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After you have filed your returns, check intimation u/s 143(1)
With e-filing & e-processing of the data, everything is happening rapidly. From issue of refund to the issue of notices, speed is incredibly amazing. Result: There is a spurt in the number of letter/notices/SMS issued by the income tax department. For most of the taxpayers, the notices & communication from the income tax department creates fear & panic. Like it or not, there is no “unsubscribe” option in the mailing list of income tax department.
One such communication is Intimation U/s 143(1) of the Income Tax-1961 issued by the Central Processing Centre (CPC), Bengaluru. This is generally received soon after the return is filed. A 6 page communications in columnar format appears bulky & is further followed by 7th page of income tax challan, if there is a demand. Let us know more about it. Intimation u/s 143(1) is nothing but just information about the processing of income tax return filed. Every return filed by the taxpayer is processed compulsorily & the information of return processing is incorporated in the intimation u/s 143(1).
While processing the return, income tax department is authorized to carry out few adjustments in the return filed. Scope of permissible adjustment u/s 143(1)(a) of Income Tax Act is restricted to
- Any arithmetical error in the return
- Incorrect claim if such incorrect claim is evident from information provided in the return
iii. Brought forward loss of earlier years claimed but the return of those years was filed after the due date.
- Disallowance of expenditure incorporated in the Audit report but not taken into account while computing the total income in the return
- Disallowance of deduction claimed u/s 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID and 80-IE, if return furnished after the due date.
- The addition of income appearing in form 26AS or form 16A or form 16 which has not been included in computing the total income in the return.
However, before making any such adjustments, an intimation of proposed adjustment u/s 143(1)(a) of Income Tax Act, 1961 has to be given to the taxpayer either in writing or through electronic mode with right to reply. If proposed adjustment is incorrect, taxpayer has option to submit online response by logging at www.incometaxindiaefiling.gov.in with used id and password & selecting “e-Assessment/Proceeding” in the “e-proceeding” menu of the portal. Necessary information, records & documents in support of claim can be uploaded along with the response. The response received is considered by the CPC before making any adjustment. Remember that if no response is done within 30 days of communication, return of income is processed after making necessary adjustments without providing any further opportunities in this matter.
Once proposed adjustment is done & return is processed, intimation u/s 143(1)(a) of income tax Act is served. Intimation provides elaborated comparison between the data provided in the income tax return and the data as computed u/s 143(1).
On receipt of intimation, Taxpayer has option to file online rectification application if the return processing is not acceptable. However such online rectification will not be allowed to change in taxable income. Hence, it will be useful if the response is submitted at the time of receiving 30 days notice itself.
Here is a step by step guide for the taxpayer if any communication is received prior to carrying out any adjustment u/s 143(1)(a):
- Visit the ‘e-Filing’ Portal at www.incometaxindiaefiling.gov.in
- Enter the valid user id (i.e., PAN) & Password before you click “Login” button.
- Click on “e-Proceeding” menu and then punch “e-Assessment/Proceedings”.’
- Click on the proceedings name to view the proceeding details. By clicking the ‘Reference ID’, additional details will get displayed on the screen.
- Click ‘Submit’ button to move to next screen.
- On clicking submit button, the details of proposed additions as mentioned in (i) to (vi) is displayed.
- After above, following options are available in dropdown menu under response column
– Agree for addition
– Disagree to the addition.
- If option “Agree for addition” is selected, taxpayer can file revised return within 15 days of submission of response. If option “Disagree to the addition” is selected then justification for the disagreement from dropdown menu as given below is required to be submitted along with documentary evidence as under: a. Income is not chargeable to tax or exempt
b. DTAA income not taxable in India
c. The TDS has been claimed on advance received. No income in the financial year
d. Income/receipts offered in the previous years and TDS is claimed in financial year
e. Construction business – Work-in-progress
f. Interest income/net income is capitalized
g. Income of the Trust/AOPis taxed in the hands of beneficiary/member. However, TDS is deducted on PAN of the Trust/AOP.
h. Allowance exempt claimed in return but not in form 16
i. Deductions claimed in the return but not in Form 16
j. Receipts considered under a different head in the return as against the section under which it is deducted
- After successful submission, success message along with the Transaction ID will be displayed on the screen
Timely & precautionary action prevents unwanted hassles at a later date. Taxpayer should carefully verify the intimation received u/s 143(1)(a) with the return of income filed. Many a time, credit for prepaid taxes like TDS/ Advance tax are rejected due to improper quoting of TAN or Challan Identification Number (CIN) or set off of loss is denied due to inaccurate furnishing etc resulting in inflated tax demand.
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