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Notice under section 143(2) of Income Tax Act, 1961

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Laxmi Navlani

Income Tax
IT Notice
Section 143(2)
Last updated on September 10th, 2021

Notice under Section 143(2) of the Income Tax Act is the second chance to assessee after Income Tax Department find major or minor discrepancies in the tax return. The discrepancy can be in the form of under-reporting the income or over-reporting of the losses. On receipt of a notice, an individual must timely respond to the tax department along with the supporting proof to defend themselves.

Reasons for issuance of notice u/s 143(2)

Income Tax Department issues notice u/s 143(2) when Income Tax Return is selected for scrutiny assessment or detailed assessment u/s 143(3).

Scrutiny assessment or detailed assessment u/s 143(3) means scrutiny carried out to confirm the correctness and genuineness of various claims, deductions, etc made in Income Tax Return. The basic purpose of this scrutiny assessment is to ensure that assessee has filed the return with the correct income and paid the tax accordingly.

Time limit for issuance of notice u/s 143(2)

AO can issue notice u/s 143(2) for scrutiny assessment only up to a period of six months from the end of the financial year in which the assessee filed his return.

For example, Ms. X filed her return on 25.07.2020 for the financial year 2019-20. In such a case, the notice u/s 143(2) AO can issue notice to Ms. X only up to 30.09.2021 being the end of six months period from the FY 2020-21 in which the said return was filed.

Types of notices u/s 143(2) of Income Tax Act

There can be 3 types of following notices under Section 143(2): 

Limited Scrutiny: This is a Computer-Assisted Scrutiny Selection (CASS) where cases are selected based on set parameters. The scrutiny will be limited to the particular area of return mentioned in the notice. An example of this scrutiny can be a mismatch in tax credits, inaccurate information, etc.

Complete Scrutiny: A complete scrutiny is carried out on the return filed along with all supporting documents. Cases are flagged based on CASS. Scope of scrutiny is not limited in these types of notices. However, the assessing officer cannot verify documents beyond the particular assessment year. 

Manual Scrutiny: Cases are selected for complete scrutiny based on the criteria defined by the Central Board of Direct Taxes; the criteria may vary every year.

How does this works?

AO can issue notice u/s 143(2) within 6 months from the end of FY in which the assessee filed his return, to carry out scrutiny of income tax return u/s 143(3).

The assessee or his tax representative will have to appear before the AO to place arguments and pieces of evidence as required by the assessing officer. Alternatively, the assessee can submit an online response to notice u/s 143(2) by uploading evidence and your arguments.

After looking over to all the evidence, AO will pass an assessment order determining total tax payable or refund to the assessee after taking into account produced evidence.

Time limit for issuance of the final assessment order u/s 143(3)

Time Limits are as below as per section 153

* For Assessment year 2017-18 or before 21 months from the end of the assessment year
* For Assessment year 2018-19 18 months from the end of the assessment year
* For Assessment year 2019-20 and onwards 12 months from the end of the assessment year

Consequences of not complying with the notice issued u/s 143(2)

If the assessee receives a notice from the Income Tax Department, and there is any default, he/she may be liable for the following:

FAQs

Is it possible to receive notice u/s 143(2) if I have not filed my return?

No it is possible to receive notice u/s 143(2) if I have not filed return. You might receive a notice u/s 142(1) asking for filing the return.

How will I receive this notice u/s 143(2)?

Generally, you will receive this notice via email in a PDF format on your email ID. You will also receive this notice at your postal address.

What is the final order u/s 143(3)?

If AO issues notice u/s 143(2) for production of evidence and after taking into account such pieces of evidence and hearing the arguments, the AO will make an assessment of total income or loss and also determine any sum payable by assessee or due to assessee by passing the order u/s 143(3).

Got Questions? Ask Away!

  1. Hey @TeamQuicko

    What is the time limit in which I need to respond to the notice under section 139(9)?

  2. How can I respond to the notice received online?

  3. How much time it will take to process the refund once response to notice u/s 139(9) is filed?

  4. Hey @HarshitShah

    It is very common to receive a notice from the Income Tax Department. The notice sent to you might be a routine inquiry or a request for clarification. There is no need to worry when you get a notice from the Income Tax Department. You will have 15 days time in which you will need to respond to the notice/file revised ITR.

    Hope this helps!

  5. Hey @ViraajAhuja47

    In case of any defects in the Income Tax Return, Assessing Office can issue notice u/s 139(9). If you have filed a return within 15 days of issue of notice, then it will generally take 60 days to process the return once it is sent for processing.

    Hope this helps! :slight_smile:

  6. Hey @HarishMehta

    It is mentioned in the notice that in case one does not respond in the stipulated time, the return will be processed by restricting the credit for the TDS proportionately.

    To give an example: There are 2 incomes mentioned in Form 26AS as below:

    Salary from A - 100000 & TDS deducted - 10000
    Salary from B - 200000 & TDS deducted - 20000

    In case you have not reported either of the above income in ITR then you may receive a notice for the mismatch.

    Thus, in the above example if you don’t respond in the time, then ITD will add the income of both of the above but will not give the credit of TDS not mentioned in ITR and process the return.

    Hence, it is always advisable to respond to the Income Tax Notice in the given time period.

    Hope this helps!

  7. Hi @Shweta_Saini ,

    Notice u/s 144(1) is issued in the following cases:

    -When ITR is not filed within due date by a taxpayer
    -When a taxpayer fails to provide a response to an inquiry of AO (Assessing Officer) for filed ITR,
    -When a taxpayer fails to provide a response to assessment notice for filing ITR.

    Here, AO can assess the total income or loss of a taxpayer based on the information gathered by them. AO usually gives the taxpayer an opportunity to present their case and provide necessary documents. Hence response to 144(1) can be given after looking at the cause of the notice and with supporting documents.

  8. Hey @SreeSSXP

    Since you had high value transactions and ITR has not been filed for AY 2020-21, ITD has flagged your PAN. Thus, you have to file ITR before March 31, 2021 and respond to the transactions on IT Portal.

    You can reach out to us on help@quicko.com or alternatively get in touch with us at +91-7575831310 so someone from our team can get in touch with you for process, pricing and discounts?

  9. Hi,

    I filed IT return for last financial error in the month of 10-Jan-2021 via Quicko. I made a loss in trading and I have shown the same in IT return for carrying forward.

    Today I got a mail from IT stating it cannot be carry forwarded as I filed late. The IT filing last date was extended due to covid and I remember filing before the last date. This is my first IT filing and I’m not sure what to do. Kindly advice.

    Snapshot of email attached below

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