If you’ve recently filed an Updated Return (ITR-U) for your client and suddenly received an email from CPC with the subject line:
“Transfer of Rectification Rights to the Jurisdictional Assessing Officer”
…you’re not alone.
Several taxpayers across the country — especially those who filed Updated Returns — are now receiving this message.
At first glance, it doesn’t look like a notice or demand. But it does leave many tax professionals scratching their heads.
Here’s what it usually says:
“Rectification rights in your case for AY 20XX-XX have been transferred to the Jurisdictional Assessing Officer on DD-MM-YYYY for the reason cited above. You are requested to contact the Jurisdictional Assessing Officer (JAO) for further action/query.”
And just like that, what seemed like a settled return is now back under scrutiny — and this time, it’s not CPC handling it, but your local AO.
But why is this happening? Is something wrong with the Updated Return? Wasn’t it accepted?
Let’s begin by understanding what exactly changed, and then go deeper into why this is happening — and what might have gone wrong under the hood.
What the Law Really Says (And What People Did Anyway)
When the Updated Return (ITR-U) provision was introduced under Section 139(8A) of the Income Tax Act, it was intended as a voluntary disclosure mechanism. The government’s intention was clear — allow taxpayers to come clean, correct omissions or mistakes, but only if they’re willing to pay the correct dues.
But as with most tax schemes in India, a wave of creative interpretation followed.
Section 139(8A) – The Core Principle
Here’s the legal premise. Section 139(8A) allows any person to file an Updated Return within 24 months from the end of the relevant assessment year, subject to certain conditions.
However, the law explicitly prohibits filing an Updated Return if:
- It results in a refund or increases an already claimed refund;
- It reduces total tax liability determined earlier;
- The return is filed without full payment of tax, interest, and late fee as applicable.
In other words, the Updated Return can be filed only if there is a real, additional tax outflow — and that payment must be completed before filing.
No tax due? then No ITR-U is allowed.
But What Happened in Practice?
In reality, many taxpayers — and professionals — bent the system. Early on, due to a mix of unclear system checks and over-eagerness to file, a variety of creative tactics were used to bypass the true intent of Section 139(8A).
Trick 1: The ₹1 Refund That Never Happened
A commonly used tactic was to show a fictitious “Refund Already Received” amount — usually a token ₹1 or ₹10.
This entry would create an artificial demand in the portal. The taxpayer would then pay this minor amount as “tax payable” — and the portal would allow filing of ITR-U.
From a technical standpoint, the system saw a demand and a payment. So it processed the return.
From a legal standpoint, however, this was nothing more than a manufactured liability to push the return through.
Trick 2: Late Fee Payment Without Tax
In some cases, taxpayers had no taxable income but still wanted to file ITR-U to regularize their position — for bank loans, passport, or vendor registration requirements.
They paid only the late fee under Section 234F (₹1,000 or ₹5,000), without any actual tax or interest.
Since late fee is technically a statutory due, the return sometimes passed portal checks. But under Section 139(8A), absence of tax liability renders the Updated Return invalid.
Filing merely with late fee defeats the intent of the law, even if technically accepted.
Trick 3: Dummy Challans and Credit Misuse
This was a more aggressive approach. Taxpayers — sometimes unknowingly — entered incorrect or unrelated challan details to give an illusion of tax paid.
In some cases, old or unrelated challans were matched. In others, TDS mismatches or incorrect credits were used to make the portal believe the tax had been paid.
The result: Portal processed the return. But again, the foundational tax logic was invalid.
The Core Assumption That Went Wrong
A dangerous assumption spread among many filers:
“If the system is accepting the return, then it must be valid.”
This logic is flawed. The Income Tax portal is a processor — not a legal validator. It can accept what’s mechanically correct, but it doesn’t check intent, eligibility, or legality.
The system might accept your Updated Return based on artificial inputs — but the law doesn’t.
And now, that’s exactly what’s surfacing.
Why This Matters Now
As the CPC begins post-filing checks and system audits, many of these ITR-Us are being flagged as structurally invalid or legally questionable.
Hence, in many such cases, the rectification rights are now being transferred to the jurisdictional Assessing Officer (AO) — because these matters can no longer be resolved through automated systems.
The AO must now review the return manually, and decide whether:
- It was validly filed in terms of Section 139(8A);
- Any refund is due or should be withheld;
- Penalties or further scrutiny are warranted.
In short: the legal ghosts of those early “adjustments” are coming back.
Why CPC Has Now Said “Bhaiya, AO Handle Karo!”
Let’s now talk about the real pivot — why these Updated Returns, originally filed through CPC Bengaluru, are now ending up on the table of your local Assessing Officer.
Yes, the mail you received might say something like:
“Rectification Rights Transferred to Jurisdictional AssessingOfficer(JAO)”
Which means this wasn’t just a system-triggered transfer — your AO actually asked for control of the case.
But why would they do that?
Reason 1: The Return Appears Legally Invalid
If a return was filed:
- With no actual tax liability
- Using artificial refund adjustment
- Or backed by unrelated challan entries
…it might technically pass CPC’s system filters, but it does not pass legal muster.
CPC doesn’t have the bandwidth to interpret intent or verify if tax was genuinely due. But the AO does.
Hence, if during post-processing or scrutiny, irregularities are flagged, the AO might request rights to:
- Recompute the return
- Issue notices
- Start inquiry
- Or even initiate penalty proceedings under relevant sections
This transfer is not random. It signals that the return requires human-level assessment.
