Annual Information Statement (AIS), developed by Income Tax Department, tracks 50+ types of income/transactions (eg. Salary, Rent, Dividend, Interest, Property transactions, Sale/purchase of securities, Cash deposits/withdrawals, Insurance policy proceeds, GST Sales & Purchases etc.) using our PAN.
One can check all incomes & transactions (from FY 2020-21) which are being tracked under our PAN either in Income tax e-filing website or AIS mobile app.It is important that one reject those items which does not belong to him/her or ask for amendment in case of incorrect recording. Thereafter the Department confirms the said information with the Source and if the Source states that there is no error, the said information is subjected to risk assessment for e-Verification.
Income tax department also reconciles AIS with our ITR return and in case of discrepancy, a notice u/s 133(6) may be issued to the taxpayer asking for justification/evidence. If the explanation is not found sufficient to explain the mismatch in the specific information, the taxpayer may be given option of filing updated ITR u/s 139(8A), if eligible. Subsequently if the taxpayer does not update ITR within the due time, Income Tax Department will undertake risk-assessment based initiation of proceedings like Assessment or Re-assessment which could lead to tax demand and penalty etc.
Please note that the taxpayer can file an updated return within two years from the end of the relevant Assessment Year. Though there is no penalty while filing updated ITR, one need to pay an additional tax of 25% in the first year (from end of AY) or 50% in the second year. For eg. the return for FY 2019-20 can be updated till 31st March 2023.