Section 143(1) Income Tax Notice

Every financial year, everybody with taxable income is required to file an income tax return. The income tax department would process the tax return when it was filed and check for any irregularities. A summary assessment under Section 143(1) can be done without calling the assessee if the faults in an income tax notice are minimal. As a result, the most common type of tax notice received from the IRS is an income tax notice under Section 143(1). When a taxpayer receives an income tax notice, he or she can take efforts to understand the notice and comply with the tax officer’s requests without becoming panicked. In this piece, we’ll take a closer look at the income tax notification issued under Section 143(1).

When Section 143(1) Tax Notice is Issued?

Without summoning the taxpayer, a tax notice under Section 143(1) of the Income Tax Act can be issued to start a summary assessment. Notices under Section 143(1) are based on the electronic processing of tax returns with no human interaction. The Income Tax Department would not request more information or documents in a summary assessment, as it would in a scrutiny assessment.

Summary Assessment under Section 143(1)

After automated verification of the tax return filed, an income tax notification under Section 143(1) will be issued in any of the following scenarios:

  1. Any errors in the return’s arithmetic;
  2. If a claim appears to be inaccurate in the tax return filed, it is an incorrect claim.
  3. If the return for the prior year for which the set-off of loss is claimed was filed after the due date for submitting an income tax return, the loss claimed would be disallowed.
  4. Disallowance of expenditures identified in the audit report but not included in the computation of total income in the return (starting with AY2017-18);
  5. If the return is filed beyond the due date provided in Section 139, the deduction claimed under Sections 10AA, 80-IA, 80-IAB, 80-IC, 80-ID, or 80-IE would be disallowed (1). 
  6. Addition of revenue from Form 26AS, Form 16A, or Form 16 that hasn’t been factored into the total income in the return;
  7. Information with contradicts another entry in the same or a different return;
  8. Donation information, for example, is necessary to validate an entry that has not been provided.
  9. If any deduction is more than the statutory limit;

Responding to Tax Notice

After applying the changes listed below and crediting the taxes and interest paid, the assessee must pay additional tax. The taxpayer will be requested to pay the sum owed within 30 days in this situation. After applying the modifications listed below and crediting the taxes and interest paid, the tax is refundable to the taxpayer. There is an increase or decrease in the assessee’s claimed loss, and the assessee owes no tax or interest, and no interest is refunded to the assessee.

Time Limit

Within one year of the end of the financial year in which the return of income is lodged, an assessment under section 143(1) can be made. As a result, the notice of tax or interest owed under Section 143(1) shall not be delivered after one year has passed since the end of the financial year in which the return was filed.

Section 143(1) Income Tax Notice

Process for Responding to Income Tax Notice under Section 143(1)

The assessee shall receive a tax notice u/s 143(1) detailing the amount determined to be payable by, or the amount of refund owing to the taxpayer. The acknowledgement of the return of income shall be considered the intimation if there is no sum payable or refundable. The taxpayer should be aware that simply receiving a notice from the income tax department does not imply that the taxpayer must appear in person before the authorities. In many circumstances, it will suffice if the individual who receives the notice responds to it either physically or electronically. If a taxpayer receives a notification under Section 143(1), he or she should be aware that the deadline for revising the return is 15 days from the date of the notice. If the taxpayer does not respond to the income tax notice within the timeframe specified in Section 143(1), the income tax return will be completed after the necessary modifications specified in the income tax notice are made.

Follow the steps below to respond to an income tax notification issued under Section 143(1):

Step 1: Go to the IRS E-Filing website and log in to your account.

Step 2: Select E-Assessment/Proceedings from the E-Proceedings menu.

Step 3: Under Section 143(1), select Prima Facie Adjustment (a).

Step 4: The information of the notice you received will be shown. To begin the process of 

sending the response, click Submit.

Step 5: You will now see a list of all identified mismatches. To respond to the mismatch, click the drop-down next to the Response.

Step 6: If you have any further facts or explanations, add them to the rationale or remarks section.

Step 7: Before submitting your response, attach any supporting papers that pertain to the amount of the disparity.

Step 8: Press the “Submit” button. An acknowledgement will be sent once the response has been submitted.