Income Tax Portal Glitches Have Been Fixed, CBDT Tells Gujarat High Court

Most glitches in the e-portal have been fixed and no interest relief will be provided to late filers, the Central Board of Direct Taxes has told the Gujarat High Court.

Over 5.89 crore taxpayers had filed their income tax returns as on Dec. 31 last year, the CBDT informed the court in an affidavit filed last week—BloombergQuint has reviewed a copy.

The tax authority's stand comes in response to a petition filed by the Surat Chartered Accountants Association, seeking directions to the revenue department to not levy interest on late filings.

Such a relief, the CBDT said, cannot be granted.

Belated Filings: Interest Liability

The due dates for filing tax returns and audit reports were extended thrice for the current assessment year. And taxpayers won't have to pay interest on unpaid dues as long as returns are filed within the eased deadlines. But the benefit was extended to only small taxpayers—those with a liability of less than Rs 1 lakh.

Taxpayers who are above this threshold and have filed returns late will have to pay an interest from the original due date.

Tax consultants argued that since a lot of delay was caused by the e-portal glitches, even large taxpayers must get the relief on interest liability.

The CBDT's latest affidavit denies the relief, saying this was a conscious decision. Taxpayers with a liability over Rs 1 lakh would not be small or medium taxpayers, it said. They would mostly be large taxpayers having a large turnover and liable to get their books of accounts audited under the Income Tax Act, the affidavit said.

The CBDT argued that the calculation and payment of tax is based on the preparation of final accounts, while returns can be filed later.

"This exercise (payment of income tax) is nowhere dependent on the date of filing of income tax return and is an independent exercise," the tax authority said. "The Act does not mandate that taxes can be paid only along with filing of tax returns."

The CBDT's response is that glitches in the portal were fixed in December, and this is a proof that there were problems, a chartered accountant involved in the filing before the high court, told BloombergQuint requesting anonymity.

While they accept their portal is faulty, they also ask taxpayers to pay an interest for late filing, the person said. This is against the taxpayers' interest, the CA said.

According to Ameet Patel, an independent chartered accountant, it's unfair to have a distinction between a big and a small taxpayer.

Patel said extending the deadlines for filing returns and audit reports, while still levying interest on unpaid liability is not helpful. "To me, the extension of filing ITR and audit reports is a half-hearted attempt."

Glitches Fixed, CBDT Claims

In its petition filed last month, the tax professionals body pointed out some common issues taxpayers faced while filing returns and uploading audit reports through the portal.

In response, the CBDT's affidavit offered the following clarifications:

Bank pre-validation issues—refund cannot be issued if the bank is not pre-validated: The CBDT stated that the pre-validation of bank is not a pre-requisite for filing an ITR. But for a successful refund to the bank account, pre-validation is necessary.

In case the validation fails, the reasons are displayed under 'failed bank accounts' and the taxpayer can always seek revalidation. Before doing that, taxpayers need to ensure that the bank has completed the KYC.

Error in uploading files: This happened since taxpayers were using special characteristics in special fields where addresses and other details had to be filled in, the CBDT has stated. Thus, the authority suggested, it was not an error in the portal.

Denial of service as lakhs of people log into the portal simultaneously: The CBDT refuted this, stating that the number of successful logins in the portal for December last year exceeded 15.55 crore. The helpdesk works continuously to assist taxpayers in filing returns, it said.

Errors with description: In a few cases, it was observed that taxpayers were filing their returns using a third-party facility, the authority said. After analysing, it was found that the issue was occurring due to incorrect furnishing of information in their software facilities, the CBDT said.

PAN validation not strictly implemented: The CBDT noted that return filers, who were in possession of multiple taxpayers' credentials, have logged into the account of one taxpayer and, inadvertently, filed returns for others. All such taxpayers have been asked to upload the revised ITR with correct data, the affidavit said.

MAT Form not accepting negative figure of profit: This glitch was resolved on Dec. 12 last year, the CBDT said. Post which, almost 4,000 MAT forms were submitted in December and 25,000, in January. The due date for the form is Feb. 15.

OTP authentication issues: The CBDT denied any challenges on this front. Over 78 lakh returns were e-verified through OTPs in the last week of December, it said.

In its affidavit, the CBDT has also questioned the the petitioners' right to approach the court. Citing past rulings, it highlighted that judicial review is limited while dealing with policy decisions on the economy.

The matter is expected to come up for hearing on Feb. 21.