Salaried employee receiving notices for claiming deduction under Chapter VI-A
Now that the due date for filing Income tax return is over for salaried employees u/s 139(1) i.e. 31.07.2023 and Income tax department has started processing the Income tax returns. Many of the taxpayers have started receiving Intimation order for the income tax return they filed for AY 2023-24.
However, as we know Income tax department has started using Artificial Intelligence in processing the income tax return and in last few years income tax department has started sending notices based on risk parameters to assessee’s.
Similarly, this year we have seen salaried employees receiving notice for claiming excess deduction under Chapter VI-A as compared to deductions declared by employers in their Form 16.
Such deductions include deduction under section 80C i.e. LIC, PPF, tax saver mutual fund, Section 80D i.e. mediclaim etc. Many employee’s even claim HRA (House rent allowance) which they have not declared to their employer which results in refund of TDS deducted by employer.
Normally in case of a salaried employee, employer has to deduct TDS based on slab rate of assessee and considering all deduction of assessee submitted by him. Hence in majority cases there should not be any refund if assessee submitted all deductions.
Further, even if there is a refund it could be of a small amount or it could be in some year where assessee has claimed any deduction later, but same could not be a regular phenomenon. Hence, according Income tax department is sending notices to all salaried employees that their income tax return is under risk management. The notice being sent in as under:
What does the above notice mean?
As per the above notice it is not an assessment notice but a preliminary notice to assessee to inform him that his income tax return is under risk management and this could result in launch of assessment notice.
The above notice is being sent to salaried employee who have claimed more deductions then what is mentioned in their Form 16.
What response can be given against such notice:
Assessee can either agree with the discrepancy and file revised return increasing the return or disagree with the notice and accordingly return shall be processed by the Income Tax Department.
Can assessee receive an assessment notice after such a notice or warning from Income Tax Department:
There are chances that Income Tax department could issue assessment notice based on the action of assessee. We have seen earlier also that Income tax department has been sending notices to lot of salaried employee who have been claiming incorrect deductions and claiming refund such as donation to political party etc.
Further, if the assessee agrees with the discrepancy in deduction of Income tax return and Form 16, assessing officer could issue assessment notice for 3 earlier 3 years also if there were similar differences earlier also.
Hence, this is the first time that salaried assessee have received so many notices and we need to wait and see what will be the further step of Income tax department for such incorrect claims by assessee. Apparently as per various online news portal, around 22,000 people have received such notices.
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