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Issues in processing of returns at CPC

Issues in processing of returns at CPC. By CA. M. Lakshmanan, B. Com., F.C.A., DISA(ICAI). Chartered Accountant, Madurai. E-mail: mlconet@hotmail.com. CENTRALISED PROCESSING OF RETURNS SCHEME 2011. Applicable to returns filed electronically

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Issues in processing of returns at CPC

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  1. Issues in processing of returns at CPC By CA. M. Lakshmanan, B. Com., F.C.A., DISA(ICAI). Chartered Accountant, Madurai. E-mail: mlconet@hotmail.com

  2. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 Applicable to returns filed electronically and for class of assessees specified in this behalf

  3. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 The following assessees have to file compulsorily e return only: - Limited Companies - Compulsory Audit Cases - from A.Y. 2012-13 Individuals/HUFs having Total Income above Rs. 10 Lakhs and assessees who have got foreign assets.

  4. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 To be filed with digital signature only for Limited Companies and for others whose accounts are audited u.s. 44 AB. If filed without digital signature the acknowledgement in Form V duly verified is to be sent to CPC within 120 days by ordinary or speed post.

  5. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 If ITR V is rejected because the same is unsigned, illegible, mutilated, bad quality or not as per specification it is deemed to have been not filed and the return is to filed once again followed by submission of ITR V .

  6. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 The Commissioner may condone the delay in a case or class of cases and he can call for fresh ITR V under special circumstances.

  7. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 ACKNOWLEDGEMENT OF RECEIPT OF ITR V This will be sent by CPC to the email address provided. If not received within a reasonable time it can be downloaded from ‘My Account” menu.

  8. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 REVISED RETURN OF INCOME If original is filed electronically the revised is to be filed electronically only. Centre will process only the revised return.

  9. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 INVALID or DEFECTIVE RETURN The Commissioner may declare a return defective due to specific reasons and the same will be intimated to the assessee If revised return is not filed within the time specified the return filed will be rejected The Commissioner has got powers to condone the delay.

  10. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 PROCESSING OF RETURNS The returns are processed after considering TDS/TCS and after verification of payment of taxes, intimations are generated and sent to assessees by e-mail. Refunds are sent through refund bankers. If there is demand the intimations are to be treated as demand notice u.s. 156.

  11. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 PROCESSING OF RETURNS If for any reason the return could not processed the same will be transferred to the jurisdictional officer and the same will be intimated to assessee as communication via email.

  12. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 RECTIFICATION OF MISTAKE Mistake apparent on record Own motion or application by assessee To be filed electronically only Applications are processed after being vetted by the tax officials in the CPC. Order u.s 154 is to be treated as demand notice u.s 156

  13. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 RECTIFICATION OF MISTAKE If the error is due to data entry or software error the excess refund or reduction in demand will be corrected by CPC it on its own motion. If the rectification results in excess demand or reduction in refund intimation will be sent and reply by assessee is to be considered.

  14. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 ADJUSTMENT AGAINST OUTSTANDING TAX DEMAND All outstandings as uploaded by the officer will be adjusted before issuing refund.

  15. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 APPELATE PROCEEDINGS Appeal shall lie with the CIT (Appeals) having jurisdiction over the assessing officer. Remand Reports and giving effect to the appellate orders shall be done by the Assessing officer.

  16. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 NO PERSONAL APPEARANCE Assessee or Authorised Representative shall not be required to appear at the centre. Written or electronic communication is sufficient. Centre can call for clarification, evidence or document, which are to be submitted electronically only.

  17. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 SERVICE OF NOTICE OR COMMUNICATION By Post Delivering or transmitting electronically Placing the copy in the registered electronic account Any of the modes mentioned in Sec 282(1).

  18. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 SERVICE OF NOTICE OR COMMUNICATION Date of posting in the website/email is the date of service. Computer generated notices need not carry any signature.

  19. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 TO OPEN THE DOCUMENT PASSWORD IS REQUIRED It is combination of PAN and Date of Birth/incorporation. This can be stored as a word file in the computer in the respective assessee’s file for easy retrieval at every time for opening the documents received.

  20. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 The process of request for re-sending of Intimation u/s 143(1)/154 and refund is available in ‘Services’ option. The Assessees who filed their income tax return online can request online for resending of their intimation under section 143(1) and section 154 of the Income tax Act, 1961. Assessee can also place request for re-issue of income tax Refund..

  21. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 • Infosys is the Technology Partner for 5 years from Feb 2009 • CPC enjoys concurrent jurisdiction of all the officers in the country • Strength of Income Tax Staff at CPC is 35 • Strength of Infosys Staff at CPC is 150 Discussion on CPC by CA.M. Lakshmanan, Madurai

  22. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 CPC has got powers to - to process the income tax returns u/s.143(1) - to call for information u/s.133 - to rectify mistakes in processing of returns u/s.154 - to declare returns of income as defective u/s.139(9) - to issue notice of demand u/s.156, and - to set off or adjust refunds against outstanding tax liability u/s.245. Discussion on CPC by CA.M. Lakshmanan, Madurai

  23. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 CPC can process more than 1,00,000 returns per day Presently CPC processes all the e-returns filed in the country and the Physical Returns filed in Karnataka & Goa. CPC is back office and not front office i.e. it carries out the instructions of CBDT CPC does not have powers to give effect to Appeal Orders/audit objections Discussion on CPC by CA.M. Lakshmanan, Madurai

  24. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 COMMON MISTAKES found in e-returns Non Generation of accurate x.ml file by private software – differences in schedules Depreciation as per Books as per I. T not shown Chapter VI A Deductions not entered correctly Discussion on CPC by CA.M. Lakshmanan, Madurai

