How To Read Income Tax Intimation Notice Under Section 143(1)

How To Read Income Tax Intimation Notice Under Section 143(1)

Read Income Tax Intimation Notice Under Section 143(1)

Filling your income tax return (ITR) maybe both terrifying and liberating. Dread since the income tax procedure and putting your papers in order might take some time, and relief since you filed well before time and won't have to worry about it for the next year. A tax return could be completed willingly under Section 139 or on the income tax department's notice under Section 142(1). 

It's important to know what occurs when a person files an income tax return. The verification step of the income tax return (ITR) filing procedure is not the end of the case. The income tax department begins processing the ITR when an applicant has validated his or her tax return.

The Income Tax Department conducts an immediate investigation of all returns submitted and notifies taxpayers of the results of that examination. The Income Tax Department will give you an intimation under section 143 of the Income Tax Act following your ITR documentation has been completed, letting you know if you owe any additional tax or if you are due a refund. Such notification to the taxpayer after the preliminary assessment is referred to as income tax intimation notice.

The preliminary evaluation is completed entirely by machine, with no human interaction, and is sent to the Centralised Processing Center (CPC). However, understanding the intimation notice given under section 143 (1) is not always straightforward. The tax agency sends the notice to the tax return filer's registered email address. In addition, an SMS is being sent to the filer's recorded cellphone number, alerting them that the notification notice has been delivered to their registered email address.

"The government has revised the time limit for issuing of intimation notice by three months effective from April 1, 2021. The intimation notice must be issued within 9 months from the end of the financial year in which the tax return is furnished. This would mean that for ITR filed for FY 2020-21, the last date of issuing intimation notice is December 31, 2022."

It is critical that a person studies his or her income tax intimation notice. This is because this notification tells you if the income tax computation you provided in your ITR reflects the information available to the tax department. However, comprehending the intimation issued under section 143 (1) is not always simple. Here's how to interpret the intimation notice and figure out what it means.

What Should You Look for in Section 143(1) Intimation Notice?

The following information will be included in the income tax intimation notice:

  1. Your income data claimed deductions and tax computations match the assessments and calculations of the tax department: In this scenario, the notification will state that you are not liable for any additional tax. In furthermore, both the due and refundable taxes would be zero.
  2. Additional tax demand notice: You may have overlooked recording a certain income in your tax return, or maybe you've claimed a credit improperly or calculated your tax incorrectly, resulting in extra tax owing to you. In this case, the tax department will issue you analysis and request that you pay any additional taxes owed.
  3. Income tax refund: According to the income tax department's estimate, you have paid more taxes than your real tax due in this case. In this instance, your income tax refund will be displayed as owing to you.

Nature of Adjustments Under 143(1)

Section 143(1) computes total revenue or loss after applying the following adjustments:

  • The result contains an arithmetic mistake.
  • Any erroneous claim that is obvious from any detail in return, where inaccurate assertion means one of the following: The claim of an item in the return that is inconsistent with another entry of the same or a different item in such return. For example, revenue from other sources is deducted from business income but not stated as income from other sources.
  • Allowance of set-off of loss carried over from prior years in the fiscal year in which the return was filed beyond the prescribed due date.
  • Disallowance of spending is shown in the audit report but not in the income tax return.

How Do I Interpret the Intimation Received Pursuant to Section 143 of the Income Tax Act?

Step 1: Enter the Password

The e-mail notification will be a password-protected file. Your PAN in lowercase, followed by your date of birth, will be your password. For example, if your PAN is ABCDE1234A and your birthday is December 31st, 1980, your password is abcde1234a31121980.

Step 2: Check the Specifics

Following that, you should double-check that the personal information supplied in the notification is correct. Take careful note of the name, PAN, and address.

Step 3: Double-check Your Calculations

When you're certain that all of the facts are right, you should compare your income tax computation to that of the department. The service will give you a table that includes the calculations you gave with their calculations. The table will include information about your income as well as any tax-saving deductions you have claimed. It will also display your tax amount, any tax relief you have claimed under sections 234A, 234B, and 234C, as well as any late filing fines you may be obliged to pay or have paid under section 234F. If you make a mathematical error or claim an erroneous deduction, you will discover a difference between your ITR and the department's computations. You will then be able to check if you owe any more taxes or if you are due a refund.

Time Limit For The Issuance Of Income Tax Intimation Notice Under 143 (1)

According to Section 143(1), income tax intimation notice must be given within one year after the end of the fiscal year in which the return is submitted. For example, if a taxpayer files a return for the fiscal year 2019-20 in July 2019, notification can be given at any time until March 31, 2021. Suppose a taxpayer does not get any intimation notice within such a period. In that case, it simply indicates that no adjustments have been made to the taxpayer's return, and no change in tax liability/refund has occurred. The acknowledgment submitted itself is regarded to constitute Section 143(1) intimation.

If the time of March 31, 2021, passes without you receiving any intimation notice, one of two things may have occurred.

  1. Your ITR may have been processed correctly, but there was an error in transmitting the notification. It's conceivable that the e-mail address was entered improperly or that a specific system failed. If this is the case, you can use the e-filing system to file a service request for the notice under Section 143 (1).
  2. It's also conceivable that some documents went missing, and the department didn't process your ITR at all. If your documentation has not been handled, you can register a grievance with the department using the e-filing website.

Action To Be Taken By The Taxpayer After Receiving a 143(1)

As a first step, check the Section 143(1) intimation notice to confirm the document belongs to your return. The data given refers to the same fiscal year as stated in Section 143(1) intimation. Examine the name, PAN, address, assessment year for which the notification was received, and e-filing acknowledgment number.

If you can identify the errors you made when submitting your return based on the 143(1) notification, and they may be corrected by completing a revised return, kindly do by logging into the income tax e-filing portal. When no mistakes were made, and you disagree with the alterations made by the CPC/computerized system, you may submit an online correction application under Section 154(1), intimating the repair of the mistake shown in Section 143(1) intimation notice

If you are dissatisfied with the way CPC handled your rectification return, you can register an online complaint or contact your assessing officer. If you do not receive sufficient action from the CPC/assessing officer, you may submit a complaint with the income tax ombudsman. However, if the taxpayer agrees to the tax demand generated by the income tax department after making the modifications as mentioned above, the taxpayer is obligated to pay such taxes.

Is Responding to the Notice Necessary?

You have 30 days to react after receiving the income tax intimation notice under Section 143(1) of the Income Tax Act. If you cannot find the notification in your e-mail or SMS, you may check your online account on the e-filing website. There should be a record of the intimation notice there.

Suppose the income tax intimation notice under section 143(1) also includes a demand for payment of any extra tax that you owe. In that case, you must make the payment within the time period specified in the notice. If you fail to meet the deadline, you may face one of two penalties:

  • “Under section 220, you will be charged interest of 1% per month for every subsequent month that you delay the payment.
  • Under section 221, the assessing officer will impose a penalty on you. The penalty amount should not be more than the amount of the pending tax that you are required to pay.”

Earlier, after getting an income tax intimation notice, an individual was obliged to physically present oneself at the Income Tax office on the day and time stated. However, technological advancements make it feasible to get the notification online and simply pay any overdue dues online. 

Countless companies rely completely on outsourcing accounting firms for a long time. In this way, they have saved a lot of money as well as time. Hopefully, the article was helpful to you. And has helped you show all the positives of outsourcing accounting. For more details or any queries, reach us at  hgoyal@especia.co.in or 9310165114.



Enquiry Now
Please submit your query.