Hello, I feel like being harassed by Income Tax office and request your advice on this regards. Here is what happened. 1. Received a notice of Tax Scrutiny under section 142(1), requesting me to explain all sources of my income and expenses. 2. As requested I met the assessing officer and explained my income and expenses. I believe I could answer to all his queries clearly. 3. During the assessment I had categorically explained that the interest income, is computed, on the basis of actual receipt while the one reported from bank directly includes interest on accrued basis. I provided the relevant documents explaining the breakup of income. 4. Despite this I was surprised to see Outstanding demand notice in Order form issued. On inspection, I found that the discripency is because of 2 things, a) accrued interest being considered b) income from dividend of mutual fund. To the best of my knowledge income from dividend of mutual funds are not taxable and I had not included that in my Tax return. 5. I tried meeting the assessing officer and explain the problem, but he was not ready to listen and told me to submit a rectification of tax return. This didn't make any sense and my original Tax Return is Correct. 6. I submitted a letter in plain paper to the office of the assessing officer requesting him to recompute the order, 7. Seems like no-action was taken on my letter. Yesterday(on 19th May) I received a letter from Tax office that I must clear the Outstanding demand by 16th May, otherwise they will use coercive action. Please advice.
1 Answers
Assessing officer may be right somewhat in these actions.
- Interest income on fixed deposits should be included on accrual basis and not on actuals.
- Dividend earned should be declared in income tax return, even if its tax free. There is a provision in the return form to declare same.
Rather than fighting with them, I would advise to file a revised/rectified return as early as possible.
Related