Typically, in such cases, the assessing officer (AO) may raise a tax demand and initiate penalty proceedings for under-reporting of income, according to tax experts. The taxpayer has to fight it out.
In a few cases, these were settled in favour of the taxpayer at the Income Tax Appellate Tribunal (ITAT).
One case involved a punching error by an online tax-filing platform. The AO held the assessee responsible as she had done the verification and also did not volunteer to return the refund of Rs 4.56 lakh until she received the notice.
The officer initiated penalty proceedings. But the taxpayer said she was pregnant and under work pressure, and trusted the online platform. She, therefore, didn’t check the details before verifying her returns.
The tribunal held that it didn’t find a deliberate attempt on the part of the assessee and deleted the penalty.
Whether the tax department or the tribunal gives relief to the assessee depends on the facts of the case.
“Punching errors have been excused in some cases, but factual errors are not,” said Arvind Rao, founder of Arvind Rao & Associates. If there is an error on the part of the platform, it is usually easier to prove.
Take a case where the taxpayer has an income of Rs 12 lakh, but the preparer missed one zero at the end. The income fell to Rs 1.2 lakh. The taxpayer, however, needs to have genuine reasons for not checking returns before verifying them.
If there are factual errors, where the taxpayer forgets to include certain taxable income, then the online platform or the chartered accountant (CA) cannot be held responsible.
There have also been cases where individuals posing as tax professionals filed faulty returns for assessees, promising them hefty refunds. These are done either by understating income or claiming deductions and exemptions that the assessee may not be eligible for. Even in such cases, the entire responsibility lies with the taxpayer.
The best way to avoid such mistakes is by checking the returns that are prepared by an online platform or CA. Ensure that you reconcile the Form 26AS with the return before filing. Make sure to report your exempt income, such as interest on public provident fund account, dividend from mutual funds, etc.
In case, you spot an error after filing the return; you can still revise it up to March 31 of the following calendar year. Even if you miss this deadline, you can still volunteer to pay tax on income you may have missed or give back the refund if you received it due to a punching error. It will help to show that your case is a genuine one.