Income Tax Notice

Income Tax Notice Management

For a particular assessment year, once a return is filed by the assessee, it goes for processing to the department. Once the income tax department processes the return, it sends an intimation to the assessee under section 143(1). The assessee will receive it at their registered email address.

An income tax return is filed by the assessee under section 139 or under section 142(1) which is done on demand by the income tax department. The entire processing takes place in a computerized environment and is free of human intervention. The software in place already persons several checks while processing the return and informs the assessee in the case of any discrepancies.

Income Tax Department issues notices on non-compliance with tax law. The reason can be an error in filing the original return, non or short payment of tax, and non-filing or late filing of the return. This plan is tailor-made to help you understand the notice issued under sections 139(9), 143(1) and advise how to respond to the issue raised. A tax expert shall be allocated to your order which shall help you sail through the process.

Intimation Under Section 143(1) of Income Tax Act ITR Intimation Password

All the income tax returns filed by the taxpayers are first processed online at the Centralised Processing Centre (CPC). After processing the return, the income tax department then issues intimation under section 143(1) to the taxpayers informing them about the results.

If you have received such income tax notice, please do not worry. SSA TAX is here to help you. Please drop an email to info@ssatax.in and our experts will get back to you.

Letter of Intimation u/s 143(1)

An income tax return can be either filed voluntarily under Section 139 or on demand by the income tax department under Section 142(1). It is necessary to understand what happens after the taxpayer has filed the return of income.
 

The process of examining the return filed by the taxpayer by the Income tax department is termed as assessment. The IT department carries out a preliminary assessment of all the returns filed and informs taxpayers of the result of such preliminary assessment. This assessment primarily includes arithmetical errors, internal inconsistencies, tax calculation and verification of tax payment. The preliminary evaluation process is fully computerized (automated), and is delegated to the Central Processing Centre (CPC).

Thereafter, system generates the intimation under Section 143(1) that generally indicates obvious errors that the mainframe system has identified.

Centralized Processing Center

With the rapid increase in the number of income tax returns and a jurisdiction-based processing model for all the returns filed, tax department faced problems leading to delayed processing of income tax returns.

Therefore, the Finance Act, 2008 empowered the Central Board of Direct Taxes (CBDT) to make a scheme for centralized processing of returns with a view to expeditiously determining the tax payable by, or the refund due to the taxpayers. Based on the recommendations of the Technical Advisory Group, the department adopted the strategy that CPC at Bangalore would process paper and e-returns without any interface with taxpayers and in a jurisdiction free manner.

CPC project envisaged benefits for the citizens as well as the tax department. For citizens, it led to faster and hassle-free preliminary processing of their returns and also relieved the department from the burden of preliminary assessment that can be computerized and enabled them to concentrate on hardcore activities.

Any communication from the income tax department creates panic for taxpayers. However, Section 143(1) intimation is not something one needs to worry about. In this article, we would be discussing intimation sent under Section 143(1) in detail to make it help taxpayers deal with such intimation with ease.

Preliminary Assessment under 143(1)

Initial processing of returns by CPC is completely automated and Section 143(1) Intimation is also computer generated record. CPC validates data provided in each tax return with details available with income tax departments own record (such as Form 26AS generated through details provided by collecting banks, TDS returns, etc.) and this notice usually only points out apparent mistakes found out by the mainframe system.

• Once the return is filed, total income or loss is recomputed by the computerized system as per the departments record and provides a comparison with data filed by the taxpayer
• The intimation has two columns: As provided by the taxpayer in the Return of Income and As computed under Section 143 (1)
• Comparison is made for major categories such as 
  • Income under various heads, 
  • Gross total income,
  • Deductions under Chapter VIA (80C, 80D, etc.), and 
  • Tax deducted at source, and tax paid by taxpayers in the form of advance tax and self assessment tax
• Appropriate adjustments are made to income as computed under Section 143(1) and final tax liability or refund is arrived at
• The adjustments are carried out only after giving an intimation to the taxpayer of the proposed adjustments either in writing or electronic mode i.e., to the email id provided in the income tax return filed
• Response received from the taxpayer within 30 days from the issuance date of intimation will be considered before making the final adjustment and in case no response received within such period, adjustments arrived at initially will be incorporated.
• After arriving at final tax liability, the same is adjusted against TDS and tax payments and other relief under Section 90/91, if any.
• An intimation shall be prepared and sent to the taxpayer. 
  Kind of intimations possible are discussed below:
  • Intimation with no demand or no refund  This generally happens if the department has accepted the return as filed without carrying out any adjustments to it.
  • Intimation determining demand  Issued in case of adjustments made under Section 143(1) due to a discrepancy found and tax liability is arrived at.
  • Intimation determining refund  Issued where any tax is found to be refundable either where no discrepancy in the return filed or after making adjustments as referred to in Section 143(1) and after giving credit to the taxes and interest paid by the taxpayer.
• While demand notice is sent in case of final tax liability, refunds if any shall be granted to the taxpayer.

What is the password for intimation under Section 143(1)?

The intimation received under Section 143(1) is password protected. The ITR intimation password will be your PAN (in lowercase) followed by date of birth in DDMMYYYY format without giving any space.

For example: Assuming your PAN is ABCDE1234E and the date of birth is 01/01/2000, the password to open the intimation will be abcde1234e01012000.

Nature of adjustments under 143(1)

Total income or loss is computed under Section 143(1) after making the following adjustments:

• Arithmetical error in the return

Any incorrect claim which is apparent from any information in the return where incorrect claim which may include the following:

• The claim of an item in the return which is inconsistent with another entry of the same or some other item in such return for example, income from other sources are deducted from business income but not declared under income from other sources.
• Disallowance of set off of loss in the financial year which is carried forward from previous years in which return was filed beyond specified due date
• Disallowance of expenditure indicated in the audit report but not indicated in the return of income.

Time Limit for issue of 143(1)

Section 143(1) intimation has to be sent within one year from the end of the financial year in which return is being filed. For eg: if the taxpayer has filed return pertaining to the financial year 2021-22 in July 2022, intimation can be sent any time till 31 March 2023. If a taxpayer does not receive any intimation within such period, it simply means there are no adjustments carried out to the return filed by the taxpayer and no change in tax liability/refund, and the acknowledgement filed itself is deemed to be Section 143(1) intimation.
 

Action to be taken by the taxpayer after receiving a 143(1)

• As a first step, review certain things in Section 143(1) intimation to ensure document pertains to your return itself and data provided pertain to the same financial year as mentioned in Section 143(1) intimation. 
• Check the name, PAN, address, assessment year for which notice has been sent, e-filing acknowledgement number. 
• In case you are able to identify the mistakes you have made while filing your return from the 143(1) intimation, and they can be rectified by filing a revised return, please do so by logging into income tax e-filing website. Please refer our article on how you can go about revising your return online.
• However, if no mistakes have been made and you do not agree with the adjustments made by CPC/computerised system, you can file an online rectification application under Section 154(1) intimating the correction of mistake appearing in the Section 143(1) intimation. Refer our article on filing rectification application. 
• Also, submit your response in the e-filing portal where there is a tax demand- whether you agree or disagree with the same.
• In case you are not satisfied with the processing of your rectification return by CPC, you can also file online grievances or contact your assessing officer. In case of no satisfactory action from CPC/assessing officer, you can file a complaint to income tax ombudsman.