Hello Experts,
I’m seeking guidance regarding a Demand Notice issued for an updated return for ITR AY 2021-22. Here’s a summary of the situation:
Initially, we filed the Original Return but missed reporting an amount of approximately ₹90,000. After three months, we consulted the same CA, who advised us to seek assistance from another CA to file an updated return due to his prior commitments.
The second CA, after reviewing the situation, recommended filing an updated return as well. Both CAs cross-checked the TDS amounts provided by the employer.
Issue with Demand Notices:
1. First Demand: The Original Return triggered a demand of around ₹4.25L. Both CAs mistakenly entered two key amounts incorrectly:
The amount meant for Section 10(10A) was entered under Section 10(10AA).
Similarly, the amount for Section 10(10AA) was entered under Section 10(10A).
We corrected this by filing a rectification request to interchange the values, and the demand was subsequently removed by the ITD.
2. Updated Return Demand: After filing the updated return, two demands (with the same DIN) were issued for AY 2021-22:
Demand 1: ~₹5.4L (₹4.25L plus interest and penalty, totaling around ₹8L).
Demand 2: ~₹16.4K (tax for additional income in the updated return, including interest, totaling around ₹22.5K).
Initially, our CA advised us to disagree with both demands. After four months, with accumulating interest, we consulted a third CA, who advised us to agree to the second demand since it was accurate. Not realizing both demands had the same DIN, we uploaded a challan to respond, which inadvertently agreed to both demands.
Attempts to Resolve:
We approached the JAO after the Demand Facilitation Center suggested it. However, the JAO mentioned they lack the access needed to make changes, recommending rectification through the Income Tax Department instead. Unfortunately, the rectification dashboard shows an error ("Total Income sought to change. Rectification doesn’t allow that") when we attempt to upload a corrected JSON file with the reversed amounts.
Currently, if this issue remains unresolved, the demand could exceed ₹12L due to continued interest accumulation.
Clarification of Section Details:
Commuted Pension Value: ₹17L (to be entered in Section 10(10A))
Leave Encashment: ₹3L (to be entered in Section 10(10AA))
However, they were mistakenly entered as:
Section 10(10AA): ₹17L
Section 10(10A): ₹3L
Could you please advise on the best course of action to resolve this situation? Any assistance would be greatly appreciated. Thank you!
CAclubindia
