Income tax return (ITR) can be either filed voluntarily under Section 139 or on-demand by the income tax department (ITD) under Section 142(1).
It is required to know what happens after the taxpayer has filed the return of income. ITD brings out a preliminary assessment of all the income tax returns filed for its own record and intimate taxpayers the result of that preliminary assessment.
Such intimation to the taxpayers after the preliminary assessment is known as intimation under Section 143(1).
These preliminary assessments/intimations are computerized and do not have any human intervention and are delegated to the Centralised Processing Centre. Centralized Processing Centre is generally known as CPC.
The notice has two columns first is ‘As provided by a taxpayer in the Return of Income’ and the second is ‘As computed under section 143(1)’ where the amounts are compared for these – income under various heads and deductions under various sections, TDS and self-assessed tax payments. You can run through each of these amounts and find out where the difference is?
If there is no mismatch in both columns:
If all of the fields in the notice are matching and there is no tax due or refundable. In such an instance, you can safely assume the notice to be an acknowledgment of your tax return. Thus there is no further action is required.
If there is a final tax due and you agree with that due.
If you find any tax due at the end of the column of “As compared under section 143(1)”, then you are required to make payment of the tax amount due to the income tax department. After you make a payment of the tax amount due, no further action is required.
Where there is a final tax due and you disagree with such tax due.
This type of situation arises when a certain amount of TDS or expenses have been disallowed. Or a self-assessed tax payment has not been considered by the department. If the assessee does not agree with the final calculations made by the ITD, you need to file a rectification under section 154(1). You can be done this by using the following steps: –
- Log in to e-Filing (https://incometaxindiaefiling.gov.in/)
- Go to My Account
- Rectification request.
Note: You can also reach out to your assessing officer (AO) and submit an application in writing.
Conditions in which you expect a notice from the IT department?
If there is an Error with TDS Amount.
Mismatch in the TDS amounts is the most common issue. Occasionally your employer or deductor may have delayed filed the TDS return or made a mistake filing their TDS returns.
If there is a problem with your return also, request your employer/deductor to revise the TDS amount credited to you.
A difference in Return Filed by you
If the difference is with the amounts declared by you in the returns you filed, these differences may arise because of the following reasons:
- Forgotten to declare some incomes or wrongly declare some expenses which is disallowed.
- Claimed a deduction under the wrong section or a wrong head.
- Provided some incomplete information.
These notices are generated automatically by the ITD’s software.
Many times even after filing your ITR correctly, but still some may have received a notice.
Need to submit Documentation
Sometimes the Income Tax Department (ITD) would like to review certain documentation based on which your returns were filed. In case of such a request, provide the said documents immediately to the ITD.
Notice to remind that ITR not filed
If the notice is to remind you that you have not filed your ITR yet, file the ITR without any delay. The Income Tax Department can ask you about unfiled returns for the previous 6 assessment years (AY). If you are not mandatory by law to file a tax return, then reply to the IT department clarifying the fact in detail.
Investments in the name of Spouse / Parents / Children.
Sometimes individuals resort to buying assets in the name of their spouse, children or other close family members to evade taxes. Assets, in such instance, refer to any kind of investment like land, buildings, FDs, mutual funds, shares, debentures, etc.
For e.g. – You bought Shares in your wife’s name. As per section 64 of the Income Tax Act, any income you generate out of these shares is still considered your income and YOU will be taxed for it.
You need to confirm that you have declared such type of income at the time of filing your ITR, otherwise, you may receive a notice for the same from ITD.
Some High-Value Transactions
High-value transactions are mandatory to be updated to the ITD by the entity/individual with which you carry out such a transaction. This is in order to confirm taxes are charged as required on each of these transactions on time. If you failed to do so you may have received a notice from ITD.
How to determine high-value transactions?
We can consider a transaction if the following conditions are satisfied: –
- Cash deposits in a bank are more than Rs 10 lakh in a year.
- Credit card purchases of more than Rs 2 lakh.
- Mutual fund investments for more than Rs 2 lakh.
- Purchase of bonds, shares, and debentures more than Rs 5 lakh in a year.
- Sale or purchase of property more than Rs 30 lakh.
Random Scrutiny by ITD
To impose tax compliance, the ITD randomly scrutinizes returns under section 143(3). If you receive such a scrutiny notice from ITD, do not panic.
Follow these simple steps:
- Check the validity of the notice (the duration) within which you have to respond to the Assessing Officer (AO). Generally, a scrutiny notice is served to the assessee within a period of 6 months from the end of the FY. In very rare cases, notices related to older cases are also sent under section 148, if the AO finds an honest cause to do so.
- Make multiple copies of the notice received from the ITD.
- Submit documents requested along with a cover letter listing all the documents to the AO.
- Request for an acknowledged copy of the cover letter from the AO for your personal records.
- If the notice is about your old tax dues, they can also be adjusted against any pending tax refund claims.
Time Limit for the issue of intimation u/s 143(1)
Section 143(1) notice/intimation has to be sent to the assessee within one year from the end of the financial year in which return is being filed.
For e.g.: if the assessee has filed a return relating to the financial year 2018-19 in July 2019, intimation/notice can be sent any time till 31 March 2020.
If the assessee does not receive any notice/intimation within such period prescribed, it means there are no adjustments carried out to the return filed by the taxpayer and no change in tax liability/refund and acknowledgment filed itself is considered to be Section 143(1) intimation.