Rectification Rights Transferred to AST ? Steps to follow

By | June 6, 2016

Rectification Rights Transferred to AST

Q: I have filled a rectification  request of Income tax Return to CPC for allowing deduction for one of my client, now the status says: ‘ Rectification Rights Transferred to AST ‘. So what does that mean? and what procedure is required now?

Normally Income tax Demands are generated in CPC (Central Processing center) in case income tax return if E filed . However after certain period these income tax demands are transferred to Assessing officer.

Demand generated in CPC  can be rectified by the Assessing Officer  through AST where rectification rights have been transferredby CPC to Assessing Officer.

Therefore you are required to contact your jurisdictional Assessing Officer in case ” Rectification Rights Transferred to AST ” Click here to Know your  jurisdictional Assessing Officer

Rectification Rights Transferred to AST and  Demand of tax has been paid

If the taxpayer’s reply or Departmental records show that demand or tax has already been paid, the AO should reduce the demand as under

  • In case regular tax (minor head 400) has been paid, the challan will have to be owned up in OLTAS
  • In case the demand is on account of mismatch of advance tax or self assessment tax, rectificationorder u/s 154 is required to be passed in AST.

The revised demand will automatically get updated in AST and CPC FAS.

Rectification Rights Transferred to AST and Demand due to TDS Mismatch

If the taxpayer’s reply or CPC FAS or IRLA shows that the demand is on account of TDS mismatch, the AO should follow steps as under:

Category 1 demand : AO should verify whether TDS credits claimed by the taxpayer are available in the 26AS. If the credits are available in 26AS, a suitable rectification order on a suo moto basis as per AST Instruction No. 118 should be passed. Alternatively, based on the taxpayers reply, order u/s 154 in AST should be passed for Tax credit available in 26AS. In case, credits in 26AS are not available, the procedure as per Category 2 demand may be followed but the order under section 154 should be passed in AST.

Category 2 demand :

 If the credits are available in 26AS: The AO should pass rectification order u/s 154 manually. Demand reduction can be made in “CPC Demand Verification Portal”.

If the credits are not available in 26AS: The reduction can be done only in the cases of Individuals and HUFs. Further, the amount of reduction should not exceed Rs. 1,00,000 and AO should take following steps

a) AO should pass order u/s 154 manually after obtaining the TDS certificate from the assessee on the basis of which claim has been made

b) In case, the outstanding demand is more than Rs.25,000, irrespective of the quantum of demand being reduced, the AO should obtain an indemnity bond

c) Additionally, in case the demand being reduced above, exceeds Rs.50,000 in a year for the assessee, besides obtaining the indemnity bond, approval of Range Head should be taken on file before removing/reducing the demand

Details of defaulting deductor where TDS credits are not available in 26AS will be shared by Directorate of Systems with CPC(TDS) for further follow-up action.

Steps for Verification and Confirmation of Demand

  • The Assessing Officer should view the list of demand cases in the interface provided in AST.
  • The AO should provide an opportunity of being heard to the assessee in case where notice u/s 245 of the Income-tax Act, 1961 (‘Act’) has been issued
  • the AO should pass relevant orders on AST only for reduction/removal of demand as per established procedure.

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