Outstanding tax demand despite answering to all scrutiny 142(1)

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.

asked May 20 '14 at 12:11 by Saikat Bandyopadhyay 111


Assessing officer may be right somewhat in these actions.

  1. Interest income on fixed deposits should be included on accrual basis and not on actuals.
  2. 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.

answered May 20 '14 at 22:46 by Pankaj Batra 5.2k320

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Asked: May 20 '14 at 12:11

Seen: 3,900 times

Last updated: May 20 '14 at 22:46