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Reply given by Income Tax Department in regard to difficulties in the system

Reply given by Income Tax Department in regard to difficulties in the system

Sl. No. Point discussed Reply / comments of the Deptt.
1. Credit for TDS when income is offered in the subsequent year following cash method of accounting.  This problem is not only arising in the case of professionals but also in the case of bank/post office interest on fixed depoists W.e.f. 01.04.2014, DG (Systems) will introduce a system according to which an assessee will be required to mention TDS Certificate number and he may claim credit either fully or partly for a certificate or may not claim credit in that year. System will carry forward credit of TDS not claimed and same can be claimed in the subsequent year when the income is offered to tax.
2. Credit for all items of TDS reflected in 26AS as “U” (unmatched) As per the system, in force at present, credit for all TDS items reflected in Form 26AS is being given even if “U” is mentioned against any item.
3. Credit for TDS deducted under section 206AA of the Act. An assessee can obtain and/or furnish PAN to the deductor. Thereafter, the deductor will be obliged to issue a certificate and load TDS details on the system. Credit will be reflected in Form 26AS of the assessee and he will get credit.
4. Credit for TDS in case of amalgamation in the name of amalgamating company particularly when amalgamation takes retrospective effect. Assessing Officer can verify and give credit to the amalgamated company even where the amalgamation is made effective from an earlier date.

It is understood that there is a system of merger of PAN and on merger credit will be reflected in Form 26AS of the amalgamated company.

5. Credit for TDS in cases where property/income is in joint names. There is no procedure to bifurcate TDS in the system and to transfer a part amount in a different PAN. Therefore, assesses have to get the amount bifurcated by the deductor only.
6. Notice to the assessee either before or immediately on loading the demand on the system and opportunity to file for rectification.  No adjustment of refund before disposal of rectification application. Application for rectification should be accepted on the system and should be forwarded to AO for necessary action. Notice is given before adjustment of the refund against the arrear of demand. Rectification can be done only by AO in respect of old demands for which no details are available in the system. At present, if demand is less than Rs. 5000, refunds are being issued pending verification of the demand.
7. Power to AO to rectify the demand. AO can rectify the demand.
8. Dividend Distribution Tax to be determined after adjustment of benefit under section 115-O where dividend is received from subsidiary company. Return Form needs to be amended. Necessary action will be taken to do the needful.
9. Figures of unabsorbed depreciation, loss, MAT credit of amalgamating company should be accepted in the return form and same should be taken as figures of amalgamated company. Return Form needs to be amended. Necessary action will be taken to do the needful.
10. System to rectify mistake if any committed by an assessee or bank when        making payment , say  payment mentioned against tax instead of others, on account of tribunal fee or TDS section is wrongly mentioned. Mentioning of wrong section in the payment challan is immaterial as credit is allowed for the amount without reference to section mentioned therein. If payment mentioned against wrong head, rectification can be done only by the bank through which payment was made. This cannot be done by the assessee.
11. Facility to file TDS returns as well rectification should be available to the deductor instead of designated agencies. TDS returns can be loaded by the deductor on the system. Very soon facility of rectification will also be made available.
12. System of generation of Form 16B in respect of deduction of tax on rent under section 194-I is cumbersome and a common person finds it difficult to do it. System only requires registration on trace for generation of Form 16B and that is necessary to identify the person. Registration and details already on the income tax site cannot be used as two sites are independent and linking the same will make the site very heavy and may pause difficulty in functioning.
13. Difficulty in getting refund in the name of heir if the assessee dies after filing return or the return is filed by the heir on behalf of the deceased. System is PAN specific and can not recognize the heir. AO can, after necessary verification, issue the refund in the name of heir.
14. Interest for non payment of advance tax under sections 234B and 234C is being charged in the cases even where income is offered under section 44AD on pre-emptive basis. This was a deficiency in the system. Same has been rectified. 



15. Interest is being charged under section 234A till the date of filing the return even if tax has already been paid on self assessment under section 140A of the Act inspite of the decision of Supreme Court in the case of CIT v. Pranoy Roy 309 ITR 231. The issue is under consideration of the Board and appropriate action will be taken shortly.
16. Deductors, notably banks and post offices with several authorized branches, commit several mistakes like incorrect PAN, TAN, challan number, assessment years etc. resulting in the deductee not getting the credit for the tax paid.  Apart from mounting continuous programmes of education punitive action should be taken against erring deductors through the system. The suggestions will be examined further for appropriate action.
17. Credit for TDS is being denied to the rightful person where the deductee is not such a person.  The provisions of Rule 37BA(2) of the Income-tax Rules, 1962 should be widely publicized. The suggestions will be examined further for appropriate action.
18. In several cases, the system, instead of processing the tax return, informs the tax payer to contact a designated Deputy Director without mentioning the nature of deficiency.  This leads to harassment and avoidable visits. The suggestion will be examined further for appropriate action.