, so on and so forth.
If you see this status, you need to login to the e-filing portal. Go to e-file > Response to outstanding tax demand. You will be given four options a) Demand is correct b) Demand is partially correct c) Disagree with demand d) Demand is not correct but agree for adjustment. Select the applicable option and submit the response. You will be given transaction ID for response submitted. Save the same for future reference.
If you agree with the outstanding tax demand, pay it online or offline at any authorized branch of a Nationalised Bank. However, if you don’t agree with tax demand, you can choose to disagree with the demand on the e-filing portal and can furnish the reasoning for such disagreement.
3. Defective Return
A return is deemed to be defective return if it hasn’t been filed in accordance with the provisions of the law. If your return is found defective, then you will receive a notice of defective return under section 139(9), asking you to rectify the defect within 15 days from the date of receiving notice. If you don’t respond to defective return, then ITR shall be treated as invalid. A few reasons for defective return are mentioned below:
a) If you are a professional eligible for presumptive taxation scheme under Section 44ADA but income is computed and reported as per provisions of section 44AD in ITR-4.
b) You have claimed section 89 relief in ITR, but failed to file Form 10E on e-filing portal.
c) You are required to maintain books of account, but failed to mention details of P&L and Balance Sheet at the time of filing of ITR.
d) You haven’t filed all the schedules applicable as per the business code selected in ‘Nature of Business’.
e) You are liable for tax audit under Section 44AB and the audit report has not been filed electronically.
If you see this status, you need to login to your e-filing portal. Go to e-file > Response to notice u/s 139(9). You need to select whether you agree with this defect or disagree. If you agree with the defect, file the income tax return in response to notice u/s 139(9) correcting such defect. If you don’t agree with the defect, then submit the reasons for such disagreement.
4. Case Transferred to AO
AO refers to the Assessing Officer. He is an officer appointed by the Income Tax Department to assess the income of those taxpayers who fall within his jurisdiction. The jurisdictional AO of a taxpayer is assigned on the basis of his source of income and his geographical details.
‘Case transferred to AO’ means the CPC has transferred the Income-tax Return to the jurisdictional Assessing Officer to process it. CPC generally transfers only those cases to the AO which may involve complexities that could not be processed without any human intervention and thus require AO to step in.
Some of the circumstances wherein a case is transferred to the AO pertain to exceptional entries found in ITR or taxpayer makes any violation in filing of return of income, inter-alia, if a taxpayer has not filed the return of income for a particular assessment year, and he files it only after receiving a notice from Income-tax Dept. or taxpayer claims some treaty benefits in the ITR. Example, you have claimed relief under section 90/91.
If your case has been transferred to the jurisdictional AO, then just wait for a communication from the AO. The AO may contact you via telephone, email, letter or SMS and he may ask you to provide necessary evidence in support of your claim or assertions to process the return. You can find your jurisdiction A.O details in your e-filing account. Go to Profile Settings > My profile > PAN Details. You will find your jurisdictional A.O. details in the same section.
5. Refund unpaid/failed
‘Refund unpaid/failed’ means that the Income Tax Department has sent the income tax refund, but it could not be credited into your bank account because the details of bank account number provided in ITR was not correct or in case of a paper refund the address provided by you is wrong. In this case, you need to visit the e-filing portal and raise a refund re-issue request.
Login to your e-filing account and then go to My Account > Service Request > New Request > Refund Reissue. You can submit a request for the refund reissue.
(By CA Naveen Wadhwa, DGM, and CA Rahul Singh, Manager, Taxmann.com)