All the income tax returns filed by the taxpayers are first processed online at the Centralised Processing Centre (CPC). After processing the return, the income tax department then issues intimation under section 143(1) to the taxpayers informing them about the results.
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An income tax return can be either filed voluntarily under Section 139 or on demand by the income tax department under Section 142(1). It is necessary to understand what happens after the taxpayer has filed the return of income.
The process of examining the return filed by the taxpayer by the Income tax department is termed as assessment. The IT department carries out a preliminary assessment of all the returns filed and informs taxpayers of the result of such preliminary assessment. This assessment primarily includes arithmetical errors, internal inconsistencies, tax calculation and verification of tax payment. The preliminary evaluation process is fully computerised (automated), and is delegated to the Central Processing Centre (CPC).
Thereafter, system generates the intimation under Section 143(1) that generally indicates obvious errors that the mainframe system has identified.
With the rapid increase in the number of income tax returns and a jurisdiction-based processing model for all the returns filed, tax department faced problems leading to delayed processing of income tax returns.
Therefore, the Finance Act, 2008 empowered the Central Board of Direct Taxes (CBDT) to make a scheme for centralised processing of returns with a view to expeditiously determining the tax payable by, or the refund due to the taxpayers. Based on the recommendations of the Technical Advisory Group, the department adopted the strategy that CPC at Bangalore would process paper and e-returns without any interface with taxpayers and in a jurisdiction free manner.
CPC project envisaged benefits for the citizens as well as the tax department. For citizens, it led to faster and hassle-free preliminary processing of their returns and also relieved the department from the burden of preliminary assessment that can be computerised and enabled them to concentrate on hardcore activities.
Any communication from the income tax department creates panic for taxpayers. However, Section 143(1) intimation is not something one needs to worry about. In this article, we would be discussing intimation sent under Section 143(1) in detail to make it help taxpayers deal with such intimation with ease.
Initial processing of returns by CPC is completely automated and Section 143(1) Intimation is also computer generated record. CPC validates data provided in each tax return with details available with income tax department’s own record (such as Form 26AS generated through details provided by collecting banks, TDS returns, etc.) and this notice usually only points out apparent mistakes found out by the mainframe system.
The intimation received under Section 143(1) is password protected. The ITR intimation password will be your PAN (in lowercase) followed by date of birth in DDMMYYYY format without giving any space.
For example: Assuming your PAN is ABCDE1234E and the date of birth is 01/01/2000, the password to open the intimation will be “abcde1234e01012000”.
Total income or loss is computed under Section 143(1) after making the following adjustments:
Section 143(1) intimation has to be sent within one year from the end of the financial year in which return is being filed. For eg: if the taxpayer has filed return pertaining to the financial year 2021-22 in July 2022, intimation can be sent any time till 31 March 2023. If a taxpayer does not receive any intimation within such period, it simply means there are no adjustments carried out to the return filed by the taxpayer and no change in tax liability/refund, and the acknowledgement filed itself is deemed to be Section 143(1) intimation.
However, if taxpayer agrees to the tax demand raised by income tax department after carrying out adjustments as above, taxpayer is required to pay such taxes. Refer our article on OLTAS challan payment on how to pay taxes. However, while paying tax on demand raised under this Section, please choose ‘Tax on regular assessment (400)’ under ‘Type of payment’ field in the challan.
If you wish to pay challan physically, the pre-filled challan is attached with the intimation as below.
The acknowledgement of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the taxpayer and where no adjustment has been made.
First of all, verify the reason for tax liability and if you agree with the tax demand, you are required to pay the tax.
Choose the Tax on regular assessment (400) under type of payment in the challan. If you don’t agree with the demand, submit a response for the same.
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