What to do if you are asked to pay tax arrears

As Payal was browsing through her emails and updating her photos on Facebook, she saw an email from the least expected source — the Centralised Processing Centre (CPC) of the Income-Tax Department. The email was regarding arrears of outstanding tax in respect of tax return filed for the year ended March 31, 2009.

On opening the attachment, she found that she was asked to pay an outstanding demand of R37,000 for the Assessment Year 2009-10.

She wasted no time in calling up her chartered accountant friend, Manish, to confirm that the email she received was not a spam and why she needed to pay additional taxes, as her employer had already deducted taxes from her salary and she has paid the balance tax in respect of her interest income.

Manish suggested two likely reasons for the demand notice:

First, the intimation may have been issued under Section 143(1) of the Income-Tax Act and would have arisen as credit for TDS or self-assessment tax may not have been granted. Another possible reason could be

that she may have filed a rectification application with the Income-tax Officer (ITO), which may be pending for disposal or the ITO may have passed a rectification order, but may not have posted the rectified position on the website of CPC.

Manish also informed her that the communication usually specifies that for any rectification or correction on the demand, the request should be made only by the ITO and the CPC can neither carry out any modifications nor clarify issues regarding these demands.

As Payal got more frustrated, Manish suggested her that she should write a letter to the ITO, informing him about the communication received from CPC and request the ITO to process the rectification application already made or in case she has not received intimation under Section 143(1) of the IT Act, she should request for one so as to ascertain the possible reason for the demand being made.

... contd.

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