143(1) Demand - Missed FTC in ITR-3 Audit Case. Is 'Return Data Correction' an option?

143(1) Demand - Missed FTC in ITR-3 Audit Case. Is 'Return Data Correction' an option?

I filed ITR-3 as an audit case (F&O business). Unfortunately, my previous CA missed filing Form 67 and left Schedules FSI and TR completely blank. As a result, the CPC has issued a demand for the tax amount that should have been offset by my US RSU tax credits.

Notably, we filed these exact schedules and Form 67 in the previous FY without any issues, and that return was processed successfully. This year, the data was simply omitted.

I’ve been suggested to just "reprocess" the return, but given the schedules are empty, I'm skeptical that will work. I also understand ITR-U isn't an option since I’m looking to claim a credit and reduce the demand.

I’m exploring the following as a potential fix, but would love to know if I’m on the right track:
• Filing Form 67 now (I have the employer tax statements ready).
• Filing a Rectification (u/s 154) using the 'Return Data Correction' option to populate the missing schedules.
• Ensuring the rest of the JSON remains a mirror image of the audited figures already on record.

Does this seem like the right approach?

I'm also very open to suggestions—if there’s a better way to respond to the demand or a different sub-category for rectification I should be considering, please let me know.

I'm looking for a professional who has experience with this specific technical workflow to help me execute this

Asked 2 months ago in Income Tax

- The correct option under online rectification is "Return Data Correction" but the system will not allow you to submit it as it will result in change in TDS amount.

- What is the reason of tax demand? Have you filed original return with tax payable amount?

- Value of RSU vested is treated as perquisites taxable under the Salary and TDS deducted on RSU vesting is covered by Form 16. There is no need to need to file Form 67 and Schedules FSI,TR for TDS deducted on RSU vesting. Form 67 and Schedules FSI, TR are required to be filed for any other withholding tax deducted on foreign income (e.g. WHT on foreign dividend income)

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Vivek Kumar Arora

CA, Delhi

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Talk to Vivek Kumar Arora NOW!

Dear Sir,

If foreign income was already taxed in India, FTC is a substantive right.

Procedural delay in Form 67 filing should not deny relief (as held in multiple ITAT rulings).

Your approach is correct:

✔ File Form 67 now
✔ File rectification u/s 154 with corrected schedules
✔ Do not use ITR-U
✔ Reprocessing alone will not help.

Thanks & Regards,

Payal Chhajed

CA, Mumbai

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Talk to Payal Chhajed

If CPC has raised demand that means in your original return you must have entered details for credit then in that case only Form 67 might be missed, for that you can very well file form 67 now and reprocess return and there are many judgements which says that filing form 67 is not mandatory but you might have to fight for it till CIT(A) or ITAT

If you need any assistance kindly let me know