After a taxpayer files their income tax return, the Income Tax Department begins the review and assessment process. They carefully examine the returns to ensure accuracy and authenticity. If there are any discrepancies, the department can ask for additional details by sending various notices such as Notice u/s 143(1)(a), and Notice u/s 142(1), etc. Failure to do so may lead to further assessment procedures. This process is known as a scrutiny assessment, and it is initiated when the department issues a notice to scrutinize the return under section 143(2).
Why Notice under section 143(2) is issued?
Essentially, Section 143(2) serves as formal notice for conducting a scrutiny assessment under Section 143(3) of the Income Tax Act.
Scrutiny assessment or detailed assessment u/s 143(3) means verification carried out to confirm the correctness and genuineness of various claims, deductions, etc made in Income Tax Returns. The purpose of this scrutiny assessment is to ensure that the assessee has filed the return with accurate income, and deductions and has paid tax accordingly.
Types of notices under section 143(2)
There can be 3 types of notices:
Limited Scrutiny: It is a Computer-Assisted Scrutiny Selection (CASS) where cases are selected based on set parameters. This scrutiny specifically focuses on the area mentioned in the notice. For instance, it might address issues like discrepancies in tax credits or the sale of property.
Complete Scrutiny: A detailed review is done of the ITR filed and their supporting documents. Here also the cases are identified through the CASS process. This scrutiny is not limited to specific areas. However, the assessing officer can only inspect documents relevant to the specific assessment year.
Manual Scrutiny: The selection of cases for manual scrutiny is based on the criteria defined by the Central Board of Direct Taxes (CBDT). These criteria for selection keep updating and they may vary every year.
Sample Notice u/s 143(2)
Time period to issue a notice under section 143(2)
The notice u/s 143(2) can be issued within 3 months from the end of the financial year in which the return of income is filed.
For example, Ms. Riya filed her income tax return on 25th July 2023 for the financial year 2022-23. As per the Income Tax Act, the AO has the authority to issue a notice u/s 143(2) to her until 30th June 2024, which is three months from the end of FY 2023-24 in which the return was filed.
How to respond to notice
- Upon receiving this notice, the taxpayer, either personally or through their tax representative, must submit the necessary documents online or appear before the AO to provide the required arguments and evidence.
- After a detailed examination of the submitted documents, the Assessing Officer (AO) will proceed to issue an assessment order. This order will specify the total amount of tax payable by the taxpayer or, if applicable, any potential refund owed to them.
Time period to issue final assessment order u/s 143(3)
The time period to issue a final assessment order u/s 143(3) is 9 months from the end of the relevant Assessment Year(AY).
Consequences of non-compliance
Non-compliance with the notice can lead to several consequences, including:
- Penalty u/s 272A will be levied amounting to ₹10,000 for each failure.
- AO can do the best judgment assessment u/s 144 for the assessee.
- If the taxpayer is found guilty then there could be imprisonment.
FAQs
No, It is not possible to receive notice u/s 143(2) if you have not filed a return. You might receive a notice u/s 142(1) asking for filing the return.
Generally, you will receive notice u/s 143(2) via email in a PDF format on your email ID. You will also receive this notice at your postal address.
If the AO issues notice u/s 143(2) for the 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 the assessee or due to assessee by passing the order u/s 143(3).
Once you receive the notice, you need to submit the documents and provide clarifications of the issues raised by the AO. You can reply to the notice online through the income tax portal.
Hey @TeamQuicko
What is the time limit in which I need to respond to the notice under section 139(9)?
How can I respond to the notice received online?
How much time it will take to process the refund once response to notice u/s 139(9) is filed?
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!
Hey @SonalYadav
You can login to your account on the Income Tax e-filing website by entering your credentials i.e. User ID (PAN), password, and captcha code.
Next, you need to click on the ‘e-file’ tab and select ‘Response to outstanding Tax Demand’ option.
Hope this helps!
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!
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!
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.
Attention XXXXX4061X, Your PAN has been flagged for not filing of ITR for A.Y-2020-21. Please file your ITR or submit online response under e-Campaign tab on Compliance Portal (CP). Access CP by logging into e-filing portal (My Account) - ITD
Please help i want to avoid any problems
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?