The income tax (I-T) department has been sending messages to some taxpayers by e-mails and SMS-es on mismatches in their tax returns.
This communication is not a formal notice but an opportunity for these taxpayers to clarify if there has been any under-reporting of income or over-stating of expenses in their tax filings, or if this is just a mismatch in the department’s records that needs to be rectified.
The department is using artificial intelligence and machine learning to analyse data captured from multiple sources; and where such mismatches are found, a communication is auto-generated and sent to taxpayers. The communications thus sent pertain to fiscal years (FYs) 2020-2021, 2021-2022 and 2022-2023.
“Mismatches could occur if the taxpayer has not reported capital gains on certain stocks, interest income, property transactions, etc. For example, certain taxpayers maintain multiple demat accounts and may forget to share details of transactions in one of the accounts,” says Karan Batra, managing partner, Chartered Club.
Taxpayers can also check the mismatches by logging into the compliance portal of the I-T department and give relevant feedback. “The taxpayer can clarify the mismatches on the portal itself. However, if the taxpayer is not able to provide a satisfactory clarification, he or she will have to file an updated ITR, or ITR-U,” points out Nitesh Buddhadev, Mumbai-based chartered accountant and founder of Nimit Consultancy.
The last date for filing ITR-U is within two years of the end of the assessment year (AY). So, the deadline for FY2021-22, i.e. AY2022-23, is 31 March, 2025. For FY 2022-23, it is 31 March 2026. The last date for filing of ITR-U for FY2020-21 will end on 31 March 2024.
Here is how you can respond to any mismatches. First login to the IT portal with PAN and password, go to the ‘pending actions’ tab and click on ‘compliance portal’. From there, go to the ‘e-verification’ tab where you can see year-wise details of any notices or letters sent by the IT department. You can provide your responses to each of these by clicking on them.
Additionally, the department is also encouraging taxpayers to compare their filings with the Annual Information Statement (AIS) on the above portal and file ITR-U if required.
If the taxpayer has reported interest income in “others”, but the compliance portal still shows a mismatch, the department has clarified that the taxpayer doesn’t need to do anything and in such cases the reconciliation will happen automatically.
“If the taxpayer doesn’t clarify the mismatches or doesn’t file the ITR-U within the stipulated time and the income remains undeclared, it can result in a tax notice under section 148A and reopening of the tax files,” points out Gopal Bohra, partner tax, NA Shah Associates.