Old income tax demands some dating back nearly two decades are resurfacing on India’s online tax portal, confronting taxpayers with liabilities they say they were never told about, and reopening questions about notice, record-keeping and due process in the age of digitisation.
Forgotten Demands Resurface on the Portal
In recent months, taxpayers across India have reported seeing long-dormant income tax demands appear suddenly on the income tax portal, in some cases tracing back to assessment years as early as 2005–06 or 2009–10. For many, the entries have come without warning, reviving liabilities they believed were settled, time-barred, or never communicated in the first place.
Tax professionals say the phenomenon is largely a by-product of the tax department’s ongoing digitisation drive, which is consolidating legacy, manually maintained records into a centralised system. What appears online, however, often lacks the accompanying trail—proof of service of demand notices, records of payments, or documentation of appeals and rectifications—that would normally clarify whether the demand is enforceable.
The sudden visibility of these entries has left taxpayers uncertain about how to respond. Seeking a stay on recovery typically requires depositing a portion of the disputed amount, even when the demand surfaces years after the fact and without prior intimation. For many individuals and small businesses, the immediate financial and procedural burden has been unsettling.
Proof of Service and the Question of Enforceability
At the heart of the dispute is whether these old demands were ever properly served. Tax advisers note that if the department cannot establish that statutory notices and assessment orders were duly delivered—through registered post, electronic modes, or personal service—the legal enforceability of the demand itself may be open to challenge.
“In instances of ineffective service, it becomes difficult to justify imposing compounded liabilities, including accumulated interest, on taxpayers who were never put on notice,” said Ashish Karundia, founder of the chartered accountancy firm Ashish Karundia & Co.
He added that the onus lies squarely on the tax authorities to demonstrate that assessment or demand orders were effectively communicated at the relevant point in time. The issue is not merely academic. Appeals against assessment orders must generally be filed within 30 days of receipt. Taxpayers who never received the original orders argue they were denied the opportunity to approach the Commissioner of Income Tax (Appeals) and prevent interest from snowballing over the years.
Refund Adjustments and Compounded Liabilities
Complicating matters further is Section 245 of the Income Tax Act, 1961, which empowers the department to adjust a current year’s tax refund against any outstanding demand from a previous year. Tax experts caution that until reconciliation is completed at the assessing officer’s level, such demands may remain on the portal, exposing future refunds to automatic adjustment.
“These are not fresh demands but earlier manually maintained records now being centrally reflected,” said Isha Sekhri, partner at Isha Sekhri Advisory LLP. She noted that in many cases, supporting documentation relating to service of notices or prior payments is not readily available on the system and requires verification from physical records.
As interest continues to accrue on unpaid tax, several taxpayers have found that the interest component now rivals—or even exceeds—the original principal. For some, paying off a relatively small base demand has become an unattractive option due to the scale of accumulated charges.
Legacy Records, Deadlines and a System Under Strain
The resurfacing of old demands has also highlighted the complexity of statutory timelines. For instance, under rules prevailing earlier, notices for escaped income above ₹1 lakh for the 2009–10 financial year had to be issued by March 31, 2017, with assessment orders due by December 31 of that year. Demand notices typically follow soon after.
Where such timelines were met but service cannot now be demonstrated, disputes are likely to intensify. Taxpayers unfamiliar with regulatory intricacies are scrambling to locate decades-old payment proofs and correspondence, records that may not have survived relocations, business restructurings, or mergers and demergers.
While digitisation is intended to improve efficiency and transparency, both taxpayers and authorities face practical challenges in retrieving and verifying historical documents. The sudden uploading of “forgotten” demands has placed both sides in a delicate position—demands may well be genuine, but establishing their procedural validity years later is proving far more difficult.
For now, professionals advise taxpayers to seek proof of delivery from the department and, where necessary, request condonation of delay in filing appeals.
