S Murlidharan

I-T returns verification: There’s a glitch in the system

S Murlidharan | Updated on July 16, 2020

Unverified returns going unnoticed for as far back as five years raises red flags

The Income Tax Department has given taxpayers a one-time chance to verify their unverified I-T returns for the last five years. Taxpayers who filed their returns electronically for assessment years 2015-16 to 2019-20 (FY2014-15 to 2018-19) but didn’t verify them, can do so by September 30, according to a circular by the department.

If returns are filed electronically without a digital signature, taxpayers are required to verify these using an one-time password or by sending a physical copy of ITR-V (verification form) to the I-T department within four months. If not verified, such returns are considered non est — never filed.

The need for verification cannot be overemphasised. Not long ago, when paper returns were the norm, they bore the assessees’ signatures as evidence of them having filed the returns with a sense of responsibility. Online returns bristled with the problem of wherewithal for verification. Initially, the department asked everyone to only print out the verification part of the return and post it to its central processing unit located at Bengaluru. This posed problems of its own. First, it gave rise to losses in postal transit given the sheer volume of such letters from the assessees. Speed post and registered post would have resulted in employment of a specific set of staff just for receiving these letters. Second, it took some of the sheen off the department’s attempt to go paperless. It quickly therefore put in place w hat is by now the time tested online verification —OTP. When one enters the OTP obtained on his or her cell phone, it is deemed to be a foolproof authentication because no one can simultaneously hack into one’s income tax account as well as their mobile.

To be fair to the department, it does take pains to emphasise in all I-T return forms the need for electronic verification through OTP within 120 days or through post within the same time. Where it has gone wrong is giving the assessees more time. Shouldn’t its system have flagged the unverified returns after 120 days from the date of their filing had passed? This would have automatically resulted in punitive action, including penalty for non-filing of return within the prescribed time as mandated by section 234F as well as ejection of the unverified returns from the system.

It is amazing that the defaulting assessees have blithely ignored the matter, despite not being refunded. And it is equally amazing that the department has let such assessees be without reminding them to verify their unverified returns.

At least, the department has woken up now, and has offered a one-time opportunity to assessees verify their unverified online returns for the last five years by September 30. Naturally, this opportunity would not be available for those who have had the mortification of being subjected to ex parte assessment, which the assessing officer is empowered to do in the face of non-cooperation from the assessee.

It may be mentioned here that digital signatures obtained from accredited agencies are good enough for verifying income tax returns. But this option is found useful only by big-ticket assessees who are already armed with digital signatures. For small assessees, the OTP option is best, and costless as well.

The writer is a Chennai-based chartered accountant

Published on July 16, 2020

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