Income Tax E-Filing Glitches Prompt CA Body To Move Court

The North Block of the Central Secretariat building, which houses the Ministries of Finance and Home Affairs, stands in New Delhi. (Photographer: Prashanth Vishwanathan/Bloomberg)

A group of chartered accountants has moved court to direct the government of India not to penalise late filers of income tax returns.

The Surat Chartered Accountants Association has filed a petition with the Gujarat High Court asking it to direct the revenue department to not levy interest on belated filings, especially since the CBDT itself has extended filing deadlines on several occasions due to glitches in the e-filing platform.

On Thursday, the high court issued notice to the Central Board of Direct Taxes on the petition.

"The petitioners are aggrieved due to the incompetency, non-operation, and technical glitches of the new income tax portal." - CAA'S petition

Further, the CBDT needs to be directed to provide a complete workable portal, free of errors and glitches. And taxpayers should be allowed to claim losses where the return is filed belated on account of technical glitches portal, the petition said.

Finally, the chartered accountants' body has asked the court to direct the CBDT to allow taxpayers to claim carry forward of losses and incentive deductions even if the return of income is filed belatedly in cases where the reason for late filing of return is defective portal.

Income Tax E-Filing Problems

The extended income tax filing deadline for financial year 2020-21 ran out on Dec. 31. And while many chartered accountants had complained of glitches in the e-filing system and subsequent delays, the finance ministry refused to extend the deadline further.

At a press conference on the last day of 2021, held to announce GST Council decisions, Revenue Secretary Tarun Bajaj said the filing process had been working smoothly and more returns had been filed this year than last.

But in its petition, the tax professionals' body has pointed out some common issues taxpayers face while filing returns:

Bank pre-validation issues – refund cannot be issued if the bank is not pre-validated.
Error in uploading files.
Denial of service as thousands or lakhs of people login into the system simultaneously.
Errors with description.
PAN validation not strictly implemented,
Even after verifying the returns, unverified returns are being generated,
MAT Form not accepting negative figure of profit
OTP authentication issues

The Annual Information Statement functionality, rolled out in November 2021, too is not reflecting accurate data, which can cause significant hardship to taxpayers, the petition pointed out. AIS is a compilation of a taxpayer's income from various sources, namely fixed deposits, dividend income, mutual fund and interest income etc.

...it is a cumbersome exercise to reconcile AIS and the statement of accounts. It is also submitted that rolling out AIS on 01.11.2021 does not provide ample time and opportunity to the taxpayers to reconcile and the difference or the non-reconciliation can result into scrutiny or the inquiry

CAA's Petition

The high court will hear the matter next on Jan. 11.