Received an intimation u/s 143(1)? Wondering why you have an additional tax demand in spite of paying all your taxes? We’ll explain why
Under section 143(1), the assessing officer, if he deems fit, shall pass an order of the summary assessment he had conducted, based on the information made available in the taxpayer’s income tax return. Accordingly, the assessing officer may make the following changes to the total income of the taxpayer. In some cases the Assessing Officer can complete an assessment without passing a regular assessment order .The assessment is completed on the basis of return submitted by the taxpayer. Following are the changes that may be made to the total income of the assesse: -
a. Any arithmetical error in the return; or
b. An ‘‘incorrect claim is apparent from any information in the return.
The Intimation shall be prepared or generated and sent to the taxpayer specifying the sum determined to be payable by, or the amount of refund due to, the taxpayer after the aforesaid corrections. The amount of refund due to the taxpayer shall be granted to him .The acknowledgement of the return shall be deemed has the intimation in a case where no sum is payable by, or refundable to the taxpayer , and where no adjustment has been made.
Incorrect claim means such claim on the basis of an entry, in the return-
a. of an item, which is inconsistent with another entry of the same or some other item in such return;
b. of an item, which is inconsistent with the data available with the income tax department. For example, the income reported or tax credit claimed in the tax return does not match with the data available in the form 26 AS.
c. In respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction.
In many cases, the intimations are auto-generated using the software available with the income tax department and because of the same; some very basic errors are committed in these intimations. Many taxpayers get an intimation, ordering them to pay additional tax. This in some cases is only due to the fact that the income tax department has not been given the tax credit that he is liable to get and because of that the demand is generated. For example, a salaried employee who’s employer has deducted TDS, is not liable to pay anymore tax as he has no further income. But in the intimation, he gets a tax demand only because the TDS on salary in the intimation has been considered as NIL even though the same was very explicitly mentioned in the tax return.
In such cases, the taxpayers must file a rectification u/s 154 in order to negate this demand.
It’s important to note that an intimation under section 143(1) should not be sent after the expiry off one year from the end of the financial year in which return of income is made.For instance, for the assessment year 2014-15, a taxpayer submits return on July 6,2014. Intimation may be sent up to March 31,2016 (even if it is received by the taxpayer after March 31,2016).
Summary assessment not necessary in some cases – Processing of a return under section 143(1) is not necessary, where a scrutiny notice has been issued to the taxpayer