You’ve managed to find out which form to use, you’ve filled it in, and you’ve even filed your income tax return before the last date. Time to heave a huge sigh of relief, you think? Sadly, your troubles do not end with filing. In fact, filing is often the beginning of a fresh set of hassles. Notices, fines, scrutiny...sometimes it seems that the tax department has some personal grudge against you.

Of course that’s not the case, but try saying that to your neighbour who has been waiting for his refund cheque for over two years, or to your colleague who got a tax notice for no known reason. The most frustrating part about getting into any kind of trouble with the Income Tax Department is that you’re fighting the system—a large faceless behemoth with almost unlimited amounts of time and money at its disposal.

So, even when you know that you’re in the right and that the notice you’ve got is illogical, you settle the matter, often with the help of a stack of currency notes. But is that really the best way out? It’s definitely the easiest, but why bribe when there are legal options open to you? We take a look at some of the most common kinds of trouble that can happen after you file your return. We also look at how you can avoid such trouble, and if that’s not possible, how to get redress.

When refunds are delayed

Some months ago, a neighbour was heard cheering loudly. When asked why, he yelled out that he’d finally got his tax refund. Sadly, the laughter stopped in a hurry when he opened the envelope and found that the cheque was not in it. When his tax representative checked with the IT Department, the officer said that was a clerical error and the cheque could be picked up from the office—and that a small token of appreciation would be nice.

My neighbour lost some 10% of the refund amount in being “appreciative”. Most of us have experienced or heard stories about refund cheques going astray. Very often, it’s accident-on-purpose addresses changed ever so slightly, so that the cheque is returned to the department.

And the taxpayer has to go to pick it up, after expressing his appreciation for some fine clerical work. Then, there are refund cheques that reach on or after the date of expiry. Or cheques that are in the mail for inordinately long periods of time. Apart from the clerks and other officials making a little extra on the side, what purpose is served by such shenanigans with the refund cheque?

The main reason for such delays is that the tax department has a revenue collection target. To increase the numbers, no refunds are issued between January and March. Any further delay simply means that the revenue figures look better. Assessing officers (AOs) also have collection targets to meet, and so delay sending cheques, claiming that they are in the mail or that the clerk addressed envelopes wrong.

Your options. The tax authorities know that issuing refunds is a problem, and also know that it’s not going to be easy to change the bureaucratic system. That’s why schemes like Refund Banker have been launched. R Prasad, chairman of the Central Board of Direct Taxes, says: “The moment the return is processed on the computer, the data is downloaded and sent to the bank. So, there is no interface between the taxpayer and the tax gatherer.

The bank issues the refund cheques.” The law is also on your side. The Punjab and Haryana High Court came down heavily on the IT Department for delays in sending the refund to Balwant Singh Bhangal. “It is unfortunate that an assessee who is entitled to refund has to approach the High Court. His grievance has not been redressed even by the so-called Grievance Cell created by the departmental authorities to help assessees.”

Then, in the case of Sandvik Asia, which was entitled to refund for four assessment years, the Supreme Court ruled that the tax department had to pay 15% interest on the total amount of refund till the date of actual payment.

Nitin Baijal, director, BMR & Associates, says: “Revenue needs to introduce a more robust tracking system to enable issue of refunds in time. This would be in interest of both the department and the honest taxpayer.” Thankfully technology has come to the taxpayers’ rescue. A small but growing number of refund cheques are being issued through the electronic clearance system (ECS).

When you’re penalised for small errors

Should you be fined Rs 10,000 for getting one number of your PAN wrong? This is no exaggeration. Last year, a taxpayer mistyped 3 for 2 in his return form, while all other forms (including Form 16) had the right number. But the tax authorities were quick to penalise him for that one mistake. The problem is that as filing of returns gets more technology friendly, there will be more room for such errors. With online filing of returns, there are fewer chances of omitting facts or forms.

But remember that fingers tend to slip on keyboards (there have been plenty of documented instances of stock exchanges losing thousands of millions of dollars just because one trader typed in an extra 0). No matter how careful you think you’re being, such errors are more than likely to creep in.

Your options. The easy way out is, of course, to slip the officer a little something to make the mistake go away. As Prasad says: “Everybody wants to jump the queue. They will pay bribes.” Quite honestly, there’s little you can do other than try and convince the officer that the mistake was inadvertent.

If you have proof of this, like the fact that the correct number was quoted on all other forms in the case above, try and show this to the officer. If that fails, you could approach the tax ombudsman or the Grievance Cell of the tax department created to help assessees.

When there’s an unprovoked notice

What do you do if you’ve been the perfect return-filer and still get a notice from the IT Department? It happened last year to an exemplary taxpayer, who had proof and forms to support every rupee he had disclosed. When he got the notice, which asked him to appear before an officer at the tax department, he went armed with all the forms and papers.

And was told that the officer had no idea why the notice had been sent, and to come back in a month. Why do these things happen? The main reason is that the Income Tax Department has been directed to scrutinise 3% of the returns filed. While all cases of scrutiny need not translate into notices being sent, the number of notices will go up as the tax base expands.

What makes this worse is that some cases are selected by the computer for scrutiny, and even the assessing officer will not know why the cases have been selected. Your options. The only recourse is for the taxpayer to go through t h e scrutiny process. Maintain proper records of financial transactions.

All that’s required of you is an affidavit through your tax consultant or chartered accountant, stating that the accountant will represent you in the case. But as assessing officers are goaded to achieve collection targets and often interpret the law to suit their needs, you must be prepared to get legal help if you feel you are being victimised or being made to wait for inordinate periods with no indication of when your case will be resolved.