IT Arrears Notice-After 18 Months

you need not to make too much out of it.

The return ffor AY 2007-08 was belated and filed by you on 31-3-2008. As per law the return was to be processed u/s 143(1) and an intimation for demand or refund to be sent to you by 31-3-2009. Please check whether any such intimation was sent to you by the department.

The demand might have arisen for interest as it appears that you paid large amount on 24-3-2009 which should have been paid as advance tax. Moreover it is a case of late return, so you were liable to be charged interest u/s 234A, 234B and 234C of the Act.

Form  26AS only shows taxes paid by you/ on you behalf (TDS) and not the arrears.

Hi Mr Vineet

Thanks for your response.

I checked and there has been no communication to me from the IT Dept regarding tax arrears for AY 2007-08.

Infact, the then AO of my ward had personally come over to my premises in the 2nd week of April 2009, well after 31/03/2009. He had come over at 8am to check whether I really existed because I had e-filed my returns with a digital signature. He never informed me about me having to pay any arrears or fine. He just wanted to know what I did for a living, spoke for a few minutes and then left. He had actually come in regarding AY 2007-08.

The thought that probably a penalty was being imposed on me crossed my mind too. But the subject line of the SpeedPost communication says : Payment of Income Tax Arrears- your own case -Reg

The content:

It is noticed from this Office Records that the following taxes are overdue in your case.

ADNCR No: ACT/354

ASST YEAR: 2007-08

Amount (Rs): 5554

In this connection you are required to pay the above Tax dues immediately and produce copy of challan at the earliest.

Also, please note that failure to pay the Taxes lead recovery proceedings including levy of penalty u/s 221(1) of the IT Act 1961.

Given the fact that the letter keeps mentioning IT dues, do you think that penalty for late filing/interest accrued is the one that is actually being imposed?

Also, I did not know that an amount of Rs 24, 000 paid as IT can attract interest. For 2008-09 I paid a sum of Rs 46, 000 in Dec last year. I hope I do not receive a notice for that too. (Returns for AY 2008-09, e-filed with digital signature, must have gone to the concerned AO in B'lore because they have been filed with a B'lore address. In June 2009, I even changed the address associatd with my PAN to my B'lore address. But for AY 2007-08, the address on the returns was that of my hometown and it is this AO that has sent me a notice)

If I'm not to make too much out of it, should I pay the penalty then? Personally I'm not inclined to because, as can be seen from the statement, I have paid the right amount of tax at rates prevailing then. Please do clarify this for me.

--

Best Regards

Suresh

Dear sureshkumar,you have complicated the case by not responding to the communation by the department.If your consultant is not co-operating with you,then you just send the xerox copies of the challans and TDS certificates if any to the department with proper covering letter.

Then,you need not worry,

with regards

Mr Chandragiri

I have indeed presented my lawyer, who prepared my balance sheet and co-ordinates with the local IT office, with a copy of the challan for Rs 24, 000 I'd paid as IT for AY 2007-08. I'd informed him to present the same along with my IT Returns for AY 2007-08 to the AO which he has indeed done.

But the AO still insists that the records at the office show arrears against my name and he wants me to pay it. He informed this to the the lawyer I have mentioned. It is not as if I have been completely non-responsive.

The AO did not offer any explanation for why I had to pay the arrrears or why the records showed arrears against my name/PAN (I mean, he did not mention if it was penalty for late filing or if I had paid less than what I was actually supposed to have paid). So, under the circumstances, my consultant is also quite helpless.

Mr Chandargi

I'm sorry for mispelling your name in my reply above. It was unintentional.

Dear Mr Suresh

Ask for a copy of demand notice/ intimation u/s 143(1)from the Income Tax Office. As they have mentioned ADCR (Arrear Demand and Collection Register) number, that means the return was processed before 31-3-2009, and an intimation should have been dispatched by the department. The caculation given in this intimation will tell you why there is demand against you.

Interest u/s 234A, 234B and 234C is not penalty. It is a compensatory interest as you did not pay Advance Tax and Self Assessment Tax within due time and neither filed your return within due time while having a tax liabity to pay. It is a statuary requirement and nobody has right to waive the same. It appears while computing your tax liabity, you or your consultant did not take the interest into consideration.

And yes, if you paid IT dues for AY 2008-09 late, you will get a demand notice for  interest on the same also sooner or later.

Please note that if the intimation u/s 143(1) was indded issued and department has evidence of dispatching the same to your address on record, you have no option but to pay the demand with further interest, if the same is genuine. If you find any fault in computation, you can apply for rectification u/s 154 of the Income tax act.

Also please note that your returns will continue to be assessed with the same AO until you request for transfer of your case records to Bangalore.

As you are filing returns online, you can log into your account on efiling webpage and check your current jurisdiction to verfiy the same.

 It is surprising that we still continue to ignore ITO's notice.

Dear Sureshkumar,I agree with Mr.Vineet,you can request for the Intimation and demand notice which is the basis for recovery. I have calculated on the basis of information rovided by you.I am ataching the file you go through it.It seems department is right in demanding the amount,because you have not paid the advance tax and filed return of income before due date,hence interest is lavied.

With regards