Reason 2: CPC Cannot Adjust or Verify Fake/Invalid Payments
CPC systems process returns based on the ledger. If tax is shown as paid — even by workaround — CPC accepts it.
But what if:
- The challan doesn’t match the PAN or AY?
- The payment was never made, but portal accepted it due to manual entry?
- There’s TDS in 26AS not actually available to the taxpayer?
CPC cannot handle these discrepancies.
So, the AO steps in to:
- Reconcile the tax payment
- Disallow fictitious credits
- Rectify incorrect entries
In short, they want hands-on access because the return involves non-standard treatment.
Reason 3: Refund or Demand Inconsistency
In some cases, the return creates:
- A refund which is not actually due, or
- A mismatch between ITR and system demand
CPC is unable to release refund or adjust demand unless things match perfectly.
So if refund is pending or wrongly claimed, the AO may intervene to:
- Block or release the refund after manual check
- Modify the demand in accordance with law
This is common in cases where “refund already received” was faked just to create tax due.
Reason 4: The AO Has a Larger History on File
Remember — CPC only sees the return.
But the AO sees:
- Past assessments
- Ongoing scrutiny
- Information from other departments (TDS, SFT, AIR)
- Previous filings or defaults
So if the Updated Return doesn’t align with the taxpayer’s broader profile, the AO might request rectification rights to:
- Launch further inquiry
- Open reassessment
- Add information already in their possession
This is particularly relevant in cases where the ITR-U was filed to “clean up” a non-filing history without real income.
What This Means for the Taxpayer
This isn’t just a backend shuffle. When rectification rights go to the AO, it means:
- CPC is done with the case.
- Any refund or resolution will now come only after AO’s review.
- If any part of the ITR-U is found to be misrepresented, penalty proceedings may follow.
- In some cases, the AO may even treat the return as invalid and proceed under best judgment (Section 144) or reassessment (Section 147).
In simple terms: now it’s serious.
What You Should Check and Do Now
So the rectification rights for the Updated Return have been transferred to the Jurisdictional AO. This isn’t a show-cause notice (yet), but it is a red flag that your return won’t be passively processed anymore.
Here’s a clear checklist of what you, as the taxpayer or consultant, should do right now — and what you absolutely should not.
What You Should Check Immediately
1. Re-examine the Updated Return Filing Logic
- Was there actual tax payable?
- Was full payment (including interest and 234F) made before filing?
- Was any fake refund amount shown just to create artificial demand?
- Did the return involve only late fee or vague tax adjustment?
- Were any irrelevant or reused challans entered?
If any of the above apply, the AO is very likely to call for verification.
2. Review Form 26AS and AIS/TIS
Check if the data declared in the return matches with official records, especially:
- TDS/TCS credits
- Advance tax payments
- Self-assessment challans
- Interest and fee details
Any mismatch here can trigger rejection or rectification.
3. Verify Challan Validity
Ensure the tax payment was:
- Correctly made against the PAN
- For the right assessment year
- Classified properly (self-assessment or advance tax)
In many cases, wrong AY or wrong code is the root cause behind AO intervention.
What You Should Do Now
1. Proactively Contact the Jurisdictional AO
- Don’t wait for a notice.
- Email the AO with the subject:
“Rectification Rights Transferred – AY 20XX–XX | PAN XXXXX0000X” - Politely explain the context, provide a copy of the filed ITR-U, computation, challans, Form 26AS, and payment proofs.
- If there’s a refund involved, request clarification or processing after verification.
If you did not use any of the “jugaads” discussed earlier, then you have nothing to worry about — just provide your paperwork and follow up.
2. Prepare for a Possible Hearing or Notice
- Keep documents ready: Computation, challans, bank statements, ITR acknowledgement.
- Be ready to justify the source of the income shown.
- If tax was paid but due to a mismatch refund is held back, request rectification through a formal letter.
3. File a Proper Response if a Notice Is Issued
If the AO issues a notice under Section 154 (rectification), 139(9) (defective return), or even under 148 (reassessment), don’t ignore it.
Respond within time and with proper facts — avoiding response will only escalate things.
4. Be Transparent
If you or your client knowingly used a workaround (like fake refund or dummy challan), it’s better to admit and request for condonation or correction rather than defend a false claim. Many AOs are willing to resolve the issue if there’s no intentional evasion.
What You Should Avoid
- Do not file a rectification request online with CPC anymore. That channel is now closed.
- Do not keep silent thinking “no news is good news.” Silence often leads to adverse orders.
- Do not assume refund will come automatically. The process is paused unless AO gives clearance.
- Do not refile the same return with cosmetic changes. The AO already has your case flagged.
Final Advice
This new wave of rectification transfers is a direct fallout of early misuse — deliberate or otherwise — of the ITR-U mechanism. While many taxpayers had good intentions, the way the system was “tricked” to accept non-eligible cases is now causing trouble.
From here on, Updated Returns must be filed strictly by the book. As for those already filed:
If everything is clean, cooperate and follow up.
If something went wrong, come clean and resolve it.
That’s the only way forward.
Need Help?
If you or your client have received such a rectification transfer mail — or are unsure whether the Updated Return was filed correctly — we’re here to help.
At EazyAccounts, we handle these cases with proper analysis, documentation, and direct communication with the Assessing Officer where needed. Whether it’s a refund issue, challan mismatch, or legal compliance query — we can help you sort it out before it becomes a bigger problem.
Feel free to reach out for a quick review or representation support.