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Section 143 (1)

Have you received a notice from the Income Tax Department lately? There is no need to panic, read on to know about the letter and how to respond to it.

What is Section 143(1)?

Section 143 (1) (a) refers to the intimation order given by the Income Tax Department of India to the assessee against a return filed for any assessment year.

When does one receive Intimation under Section 143(1)?

The assessee can receive the intimation order from the Income Tax Department under section 143(1) for the following circumstances:

If the assessee has paid extra, then the refund amount intimation will be mentioned in the notice. It is to be noted that the refund will be initiated by the Income Tax Department only if the amount exceeds INR 100. If the refund amount is less than INR 100 then no refund will be given.
Intimation under section 143 (1) can also be issued if the assessee has paid less than the actual amount. The letter will mention the actual amount payable along with a copy of a challan.
When the income tax is paid and accounted by the assessing officer, then in such a case no intimation is sent - the acknowledgement (ITR-V) is treated as intimation notice.

Centralized Processing Centre

Earlier, the tax department was facing the problem of delayed processing of income tax returns due to the rapid increase in the number of tax returns and jurisdiction wise processing model for all the returns filed. In the Finance Act, 2008 amendments were made to empower the Central Board of Direct Taxes (CBDT) to centralise the processing of returns to expedite the process and determine if the taxes are paid correctly by the taxpayers. Any payment due or refund can be communicated to the taxpayers in a timely manner.

The recommendations of the Technical Advisory Group were taken on board by the Income Tax Department. It was decided that CPC at Bangalore will handle the e-return and paper process filing without the interference with taxpayers and will be jurisdiction free. CPC project turned out to be successful for the tax department as well as the citizens. It helped the citizens file their returns quicker, without any hassles, and also removed the burden on the department as preliminary assessment got automated. It enabled the Tax Department to concentrate on more important activities than simple administration.

Preliminary Assessment under Section 143(1)

As discussed above, the preliminary assessment of the returns by CPC has been made completely computerised and Section 143(1) acknowledgment is also a computer-generated record. The data is cross-checked by CPC in each tax return with the details in the Income Tax Department’s record (TDS returns, information collected from banks etc). The notice only points out any discrepancies found by the automated computer system.

Once the taxpayer files the return, the computerised systems match it by the Tax department’s record and provides a comparison. The intimation has two columns one is “taxpayers provided records” and other is “as per the tax department’s record and computation under section 143(1)”. The comparison is basically done under four categories

Income from various sources
Total gross income
Deductions under 80C, 80D, etc.
TDS (tax deducted at source and payments done by the taxpayer in the form of self-assessment tax and advance tax.

If difference is found then the appropriate adjustment is to be made to the income as per Section 143(1) and finally, tax liability or refund is arrived at. The adjustments are not carried out directly but the taxpayer is first informed of the proposed adjustments via post or email as per the contact details available with the Income Tax Department. The taxpayer is given a time of 30 days to file a response against the difference in the calculation of tax. If there is no response given by the taxpayer then the Income Tax Department will make the final adjustment.

On arriving at the final tax liability, the same is adjusted against the tax payments and TDS and other relief as per Section 90/91 if any. The department will prepare an intimation and send it to assesse. The different kinds of intimations are discussed below:

Intimation with no refund or demand

This sort of intimation is sent when the returns are filled correctly and it matches with the records of the Income Tax Department. There is no adjustment required in such cases

Intimation determining demand

This intimation is sent if there is difference found in the tax liability to be paid as under section 143(1). The taxpayer will get the notice to pay the difference amount along with other charges as stated in the notice.

Intimation determining refund

This intimation is sent when it is found a refund is required to be paid to the taxpayer after making appropriate adjustments. The demand notice is sent by the Income Tax Department in case of final tax liability. In the case of refund, it will be granted to the taxpayer after making the final adjustment.

Sample of intimation under 143(1)

Nature of adjustments under Section 143(1)

Total loss or income is calculated under Section 143(1) after the following adjustments are made:

Mathematical error in the return :Incorrect claim is any information which is apparent in the return where the incorrect claim will mean the following: Claim of the item does not match or is inconsistent with another entry of the same. For example – Income from other sources has been subtracted from business income but not declared under income from other sources.
Disallowance of set off loss in the financial year which is carried forward from last year in which return was filed beyond specified due date
Disallowance of expenditure shown in the audit report but not shown in the return of income column.

Time Limit for Issue of 143(1)

Section 143(1) intimation has to be sent by the Income Tax Department within a year from the end of the financial year in which the taxpayer filed the return. For example – If the returns for the financial year 2016-2017 has been filed in the month of July 2017 then the tax department can send the intimation any time before 31st March 2019.

If there is no intimation received by the taxpayer within the stipulated period it means there are no adjustments required to be carried out.

How to deal with Intimation under Section 143(1):

The first thing when the intimation is received under section 143(1) is to ensure that it relates to your filed returns itself and the data in the intimation is indeed for the financial year as mentioned in the letter. You should check the PAN, address, Name, assessment year, acknowledgement or reference number of e-filling.

If there are any mistakes which have been made by the person filling, the same can be rectified by filing a revised return by visiting the e-filling income tax website. However, if you feel that no mistakes have been made with filing your e-returns and you have received the notice erroneously then grievance can be filed. The grievance can be filed online through the website or you can contact your assessing officer. If you still don’t get a satisfactory answer from the assessing officer or CPC then you have another option to approach Income Tax Ombudsman.

If you agree with the adjustment made and a tax demand has been raised by the Income Tax Department then you will be required to pay the balance tax amount.

FAQs

What is meant by intimation under section 143(1)?

Intimation or notice under section 143(1) is an automation computer generated reply. The Income Tax Department authenticates each return filed with its own record. The intimation gives details of any discrepancies found by the Income Tax Department system.

How do I open intimation u/s 143 (1) received on email?

The intimation or notice received is password protected for privacy. It can be opened by putting your PAN and date of birth. The password can be case sensitive - so read the instruction in the email regarding opening the attachment.

Is intimation under section 143 (1) an assessment order?

The intimation under section 143(1) is only intimation and not an investigation or assessment order. Intimation sent under section 143 (1) is totally automated and there is no interference of human in it. The automation is in place to remove the burden of primarily assessment of the returns filed on the Income Tax department.

Is it possible to file revised return after receiving intimation under section 143 (1)?

It is totally possible to file a revised return after the notice or intimation has been received by the taxpayer under Section 143(1) by the Income Tax Department. The revised return can be filed as per the Section 139 (5) of the Income Tax Act. In addition to this, a revised return can be filed even for belated returns filed by a taxpayer after July 31st of any financial year.