A query by the ITD may be raised on expenditures like family functions, foreign travel, foreign education, expensive hotels/restaurants, etc. These are some expenses where income gets utilized. The taxpayers who have spent a significant amount on such expenditures have to quote their PANs in such transactions. Some of the above-mentioned expenses are to be reported as well through AIR or SFT. Expenditures are an indicator of assessee’s lifestyle and standard of living. Any unexplained expenditure can also be deemed to tax in hands of the assessee for that Financial Year.
Taxpayers who receive an SMS or any communication via call or email from ITD are likely to face some verification issues in their ITRs. Taxpayers can receive the SMS for three reasons:
- Not filed ITR or The ITR is not filed in the given assessment year and has potential tax liability pending.
- Details provided by taxpayers and Information received to the ITD don’t match for that particular assessment year.
- Significant transactions get reported to the Income Tax department during a financial year which is considered abnormal or out of line with the profile of the taxpayer.
Verification issue in the computation of tax liability from Expenditure
|A1||Correct Information Value||Amount + Remarks|
|A2||Out of earlier income or savings||Amount + Remarks|
|A3||Out of receipts exempt from tax||Exempt income-wise list|
|A4||Received from identifiable persons (without PAN)||PAN wise list|
|A5||Received from identifiable persons (without PAN)||Person wise list|
|A6||Received from un-identifiable persons||Nature of transaction wise list|
|A7||Others||Amount + Remarks|
|A8||Unexplained amount||A1- (A2+A3+A4+A5+A6+A7)|
A1- Correct Information value
The total of all the amount paid for the purchase of the property has to be mentioned here. The purchase amount and all the expenses like stamp duty etc. In the case of co-ownership, the taxpayer should mention his/her share of investment and give details like name, PAN and share of other co-owners under the remarks section.
A-2 Out of earlier income or savings
If any part of the investment or expenditure is made out of earlier income or savings then it should be mentioned with the amount under this category. Suitable remarks are also required under the remarks section.
A3- Out of receipts exempt from tax
Available exemptions are listed below in the drop-down list. After choosing the relevant exemption the value of the receipt will be determined.
- Interest income u/s 10.
- Dividend income u/s 10(34)
- Long-term capital gains on shares u/s 10(38).
- Agricultural income u/s 10(1).
- Share in the total income of firm/AOP etc. u/s 10(2A)
- Income is not taxable in India.
If this field is selected you will be displayed the following rows:
A4- Received from identifiable persons (with PAN)
If any amount is received from an identifiable person who holds a valid PAN, then his/her details are to be mentioned as per the following table:
The Transaction Type consists of:
- Loan Received
- Loan Repayment
- Gift Received
- Donation Received
- Other Receipt.
The Transaction Mode consists of two options i.e ‘Cash’ and ‘Non-cash’. More rows can be added by clicking on the button ‘Add Row’. Suitable remarks are to be provided under the remarks section.
A5- Received from identifiable persons (without PAN)
If any amount is received from an identifiable person who doesn’t hold a PAN, then his/her details are to be mentioned as per the following table:
A6- Received from un-identifiable person
If any amount is received from an unidentifiable person, then his/her details are to be mentioned as per the following table:
If any amount which was not covered in any of the above-mentioned categories then it should be mentioned here. Suitable remarks are to be provided under the remarks section.
A8- Unexplained amount
This section computes a figure (A1 – (A2+A3+A4+A5+A6+A7)), for which no explanation is provided.
Yes, it is advisable to log in to the compliance portal. If a taxpayer doesn’t log in he/she will not be able to respond to the issues raised.
Upon examining the online response submitted by the taxpayer, ITD can raise an additional query request to seek further information/clarification from the taxpayer. The taxpayer needs to respond to the additional query request as well.
If there are any e-Verification issues it will be pushed to the compliance portal for e-verification, Email and SMS will be sent to the taxpayer informing about the issue raised. Taxpayers then need to respond to those issues raised.