Intimation u/s 143(1) - Reasons & Responding to Notice u/s 143(1)(a)

After you file your Income Tax Return (ITR) under section 139 voluntarily or on the demand of the Income Tax Department under section 142, the return is processed automatically by the Centralized Processing Centre (CPC) of the Income Tax Department. 

After the return has been processed, you will receive an intimation related to the results of your processed return.  When the ITR is not correctly filed as per provisions of the Income Tax Act, 1961, the system automatically identifies the error.

The error could be due to incorrect claim, arithmetic errors, excess claim of deductions, etc., It may also be any adjustments that does not result in change of tax liability. This article explains in detail, the meaning and reasons for issuing section 143(1) intimation, steps to file response and other significant and related concepts.

What Is Intimation under Section 143(1)?

• After processing the Income Tax Return (ITR), the Income Tax Department considers if any adjustments should be made in the return filed for arriving at the correct total income of the taxpayer. 
• It sends a summary of details provided by the taxpayer in the ITR and the details that the Income Tax Department has considered according to the provisions of the Income Tax Act, 1961.
• This is sent via e-mail to the taxpayer or an SMS alert to the registered mobile number. The intimation contains the following information:
  • Personal details of assessee like name, address, etc
  • Details about the ITR filing, such as the acknowledgement number, filing date, etc
  • Refund sequence number
  • Details of tax computation as done by the taxpayer in his ITR
  • Details of the tax computation as done by the Income Tax Department.

Reasons for Issuing Intimation under Section 143(1)(a)

The ITR filed by the taxpayers is reviewed electronically through a computerized procedure of the Income Tax Department. The system can find arithmetic errors, discrepancies in the computation of total tax liability, underreporting of income and many others. The assessment’s result is sent via email to the taxpayer or can be accessed at the income tax department's e-filing portal. The reasons for issuing intimation under section 143(1) are as follows:

• Deductions claimed in return but not in Form 16/ Form 16A/ Form 26AS.
• TDS of preceding year income claimed in current year. (E.g., Rent was received in FY 2023-24, TDS on the same rent is claimed only under FY 2024-25)
• TDS of current year not claimed
• Expenses that are disallowed in Tax Audit Report, but claimed in the Income Tax Return.
• Claim of chapter VI-A deductions and other losses after the due date.
• Arithmetical errors in the calculation of tax, late filing fee, interest, etc.
• Non- Disclosure of exempt income in the returns. (E.g, agricultural income)
• Interest income not accurately disclosed in the returns, but deductions u/s 80TTA or 80TTB claimed.
• DTAA(Double Tax Avoidance agreement)  income not taxable in India – In case of non-residents, if DTAA exists; then such income shall be exempt.
• Income of the Trust/AOP is taxed in the hands of beneficiary whereas TDS is deducted on the PAN of the Trust/AOP. 
• Receipts considered under different head of income in the return as against the section under which it is deducted (For example, TDS deducted on rent u/s 194 I shown as Business income or income from other sources rather than showing as Income from house property.)

Thus, there is no need to worry if you have a valid reason for such a mismatch. 

There is an option given by the Income Tax Department whereby you can agree or disagree with such a mismatch and can choose the reason from the various options given as explained above. 

The time limit for replying to such a notice is 30 days from the date of receiving it.

Actions Required for Intimation under Section 143(1)

After processing of return by the Income Tax department, every assessee receives intimation under section 143(1) for performing the below actions:

Tax Refund: If the amount of tax paid by the assessee by way of TDS, TCS and advance payment during the financial year is more than the actual total liability, the assessee will receive the intimation about the due amount to be paid by the Income Tax department. The assessee can receive a tax refund intimation for amounts above Rs 100.

Tax Demand: When the assessee computes less tax liability for the financial year due to improper deductions, calculations, or underreporting of income than the taxes paid during the same year, the assessee will receive an intimation about the tax demand.

No refund, no demand: When the information provided in the ITR aligns with the information that the Income Tax Department has obtained from various sources, an assessee will receive a confirmation of the ITR filed by the Income Tax Department. In case of not receiving the confirmation, the taxpayer should consider the acknowledgement of ITR V as the intimation notice. 

Steps to Be Taken on Receiving Intimation Under Section 143(1)

• When receiving the Intimation order, check if the details of the intimation match your ITR. 
• Check for the details like name, PAN number, assessment year, address, and e-filing acknowledgement number to be correct.
• On finding the mistakes in your ITR, you can file a revised return on the Income Tax e-filing portal.
• If you do not agree with the mistakes mentioned in the intimation notice, you can file an online rectification application under section 154(1) to correct errors in the intimation under section 143(1).
• If you are not satisfied with the processing of your rectification return by the Centralised Processing Centre (CPC), you can file an online grievance or contact your Assessing Officer. 
• When you receive an intimation regarding the tax demand, submit your response, whether you agree or disagree, on the Income Tax department's e-filing portal
• If you agree with the Tax refund or the tax owed, you have to pay the tax overdue as shown in the intimation under section 143(1)
• If there is no tax refund or tax overdue, then consider the intimation under section 143(1) as the completion of the return filing process by the Income Tax Department for the assessment year for which it is filed.

When Is Intimation under Section 143(1) Received?

• An assessee can receive the intimation under section 143(1) within 9 months from the last date of the financial year in which the ITR has been filed. 
• If an assessee has not received intimation after the expiry of 9 months from the end of the year in which the ITR has been filed, the acknowledgement of ITR-V should be considered an intimation. Also, an assessee should check on the Income Tax portal if the ITR has been processed.

What Is The Password To Open the Intimation under Section 143(1)?

The password for opening the intimation under section 143(1) is the PAN card number and date of birth of the assessee in lower case.

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Step-by-Step Process to Respond to a Notice

Step-1: Login to the income tax portal.

Step-2: Go to the pending action > E-proceedings.

Step-3: Click ‘Self’ on the e-proceedings page. You can view and download notices from this page.

Step-4: After downloading the notice and verifying the particulars, now you have to submit response as appropriate. Click on ‘Submit response’ option.

Step-5: You can either agree or disagree to the notice in the next page. On disagreement, you have to mention the reason for the same in the space given and submit response.

Step-6: If you agree to the notice, you can upload JSON file and file the rectified ITR.

Step-7: On successful submission, you will get a dialogue box of submitting the response. You can also view the submitted response from here.

Reach out to support@cleartax.in if you need further help.

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