Taxpayers slapped with unexpected notices for old tax demands

economictimes.indiatimes.com:

tax demands going back more than 15 years, long paid and closed, are popping up as new claims.

In the past few weeks, several individuals have been slapped with notices from the Income Tax (I-T) department asking them to cough up the amounts within a week.

While the department’s records show the demands as 'unpaid', tax payers who have received the notices are confident they have no such outstanding with the tax office.

Some of the notices pertain to assessment years 2003-04 and 2004-05. Many are clueless how to go about handling the notices as the old payment challans and rectification orders, which can serve as proof of tax payment, have been misplaced.

The errors, sources believe, are probably a consequence of the department migrating to a new system.

«This is troublesome for many. These old demands are further sought to be adjusted against refund receivable for the current year! In most cases these demands are either paid or necessary rectifications have already been passed several years back.

But the new system does not recognise the updated position. Thus the taxpayers have to submit documents in support of deletion or payment of such demands.

In several cases such old records are either not easily obtainable or just plain unavailable,” said Rutvik Sanghvi, Partner at Rashmin Sanghvi & Associates, a CA firm.

Some taxpayers are choosing to pay up without challenging the department, if the amount in question is small. For others it could mean going through the rigmarole of an appeal.

While the tax office can go back up to ten years in reopening as assessment under the grounds that some income has escaped untaxed, there is no time limit in pursuing old demands with taxpayers.