At present all income tax returns are processed by Central Processing Centre, Bangalore. The demands/refunds are issued after verification of credits on the basis of online data uploaded in the system. If there is mismatch of credits for any reason the credit is denied to the tax payer, resulting in unnecessary demands or denial of refunds. Very often the refund due to tax payer is adjusted against wrong past arrears of taxes without following the mandatory procedure of issue of notice to the tax payer to have his say as required under Section 245 of the Income Tax Act 1961. The tax payers are also denied interest under section 244A for delay in issuing refunds.
The tax payers all over India face numerous difficulties and harassment as a result of faulty processing of income tax returns due to adjustment of past arrears of taxes wrongly raised and for not giving credit for TDS, due to non filing of TDS returns by the tax-deductor for which tax- payer is not responsible.
A tax payer can view the status of his tax returns filed or tax credits for TDS, advance tax and self assessment tax for any particular year from Income Tax department’s website www.incometaxindia.gov.in by logging in his account with his PAN and birth date.
Under Income Tax law:
• If the tax return in which there are no tax dues or refunds is accepted by the income tax department, acknowledgement receipt itself serves as intimation.
• In case of tax demand or tax refund, intimation u/s 143(1) of IT Act 1961 is required to be served on the tax payer.
• No adjustment of refund can be made against past arrears without following mandatory procedure under section 245 which requires giving an opportunity to the tax payer about his say in the matter.
• The tax payer is entitled to interest on refund under section 244A till the issue of refund order.
As per Citizens Charter issued by the Income Tax Department:
• Refund of Income Tax alongwith interest u/s 244(a) of IT Act should be issued within 6/9 months of filing tax returns.
• Decision on rectification application to be given within 2 months.
• Redressal of Grievance to be made within 2 months.
• Unredressed Grievance filed before next higher authority to be decided within 15 working days of receipt.
• The grievance redressal mechanism including Contact details of Public Grievance Officers are available on the website of the income tax department www.incometaxindia.gov.in
In Public Interest Petition, Hon’ble Delhi High Court in “Court On Its Own Motion V/S CIT” (2013) 352 ITR 273 (Delhi), has given directions to be followed by the income tax department for handling pending refund matters:
• Maintenance of “Register of Rectifications under section 154 of IT Act” showing receipt, processing and disposal of applications.
• Serving of intimation u/s 143(1) of IT Act 1961, showing demands or refunds due which were not earlier served on the tax payers.
• Requiring income tax department to give credit for the TDS payment made on the basis of TDS certificates as evidence against any mismatched amount.
• Follow procedure under section 245 of IT Act for adjustment of refunds against past the arrears.
• Payment of interest to the tax payer on refunds under section 244A, when tax payer is not in default.
Based on above judgment of Hon’ble Delhi High Court, the Central Board of Direct Taxes has issued five circulars bearing nos. 3-4-5-6-7 of 2013 in July 2013 to all Chief Commissioner of Income Tax laying down procedure to comply with the High Court directions.
The tax payers who are facing wrong arrears of demand or non-receipt of proper refund due should follow following procedure to redress their grievances:
• Write application for rectification to concerned assessing officer of his Ward giving PAN, assessment year and particulars of his grievance to be redressed.
• If the grievance is not redressed within two months make application to the Commissioner/ Chief Commissioner of Income Tax, Aayakar Bhawan, Patto Plaza, Panjim – Goa under whose jurisdiction assessing officer comes stating facts along with copy of the application filed with the assessing officer.
• If there is no response within one month, make written complain to the Chairman, Central Board of Direct Taxes , New Delhi 110 001
• If there is still no response approach “Income Tax Ombudsman” Room No. 251, Central Revenue Building, IP Estate, New Delhi-110002with a complaint within one year.
Ombudsman is an independent authority. The complaint should state name and address of the complainant, the name of the office, the official against whom the complaint is filed, the facts giving right to the complaint and the document thereof and the relief sought from the Ombudsman. If the complaint is not settled by the department within one month from the date of receipt of complaint, the Ombudsman passes an “Award” which should be accepted by the complainant in writing within 15 days failing which same will lapse.
