How to deal with notice under section 143(1)?
In India, as per the Government norms, it is mandatory for individuals who have a specified amount of annual income should file for an Income Tax Return and within a specified time limit. Income Tax Return is a form or a collection of forms that helps a taxpayer in reporting his gross taxable income obtained from various sources, his deductions and the net tax liability.
Income Tax Returns should be filed by salaried individuals, self-employed individuals, companies, firms, Hindu Undivided Families, etc. Filing for Income Tax returns can be done online by visiting the web portal of the Income Tax Department. This process of filing Income Tax Return is known as e-filing.
Now, after the e-filing process has been completed by a taxpayer; it is the turn of the Income Tax Department to carry out the processing of the Income Tax Return request. During the processing of the request, there might be scenarios where the Income Tax Department might find certain discrepancies in data, errors in calculations, wrong entry of certain data, etc. In such cases, the Income Tax Department will issue a notice otherwise known as Intimation Order.
Let us have a detailed study on all about intimations.
When you do receive Intimation on ITR?
After filing for Income Tax Return, there are possibilities that you might end up receiving an Intimation order from the Income Tax Department. Let us list down the major causes for receiving intimation from the Income Tax Department.
- Discrepancies in return filed
This situation can occur when there is a discrepancy in the amounts declared by you and the records available with the Income Tax Department. You might have forgotten to declare some of your incomes or might have provided some wrong information. In such cases, you will receive intimation from the Income Tax Department. - TDS error
TDS amount error is the most common type of error occurring with Income Tax Returns. It might happen that many times, your employer has made a wrong deduction from your salary for the purpose of TDS. This will result in you receiving intimation from the Tax Department. - Document review
There are many cases in which the Income Tax Department will wish to have a review of the documents based on which a taxpayer has filed his Income Tax Returns. For this purpose, the Department can send intimation to the taxpayer and the taxpayer should immediately respond back with the necessary documents. - Declaration of investments made in the name of spouse
There are many people who opt for purchasing certain valuable assets like land, fixed deposits, buildings, mutual funds, etc. in the name of their spouses or other close relatives with the intent of avoiding taxation. However, these assets belong to the individual only and need to be declared while filing for the Income tax return. The Income Tax Department will inform such people about this by intimation. - Random Scrutiny
Sometimes, the Income Tax Department might just send intimation to the taxpayer for random scrutiny of the records and data used during filing Income Tax Returns. In such a case, it is the responsibility of the taxpayer to co-operate with the Department and provide them with all the necessary data needed.
Now, let us have a look at the different types of Income Tax intimation.
Types of Income Tax Intimation
- Intimation under Section 143(1)
An assessee would receive intimation under Section 143(1) if the assessee has paid either more or less than the amount which he is actually liable to pay. In case of payment made less than the actual amount, the assessee need to make the payment and resolve the issue. In case of payment made more than the actual amount, he will be informed about the refund amount by intimation. - Notice under Section 142(1)
This intimation notice is sent by the Income Tax Department with intent of obtaining documents, books of Accounts or any written information for scrutinizing the records and the return filed by the assessee. - Notice under Section 143(2)
This intimation is sent by the Income Tax Department to inform the assessee that his request for Income Tax Return will now be sent for detailed scrutiny. This intimation is usually sent after sending Notice under Section 142(1). It means that the Assessing Officer has not received any relevant documents or is not satisfied with the obtained documents. - Notice under Section 148
Suppose, the Assessing Officer feels that any taxable income has not been assessed; he can assess and reassess the income. For this, the assessee will be sent Intimation under Section 148 and the reason for this assessment has to be stated clearly by the Assessing Officer. - Notice under Section 156
This is also known as Notice of Demand which is served to an assessee with instruction for payment of any tax, interest or penalty. - Notice under Section 139(9)
This notice is sent by Assessing Officer in case of a defective return. If the Assessing Officer feels that the Income Tax return filed by an assessee is defective and needs certain rectification, then he can send a notice under Section 139(9). - Notice under Section 245
This is an intimation to inform an assessee about certain adjustments made by the Tax Department against remaining payable tax by using the refund amount.
Intimation u/s 143(1)
Intimation u/s 143(1) is the first stage where all Income-tax returns are processed to correct arithmetical mistakes, internal inconsistencies, tax calculation and verification of tax payment.
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At this stage, no verification of income is undertaken. It is completed through computerised processing and there is no human interference.
Intimation under section 143(1) is sent to a taxpayer only in case any tax or interest is found payable or refundable or there is any increase / reduction in loss. In case , one has received such an intimation , he should first check the reason for receiving it. The intimation would contain the details of return filed by you and the computation as done by the income tax department.
Please refer to the below image:
The return filer is required to read and analyse the intimation. Let us discuss on how to read intimation. You will need to review a few things in the intimation for confirmation like
- You should check your name, address, and PAN on the intimation.
