Subject: Processing of income-tax
returns filed in Forms ITR-2, 3, 4, 5 & 6 under section 143(1) of the
Income-tax Act-applicability of section 143(1)(a)(vi)-reg.-
Sub-clause (vi) of clause (a) of
sub-section (1) of section 143 of the Income-tax Act, 1961 ('Act') as
introduced vide Finance Act, 2016, w.e.f. 01.04.2017, while processing the return of income,
prescribes that the total income or loss shall be computed after making
adjustment for addition of income appearing in Form 26AS or Form 16A or Form 16 (the three Forms) which has not been included in
computing the total income in the return.
2. In this regard, while processing
income-tax returns filed in Forms ITR-2, 3, 4, 5 & 6, doubts have arisen
regarding the nature, extent and scope of comparison of information as
contained in the return of income with the three Forms which might lead to
issuance of intimation proposing adjustments in the returned income. It has
also come to notice that some of the information so available in the ITRs is
incomparable with information contained in the three Forms. In this backdrop,
it has become imperative to lay down suitable guidelines for CPC/ADs so that
provisions of section 143(1)(a)(vi) of t he Act are invoked only in appropriate
cases.
3. After examining the matter,
Central Board of Direct Taxes (CBDT), in exercise of its powers under section
119 of the Act, hereby lays down following guidelines regarding applicability
of section 143(1)(a)(vi) of the Act while considering returns for processing
pertaining to ITR Forms 2, 3, 4, 5 & 6:
3.1 For purposes of section
143(1)(a)(vi) of the Act, only the information so contained in the three Forms specified therein, would be taken into
consideration.
3.2 In returns filed in ITR-4 Form, information about a particular
head/item of income under the heads 'salary', 'income from house property', or
'income from other sources' is only on net basis and t hus, complete
data/information may not be available the rein which may enable any comparison
with the data/information as contained in the three Forms. Therefore, section
143(1)(a)(vi) shall not be applicable in such instances. However, if the
receipts under these heads are completely omitted from the return, then the
provisions of section 143(1)(a)(vi) shall be applicable. Further in ITR-4,
wherever in the return Form, presumptive income under both Sec. 44AD and 44AE
is disclosed, it will be difficult to correlate the receipts in the return wit
h the information in the three Forms. Hence, any likely difference in the
receipts under these items in the return with the receipts in the three Forms
under this scenario would be excluded from the purview of Sec. 143(1)(a)(vi).
Similarly, it will be difficult to correlate the , income under sec. 44AE in
the return with the information in the three Forms. However, where t he
presumptive income fro m business either u/s 44AD or profession u/s 44ADA alone
are reported in the return and t he gross receipt s fro m presumptive business
or profession show n in the ret urn is less than the gross receipts as per the
three Form s, intimation proposing adjustment would be issued.
3.3 For returns in Forms ITR-2 & 3, as receipts/income under
the heads 'salary' is comparable with information available in the three Forms
on a gross basis, provisions of section 143(1)(a)(vi) of the Act may be invoked
in such cases wherever applicable.
3.4 In ITRs
3, 5 & 6, in respect of income under the heads 'income from
house property' or 'income from other sources', there may be difficulties in
ascertaining whether the receipt being shown in the three Forms is getting
reflected under the head 'income from house property' or 'income from other
sources' in the ITR Form or is being treated as business income under the head
'income from business or profession' by the concerned assessee. Under these
circumstances, any likely difference in income shown under the head 'income
from house property' or 'income from other sources' as contained in ITRs 3, 5
& 6 with the three Forms, being difficult to verify under section
143(1)(a)(vi) of the Act, would be excluded from purview of intimations proposing
adjustments. However, there are certain types of income which are only taxable
under the head 'income from other sources', in such situations, in case of
mismatch at gross level, adjustments u/s 143(1)(a)(vi) of the Act shall be
proposed. In respect of income under the head 'income fro m house property'
being shown in ITR-2, as receipts/income are comparable with information
available in th e three Forms on a gross basis, provisions of section
143(1)(a)(vi) of the Act may be invoked .
3.5 In case of business receipts
being taxable under the head 'income from business or profession' which are
reported in ITRs 3, 5 & 6 Forms,
comparison of such receipts in the three Form s with data in ITR at gross level
may not be possible as receipts shown in the three Forms would get subsumed in
the consolidated income in P&L A/c. Further, items in the P&L a/c such
as commission, interest etc may be shown at a net basis whereas the details in
the three forms are reported on a gross basis. Hence, any likely difference in
business receipts as contained in ITRs 3, 5 & 6 with the three Forms is
excluded from the purview of intimations proposing adjustments under section
143(1)(a)(vi) of the Act since they may not be comparable.
3.6 In case of income under the head
'capital gains' being shown under any of the ITR
Forms i.e. 2, 3, 5 & 6, for purposes of section 143(1)(a)(vi) of
the Act, the information of payment, which may span multiple years, being
reflected in t he three Forms and the information being captured in the ITRs
may not be comparable. Therefore, section 143(1)(a)(vi) of the Act shall not be
applicable in case of income under the head 'capital gains' being shown under
any of the ITR Forms l.e. 2, 3, 5 & 6. However, the credit for tax which is
deducted at source and paid to the credit of the Central Government shall be
governed by section 199 of the Act read with Rule 37BA of I.T.Rules, 1962.
Further, information in the three Forms regarding TDS on immovable property in
the case of persons engaged in real estate etc. may be in the nature of
business income, such cases being covered under para 3.5 above, section
143(1)(a)(vi) would not be applicable on them.
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