New feature added in ITR portal:
Now you can file rectification request online for incorrect ITR processing even if it’s with the AO
Dec 31, 2024
Synopsis
Income tax return: Taxpayers can now file an online application for rectification of their ITR if it was incorrectly processed. However the error must be apparrent from the records. For example: Taxpayer has claimed deductions in original/revised return and same has not been allowed while processing the ITR. Read below to find out about online rectification application to income tax assessing officer (AO).
Sometimes the income tax department makes mistakes while processing the ITR and these are the mistakes which can be seen in plain sight like in AIS, TDS certificates, etc. To rectify these minor mistakes, which are apparent from the records, the taxpayer has to file a rectification application with either the CPC or AO depending on who has access right to the ITR.
However, if the ITR’s access rights remained with the centralised processing centre (CPC) only then you could file an online rectification application for correcting such mistakes. However, if the ITR’s access rights were transferred to the AO then an rectification request could not be filed online and taxpayer needed to do it in paper form.
This anomaly is now fixed by the tax department and hence both the types of rectification request can be filed online thereby saving precious time and resources. Do note if the mistake is of such nature that you need to prove it and base it on an interpretation, then the rectification request option can’t be used.
Some examples of mistakes apparent from official records include: Taxpayer has claimed deductions in original/revised return and same has not been allowed while processing the ITR. Another example can be when a taxpayer has made a correct claim of TDS/TCS/Self-assessment tax/advance tax and the same has not been allowed while processing the ITR.
Read below to know when, how and who should benefit from this new online rectification request feature for incorrect processing of ITR.
When does an ITR’s access right get transferred to AO?
According to Mihir Tanna, associate director, S.K Patodia LLP, an ITR once filed stays under CPC’s authority until the time any assessment is started by the tax department, or the rectification application could not be processed by the CPC’s system. So, if there is no issue in ITR, it will remain under the CPC’s authority.”
This is an important aspect to check before filing a rectification application. Because now both the systems are online, you need to apply for a rectification request to CPC if there is no issue with ITR and else to the AO.
How to use the new online system to file a rectification application to the AO?
Section 154 empowers the AO to rectify mistakes that are clear and do not require extensive reasoning. According to chartered accountant Himank Singla, partner, SBHS & associates, “This new feature on the Income Tax Portal now allows portal-based rectifications and streamlines the process, aligning with the government’s push for greater digitization and efficiency and in tax administration.”
Here’s a step-by-step guide on how to file an rectification application to the AO:
Step 1: Go to the ITR e-filing portal- https://eportal.incometax.gov.in and login using your credentials.
Step 2: Navigate to the ‘Services’ tab and click on the ‘Rectification’ column. In here you need to click ‘Request to AO seeking rectification’. A new webpage will open and here you need to click on ‘New Request’.
Singla says: “On the positive side, this new feature simplifies the process by enabling digital submission, reducing the need for manual filing or reliance on grievance mechanisms. This saves time, ensures transparency, and allows taxpayers to correct apparent errors such as calculation mistakes or incorrect entries more efficiently. The streamlined interaction with the AO also improves communication and accountability. However, certain challenges remain.”
Singla highlights some of the challenges with this system:
● Technical issues with the portal, such as glitches or downtime, may delay the process.
● The scope of Section 154 is limited to mistakes evident from the record, leaving out more complex disputes.
● Additionally, frivolous or repetitive rectification requests could strain the system further.
Ramakrishnan Srinivasan, former chief commissioner of Income Tax Department says: "Now CBDT has enabled e-filing of rectification petition under section 154 in e-portal addressed to the JAO) for the orders passed by JAO instead of filing it in manual/paper form which was the case hitherto. The same will also apply to cases where the rectification rights are transferred to JAO by CPC.
Earlier the taxpayers were facing lot of difficulty in filing rectification applications as they were not aware when to e file or paper file rectification application and before which authority. With the result their rectification petitions remain unattended/rejected resulting in piling up of grievances. CBDT is taking efforts to streamline the system by enabling e-portal as the sole accessing point for taxpayers to interact with the department and this facility is one of the steps in this direction."
Who may benefit from this new feature on the ITR portal?
According to Singla, this feature is particularly helpful for correcting errors such as mismatches in income, tax credits, or deductions that are evident from the records. “For example, if TDS is not correctly reflected or an exemption has been omitted by mistake, a rectification request can address these issues quickly. Once the application is submitted, taxpayers can track its status online, ensuring better transparency and reducing the need for physical follow-ups."
Tanna says that earlier the manual rectification application needed to be filed along with the documentary evidence. “Sometimes the file used to get misplaced, or could not referred to in time to it when required. Now with this online application facility, a database can be maintained where a search query can easily be performed. I think this will create a reference access point where rectification cases can be referred to by any AO or chartered accountant or lawyers and they can get the background of the case online.
Chartered Accountant Ashish Niraj, Partner, A S N & Company, says: "New option of ‘Request to AO Seeking Rectification” is a welcome step by department and was long awaited by tax payers. By this option this aseesee can submit request for rectification of orders passed under section 154 of the Income Tax Act 1961 to his concerned AO online. Earlier Some manual process was also involved which was leading to inconvenience to taxpayers. Also this measure will enable the concerned AO to see rectification requests related to him on his personal dashboard. This will enable him regularly monitor and see the progress of pending applications etc. This will enable AO to dispose the Rectifications related to him timely. Overall this New option is good for both AO and Taxpayer and will lead to faster processing."
[The Economic Times]
