What does income tax notice for high value transactions imply?

 

“Income-Tax (I-T) department has identified certain high value information which does not appear to be in line with the income tax return (ITR) filed for Assessment Year (AY) 2021-22 (relating to FY 2020-21).” 

Have you also received the same message via an SMS? But what if you don’t have any high value transactions to report. In that case, you have nothing to worry as such messages are part of the I-T department’s e-campaign.

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“The aim of the e-campaign is to notify the taxpayer about transactions reported against their PAN by agencies like banks, brokers etc. An email or SMS is triggered when the system identifies discrepancies in the information available with the tax department and the information filed by the taxpayer in their income tax return,” said Neeraj Agarwala, partner, Nangia Andersen.

The idea is to promote voluntary compliance to avoid the notice and scrutiny process for taxpayers. 

“This (e-campaign) was done to verify the information relating to financial transactions of the taxpayers such as TDS (tax deducted at source), TCS (tax collected at source), statement of financial transactions (SFT), foreign remittances, exports, imports, and transactions in securities, derivatives, commodities, and mutual funds,” said Sandeep Sehgal, partner-tax, AKM Global, a tax and consulting firm.

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The last AY was the first time when annual information statement (AIS) and pre-filled forms were introduced and there’s a high probability that taxpayers did not reconcile them with their form 26AS, TDS certificates, or investment statements, leading to the intimation from the I-T department in case of mismatch. 

A discrepancy doesn’t always mean you have concealed information but could also result from an error in the AIS, which should have been flagged to the I-T department in the form of feedback before 31 March.

Such intimation is not a notice for scrutiny and hence there is no prescribed time limit for filing a response nor will any penalty be levied for non-filing.

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 “On receiving such an intimation, the taxpayer should provide their feedback, even in cases where an income tax return has been correctly filed. A preliminary response will enable the tax department to resolve queries and avoid any future notice and scrutiny. Guidance on filing a response is available on the compliance portal under the ‘resources’ tab,” said Agarwala.