scorecardresearchIncome Tax Department is messaging taxpayers informing them of ‘high-value transactions’; Should you panic?

Income Tax Department is messaging taxpayers informing them of ‘high-value transactions’; Should you panic?

Updated: 31 Mar 2022, 08:32 AM IST
TL;DR.

Taxpayers must contact banks and financial institutions to submit information about their high-value transactions to the Income Tax department.

Paying taxes

Paying taxes

Many taxpayers are in a tizzy as they find their mobile phones flooded with messages from the Income Tax department regarding the mismatches between the ITRs filed for the AY21-22 and the high-value transactions they had made during the year. The department has asked the taxpayers either to file a fresh ITR or reply to the query on the compliance portal by March 31, 2022.

The messages (SMSs) state, “Attention XXXXXXXXXX (PAN Number), the Income Tax Department has identified high-value information which does not appear to be in line with the Income Tax Return filed for Assessment Year 2021-22 (relating to FY 2010-21). Please revise ITR / submit an online response under the e-Campaign tab on the Compliance Portal (CP). Access CP by logging on to the e-filing portal and clicking on the ‘Compliance Portal’ link under ‘My Account’ or ‘Compliance’ tab - ITD.”

Many chartered accountants are now busy interpreting the reasons behind these messages by scanning through their clients’ ITRs already submitted. Explaining to their clients why they need not panic on reading such messages while ensuring timely replies is the biggest challenge that they now face.

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The shortage of time has set forth an air of frenzy among his clients. As the deadline to reply is approaching, Ayush Goel, Designated Partner, BAS & CO. LLP |Chartered Accountants| grimaces at the shortage of time and explains why the government should have lent a bit more time for people to figure out the possible reasons behind this mismatch. Though most of these queries stem from the interest earned on fixed deposits, savings accounts, debentures or bonds, it is the shortage of time that has forced many to seek professional help.

Goel explains how one may respond to the request by the Income Tax department.

  • First login to the Income Tax Portal. then visit the compliance portal and/or Annual Information Statement (AIS) and check for high-value transactions.
  • Certain information shall be marked as expected, which means that a response to the same is expected as to whether you have considered such information/transaction in the filing of the return.
  • You must revert accordingly if the same is considered or if the same is incorrect or otherwise.
  • If the same is correct, check with your ITR and confirm that all such amount is considered already and repeat for all other optional information.
  • Refer to your professional for advice in case of any confusion in determining the same has been considered.
  • If any information is mistakenly skipped, make sure you take adequate corrective action in form of a revised return or otherwise.
  • Always check your AIS in advance to the filing of a return to avoid such notices in future.

The taxpayers must approach the banks, mutual fund companies or other financial institutions to extract information regarding the transactions that exceed those mentioned in the ITR. The common high-value transactions that have come under the scrutiny of the Income Tax department include:

  • All cash deposits equal to or more than 10 lakhs during the year that is credited in commercial and co-operative banks.
  • Buying foreign exchange or currency transactions or paying for shares/mutual funds/debentures of 10 lakh or more.
  • Purchase or sale of any immovable property costing 30 lakh or more.

Many taxpayers tend to miss out on sharing information while filling out their ITR forms. The Income Tax department pinpoints these anomalies to the taxpayers, thus, requiring them to furnish the necessary information. The taxpayers must take care to note that all the transactions carried out during the year are mentioned correctly in the ITR. Also, the taxpayers must pay attention to the correctness of the details shared.

First Published: 31 Mar 2022, 08:32 AM IST