The Income Tax Department has issued these notices under sections 138 and 148 (A). In many cases, the notice asks questions about only one deduction wrongly claimed. In some cases where the amount of deduction is large, notice for reassessment has been issued.
The Income Tax Department is re-examining many tax returns. Especially those ITRs are being scrutinized in which deductions have been claimed on donations to charitable trusts and political parties. These income tax returns are for the financial year 2018-19. Chartered accountants have told Moneycontrol that notices have been issued to hundreds of salaried individuals between March 20 and June 10 this year. Paras Savla, partner at tax consultancy firm KPB & Associates, said that with the help of Artificial Intelligence (AI), the Income Tax Department has identified those people whose income and donation ratio does not seem natural. Under Section 80G of the Income Tax Act, 50-100 percent deduction can be claimed on donations made to political parties and charitable trusts.
Notices issued under these sections
The Income Tax Department has issued these notices under sections 138 and 148 (A). In many cases, the notice asks questions about only one deduction wrongly claimed. In some cases where the amount of deduction is large, notice for reassessment has been issued. Re-assessment of income tax return can be done within 10 years of filing. These rules are for ITR with income more than Rs 50 lakh. If the income is less than Rs 50 lakh, re-assessment of ITR can be done within 8 years. According to this rule, assessment of ITR for FY19 (assessment year 2020) can be done till March 31, 2029.
“Such notices have been sent mostly to Gujarat taxpayers who have donated to political parties,” said a chartered accountant with knowledge of the matter. Moneycontrol has not been able to independently verify this claim.
What are the rules of donation
The Income Tax Department has many ways to find out whether a donation is genuine or fake. Due to computerization, it has become easier to match the data provided by charitable trusts and political parties with the donations claimed in ITR. An Assistant Commissioner or Deputy Commissioner has the authority to issue a reassessment notice only after solid facts are established. It was said in the Union Budget 2019 that it will be mandatory for charitable trusts to obtain a unique identification number. Deduction can be claimed under section 80G only on donations made with this identification number. This system was implemented from April 1, 2020.
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