- You should cross check your Assessment Year and also check your e-filing acknowledgment number.
How to understand my Income tax Assessment Order?
The Income Tax Department will validate each tax return filed with their own records and will point out the mistakes reflected in the system.
The validation will have two columns i.e. ‘As provided by taxpayer in Return of Income’ and ‘As computed under section 143(1)’. Here comparison of amounts will take place under heads like TDS, Deductions, etc. The result varies case to case basis and broadly has three conclusions:
- No demand No Refund ( but resulting in any increase/reduction in loss)
- Demand Determined
- Refund Determined
The detailed analysis of these three situations are as follows:-
1. No demand No Refund (but resulting in any increase/reduction in loss)
It is a case where the adjustments as referred to in section 143(1) have been made resulting in increase/reduction in loss declared by the taxpayer and no interest or tax is payable/refundable by/to the assessee.
2. Demand Determined
This is a case of demand determination in intimation u/s 143(1).
It is a case where any interest or tax is found payable on the basis of the return after making adjustments as referred to in section 143(1) and after giving credit to the taxes and interest paid by the taxpayer. In this case, three situations will arise as (I) Agree with Demand (II) Disagree with Demand and rectification return filing required (III) Disagree with Demand and revised return filing required. Let us understand these situations in a bit detailed manner:
I) Agree with Demand:
If you agree with the demand, then you will be required to pay the amount of tax as per the intimation u/s 143(1). In this case, tax can be paid in the following ways.
Taxes can be paid by a taxpayer through any one of the following modes:
- Payment Through Bank: The taxes due can be paid through specified branches of nationalized banks. A challan is required to be filed by taxpayer specifying his PAN, name, Assessment Year and amount of tax to be paid. You can get a blank copy of challan here. You should take a print of the same and after filling the details, submit the same to the bank. While filing the challan details, please tick on “Tax on Regular Assessment (400)”, under the head “Type of Payment”. Bank will return the challan to the payer after affixing its stamp as duly paid. The assessee is required to keep a copy of this challan for his personal record.
- Payment Through Online mode: If a taxpayer wishes to pay taxes online then he is required to follow some simple steps. Click here to know the steps for making online payment of outstanding demand.
II) Disagree with demand:
It might happen that the taxpayer may forget to claim certain incomes or deductions in his Income-tax return. Sometimes the taxpayer may inadvertently claim certain incomes or deductions under the wrong head, such issues are referred as “mistake apparent from record” as per the Income Tax Act. In this case, there are two with you either to file revised return or rectification request.
- Revised Return: Revised Return can be filed only if you have made any mistakes in your original income-tax return. In other words, the revised return is filed to correct the mistakes committed in your original return. Please click here for How to prepare and file revised return?.
- Rectification return: Rectification return can be filed only if you find any error in the order passed by the Department. Please click here for How to file rectification?
3. Refund Determined
It is a case where any interest or tax is found refundable on the basis of the return after making adjustments as referred to in section 143(1) and after giving credit to the taxes and interest paid by the taxpayer. In the intimation so received, the refund amount may be same as shown in the return with interest on it or refund amount may be reduced due to some addition in the return on the basis of mistake apparent from the record. In case less refund amount is shown in the intimation than that shown in the income-tax return, then check your income tax return along with the intimation computation for any mistake in the return. On the basis of scrutiny of return, you can decide in the following ways.
a) Agree with less refund amount: After scrutiny of return, you may realize that the refund amount as shown as per intimation is correct, in that case, you need not do anything from your end.
b) Disagree with less refund amount: If you disagree with the reduced or less refund amount then, you will be required either to file a rectification or revised return which will depend upon the scrutiny of your income tax return and intimation u/s 143(1).
- Revised Return: Revised Return can be filed only if you have made any mistakes in your original income-tax return. In other words, revised return is filed to correct the mistakes committed in your original return. Please click here for How to prepare and file revised return?
- Rectification return: Rectification return can be filed only if you find any error in the order passed by the Department. Please click here for How to file rectification?
Conclusion
Hence, intimation notices are a means of communication of the Income Tax Department regarding any queries or assessment needed. Intimations from Income Tax Department should always be taken seriously by taxpayers. You should respond to intimation within the stipulated time period failing which can even worsen the situation. If you agree to the errors mentioned, then you can file for rectification and if you feel you have received the intimation erroneously you can file a grievance.
FAQs
- How can I open an intimation u/s Section 143(1) received on my mail?
The intimation received under Section 143(1) is protected by password for privacy. You can put your PAN and date of birth and open the mail. - I have received intimation u/s 143(1). Is it an assessment order?
Intimation u/s 143(1) is intimation and not an assessment order. It is an automated response and has no human intervention involved.
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