As a responsible citizen, submitting your income details to the Income Tax Department is essential. You can declare them by filing your returns accurately. Once your returns are filed, the Income Tax Department starts processing them.
The department verifies your returns for correctness, and this process of examining returns is known as ‘Assessment.’ While there are four assessment types, Section 143(1) pertains to the preliminary type, also referred to as ‘Summary Assessment.’
Ideally, this assessment does not require the presence of an assessee, the taxpayer. However, when the Assessing Officer (AO) finds any discrepancy while examining your returns, a notice will be sent to you under Section 143(1).
To get an in-depth understanding of what is 143(1) and a few salient features of this assessment type, read on.
As you know, Section 143(1) of the Income Tax Act pertains to a summary assessment, which does not require a taxpayer to be physically present. Simply put, you are issued a notice when AO notices minor errors in your income tax returns.
Assessment under Section 143(1) can be referred to as a preliminary check on the returns you filed. While detailed scrutiny is not performed, your returns are examined to check the following:
If there are any arithmetical calculation mistakes
If you have made an incorrect claim
If any expense accounted in the audit report has not been included in the returns
If there is a difference between the income you recorded and the income recorded in the system
If you calculate the wrong TDS from the salary
If you under-report your income details
When the AO notices such discrepancies, you get an intimation in the form of notice under Section 143(1) of the Income Tax Act. Hence, when you get a notice, understand there are some errors in the tax returns you have filed.
You receive the notice on your registered email ID. Alternatively, you may receive an SMS stating that a notice has been sent to your mail.
The Income Tax Department can issue the notice within 9 months after a financial year-end. However, per Sec 143(1), you do not need to visit the department. You can respond online within the stipulated timeframe after you check and tally your returns correctly. This way, you can revise the details of your IT returns efficiently.
First, you need to check if your income details match the records of the Income Tax Department. When you find any discrepancy, alert the department within a month of receiving the notice per Section 143(1).
However, if you are not satisfied with the computation of the Income Tax Department, you can file a rectification application. Note that you have to file this application per Section 154 of the Income Tax Act.
Suppose the case is old and the Income Tax Department has transferred the rights to jurisdictional AO from the centralised processing centre. In such a situation, you must file the rectification request within 4 years of notice issuance.
Remember that you need to understand why an intimation has been sent and then proceed with rectification. This is crucial as it helps you make the necessary rectifications. There could be three different scenarios.
In the first situation, the Income Tax Department may not raise a demand for paying tax. Then, you do not have to think much about this. A second scenario may ask you to refund the tax.
However, under the third circumstance, there is a demand for the tax to be paid. Understanding the scenario type can help you do the needful rectification. For example, applying for the same can decrease your tax liability if the department has not included TDS.
This way, understanding the process after you receive an intimation per Section 143(1) can help you avoid unnecessary delay and rectify the mistakes quickly.
Here is the process followed by the Income Tax Department after you answer the notice issued per Section 143(1):
Tax along with interest and fee is computed based on the income details after necessary rectifications are made
You are intimated about any refund amount or the amount you need to pay
An intimation will be generated and sent to you detailing the refund and sum to be paid, depending on the scenario
You may also be contacted by the Income Tax Department when you have adjusted the loss declared
Acknowledging the income return confirms that there is no tax payable or to be refunded
An additional point to remember is that you may have to pay additional fees, according to Section 139(1), when you fail to file your returns within the due date. You may have to pay ₹5,000 in such cases.
Hence, filing your tax returns accurately without delay can save you from the hassle of paying additional fees.
Also, it is vital to acquaint yourself with these tax laws to know the importance of filing your returns. You can get essential information related to the Income Tax laws on Bajaj Markets.
It is important to take immediate action when you receive a notice, or else the Income Tax Department may adjust the required amount from your tax refund.
Analysing the income tax notice is crucial as this provides information whether or not the income tax calculations stated in your returns matches with records of the Income Tax Department.
Yes, the notice is password protected. To view the notice, you must type your password, which is your PAN information, in lowercase, along with your date of birth.
Your notice may contain one of the following things. The first scenario is that your income details and deductions claimed match the calculations of the Income Tax Department.
Secondly, you may be asked to pay additional tax as you missed reporting a particular income in your returns. Thirdly, you must have paid additional taxes, and may be due for a tax refund.