The source of investment has to be declared, especially if it’s in cash. As per the Income Tax Act, any unexplained investment is considered as Income for that Financial Year u/s 69 and 69B and ITR is to be filed. Moreover, some investments are likely to make income in the future in that case, ITR is to be filed not only for investment but the income generated from the investment as well.
Taxpayers who have received any such verification issue needs to submit a response on those issues raised. Additionally, the response has to be submitted online by logging into the compliance portal.
Therefore, 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 even if the ITR is not filed in the given assessment year and has potential tax liability pending.
- Even if the 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 for the source of Investment
| Code | Description | Response |
| 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) |
| A9 | Income on above transaction/investment during the year | Amount + Remarks |
A1- Correct Information value
You need to mention the total amount of investment here. However, 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. You also need to add suitable remarks under the remarks section.
A3- Out of receipts exempt from tax
The drop-down list below lists the available exemptions. 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.
- Others
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:
- Sales
- Loan Received
- Loan Repayment
- Gift Received
- Donation Received
- Other Receipt.
The Transaction Mode(source of investment) 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(source of investment amount) is received from an unidentifiable person, then his/her details are to be mentioned as per the following table:
A7- Others
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.
A9- Income on above transaction/investment during the year
Investments made and income generated from that investment of that particular financial year are to be mentioned. If the nature of the business is such that it has a lot of such frequent transactions then, in that case, working capital employed in the business and income earned on the turnover is to be mentioned.
FAQs
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.