Filing Income Tax Returns ( ITR ) can sometimes be a labyrinthine process, filled with potential pitfalls. Despite the apparent straightforwardness, many taxpayers encounter recurring challenges that can complicate the Income Tax Return ( ITR ) filing experience.
From technical glitches delaying return processing to complexities in claiming foreign tax credits, staying updated of these common issues and solutions is important.
This article delves into some of the frequently faced issues during ITR filing, offering insights and solutions to help taxpayers navigate these problems effectively.
Failure in processing of validly filed return of income (not processed within the due date) due to some technical reason not attributable to the assessee
As per Board’s Instruction No 5 of 2018 dated 21st Aug 2018 – window was provided till 30th Nov 2021. To be approved by CCIT – To be communicated to Systems – Systems will enable processing of such returns.
Since time has not been extended beyond 30th Nov 2021, such cases are to be referred to the Board through proper channels.
Notification on 06th December 2023: CBDT extended the deadline for processing claimed refund ITRs for AYs 2018–19 to 2020–21 until January 31, 2024.
Condonation of delay u/s 119 (2)(b) of I. T. Act for filing return of income beyond the due date
➢ As per Board Circular No 9/2015 dated 09-06-2015 modified by Circular No 7/2023 dated 31st May 2023 Monetary limits prescribed.
➢ Condonation application should be made within 6 years from the end of the AY for which refund / loss is claimed.
➢ There should be a claim of refund or carry forward of losses to entertain such claims.
Claim of foreign tax credit in ROI
➢ Residents are allowed credit for any tax paid outside India by way of deduction or otherwise. Credit only for
Tax Surcharge and Cess and not against Interest, Fee or Penalty.
➢ Form 67 to be furnished before the due date for filing ROI.
➢ There is no provision for condonation of delay in filing Form 67 by the Assessing Officer and the alternative
remedy to file such an application before PCIT/CCIT/CBDT should be explored.
Form 67 due date for AY 2023-24
• The Central Board of Direct Taxes ( CBDT ) revised Rule 128 to provide that Form 67 can be filed on or before the end of an assessment year if the return of income for that year was filed within the time stipulated in Section 139(1) or Section 139(4).
• If the assessee has filed an updated return under Section 139(8A), Form 67 (related to income included in the updated return) must be filed on or before the date of filing of the updated return.
• The modification takes effect on April 1, 2022, and so applies to all FTC claims submitted during the fiscal year 2022-2023.
Defective returns not processed and AO not able to passed orders
➢ The assessee will receive a detailed communication regarding the defective return filed along with the defects to be rectified.
➢ The assessee has to go to his E-filing Portal and rectify the defects mentioned by CPC and re-submit for processing.
Non receipt of Intimation order u/s 143(1)
The assessee can download intimation order from E-filing portal following path.
Login to E-Filing Portal → E-File → View Filed Returns→ click on Download Intimation Order
Non-receipt of refund: Refund is determined for a particular A.Y. but there are outstanding demands for different A.Y.s or the same A.Y. under different sections (Penalty, 220(2) etc.)
Assessee has to submit response to the outstanding demand: Path: www.incometax.gov.in ->Login->Pending Actions-> Response to outstanding demand.
JAO also has to submit his response to the outstanding demand: Confirmation of demand through ITBA – recovery- menu- demand analysis- select recoverability status (A.Y. wise)- submit to CPC.
Non-receipt of refund: No outstanding demand but refund held for 245
➢ Reason for refund failure such as PAN and Bank account name mismatch, invalid bank account number or IFSC Code (due to merger of banks) etc., is stated in the CPC communication.
➢ The assessee may be requested to update the relevant details in e-filing portal and then raise refund reissue request through his e-filing account login- services- create refund re-issue request.
➢ In such cases, no action is pending at the JAO end.
Non-receipt of refund: Refund determined; bank account validated by the assessee but refund failure
➢ Assessee may be advised to update the bank account details once again: Delete the validated bank account and again add validated bank account through his efiling account.
➢ JAO to also update the bank details: Add assessee bank account through ITBA common function- menu maintain bank account details and then inform assessee to raise refund re issue request through his efiling account login- services- create refund re-issue request.
Refund determined but wrongly adjusted against an incorrect demand
➢ Verify the details to ascertain whether the refund is adjusted against incorrect outstanding demand.
➢ If required, AO can pass rectification order.
➢ Upto A.Y. 2015- 16 rectification order can be passed in ITD for the A.Y. against which refund is adjusted.
➢ If the respective order for A.Y. is not passed through ITD / 400 Challan is not reflected while giving tax credits, then use manual order upload functionality in ITBA.
➢ For Assessment year 2016-17 onwards, pass Rectification order in ITBA for the A.Y. against which refund is adjusted. Up to AY 2020-21, Web Service is available. If 400 Challan is not reflected while giving tax credits, then use manual order upload functionality in ITBA. Path: Assessment- Menu- Manual order
Upload Once manual order is uploaded then check for accounting status under list of manual orders. If accounting status is “accounting closed by CPC”, then only order is passed. In case of errors, raise ITBA Helpdesk ticket with error screenshots. Path: Assessment- Menu-List of manual orders
Withholding/release of refund: (amended section 245(2) of IT Act, 1961 from 01.04.2023 as per finance act-2023)
Section 245(2) of the IT Act, 1961 allows assessing officer to withhold refund of the assessee with prior approval of the PCIT related to ITR selected for scrutiny through CASS.
Since CASS cases are handled by FAOs under faceless assessment, the FAO needs to take prior administrative approval of the PCIT( AU ) and then communicate to JAO for withholding or release of refund. Communication from FAO will be received in official mail as well as ITBA- Faceless enquiry- Work list.
Once JAO receives communication from FAO, the JAO needs to take necessary action for withholding/ release of refund through ITBA – ITR Processing – Return Receipt Register-View RRR entries.
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