  25. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 COMMON MISTAKES found in e-returns Mismatch between TDS claimed and Form 26AS, Wrong CIN of Challan Mistakes in BSR Code, Date of Payment, Challan Serial No., Entering Major head as 400 instead of minor head 300 for self assessment tax Discussion on CPC by CA.M. Lakshmanan, Madurai

  26. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 COMMON MISTAKES found in e-returns Wrong amounts entered in tax paid – even difference of Re. 1/- the Challan will not be taken into account Wrong PAN of the Deductee is quoted by Deductor Wrong TAN of the Deductor is quoted by Deductee Discussion on CPC by CA.M. Lakshmanan, Madurai

  27. CENTRALISED PROCESSING OF RETURNS SCHEME 2011 COMMON MISTAKES found in e-returns Correct e-mail id should be given, to which only communications will be sent and not the one registered on the website. Correct address is to be given ITR V not sent in time – 7% of the assessees didn’t send ITR V. Discussion on CPC by CA.M. Lakshmanan, Madurai

  28. REQUEST BY CPC TO CA FRETERNITY • To encourage assessees to file e-returns • To encourage assessees to get DSCs • To send ITR V within time • To ensure quality & size of paper Discussion on CPC by CA.M. Lakshmanan, Madurai

  29. REQUEST BY CPC TO CA FRETERNITY • While making a call to CPC in phone no.1800 425 2229 keep ready of the following: • PAN, Date of Birth/Date of incorporation and communication no. of the CPC document received. Discussion on CPC by CA.M. Lakshmanan, Madurai

  30. REQUEST BY CPC TO CA FRETERNITY • If problem is not solved get the ticket no. for future reference. • If demand is paid there is no need to send copies of Challans; it will be taken care by OLTAS. • While making entries for TDS, there is no need to enter all the certificates of the same Deductor; it is sufficient to fill the total amount under one TAN. Four quarterly certificates can be added together. Discussion on CPC by CA.M. Lakshmanan, Madurai

  31. Practical Problems • Why registered post is not accepted? • - [2011] 16 taxmann.com 323(Bombay) Crawford Bayley & Co. vs. Union of India • Disallowances are not known – difference between returned income & assessed income. Discussion on CPC by CA.M. Lakshmanan, Madurai

  32. Practical Problems • Loss from House Property is adjusted in Income from Salary. • Depreciation is disallowed if Depreciation Schedule is not filled in. • Donation u.s. 80 G is not allowed if the details of order of CIT granting exemption is not furnished in the return • Communication is received without attachment Discussion on CPC by CA.M. Lakshmanan, Madurai

  33. Practical Problems • Refund cheques are received or the same is credited in the Bank Account without any intimation/rectification order • How much TDS is considered and how much interest is given is not ascertainable. • Non-existing demands are adjusted while granting refunds. Discussion on CPC by CA.M. Lakshmanan, Madurai

  34. CHANGES EXPECTED IN THE NEAR FUTURE • PAN encrypted DSC or plain DSC if all the directors are foreigners • Method of Accounting and claim for TDS to be sorted out by jurisdictional officers • Co-owners of Property and TDS certificate is in the name of one owner. • PAN of the Deductee not mentioned in the TDS return • Clubbing of Income – TDS is one PAN and income offered in another PAN Discussion on CPC by CA.M. Lakshmanan, Madurai

  35. SUGGESTIONS • Registered Post with ack. due is to be accepted • Details of disallowances should be given • In the ‘my account’ menu facility for down loading intimation/rectification order should be made available • Mismatch in TDS between claim and Form 26AS should be given Discussion on CPC by CA.M. Lakshmanan, Madurai

  36. SUGGESTIONS • Old out standing demands uploaded by the assessing officer should be made available so that the assessee can approach the concerned officer for deleting non-existing demands before the same are deducted from refunds. • Pendency of Appeals/Revisions can also be uploaded by the concerned officials so that the assessee can ascertain from the site the pending proceedings. Discussion on CPC by CA.M. Lakshmanan, Madurai

  37. SUGGESTIONS • Dialogue Box/Bulletin Board should be provided in the “My Account” menu to accept word/excel documents wherein the assessees can upload their queries/doubts relating to the intimations, rectification orders, refunds etc., Discussion on CPC by CA.M. Lakshmanan, Madurai

  38. SUGGESTIONS • Uploading of payment of taxes demanded by CPC as well as existing demands relating to earlier year should be made available. • Likewise assessees should be given option to upload pending refunds . • List of donations eligible for deduction u.s 80 G should be made available in the Income Tax site and link should be provided in the CPC. Discussion on CPC by CA.M. Lakshmanan, Madurai

  39. SUGGESTIONS • LIST of mistakes that can be considered as “MISTAKES apparent on Record” should be provided so as to reduce the time in making an application, rejecting the same etc., • As of now the following are not considered: • -- Depreciation • -- Carry forward loss Discussion on CPC by CA.M. Lakshmanan, Madurai

  40. CASE LAWS • Sending ack. by Post – [2011] 16 Taxmann.com. 323 (Bombay) HIGH COURT OF BOMBAY - Crawford Bayley & Co. vs. Union of India. Discussion on CPC by CA.M. Lakshmanan, Madurai

  41. CASE LAWS • Carry forward loss - ITAT CHANDIGAR BENCH Ambala Central Co-op Bank Ltd., vs. Income Tax Officer IT APPEAL NO. 332 (CHD.) OF 2012 - Discussion on CPC by CA.M. Lakshmanan, Madurai

  42. CONCLUSION • This presentation is not full coverage of all the aspects of CPC • CPC is in the initial stages and it is to be fine tuned for which we have to share our experiences within ourselves and with the Department . • We have to be very attentive and file rectification petitions/appeals/stay petitions in time to avoid further complications. Discussion on CPC by CA.M. Lakshmanan, Madurai

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