Understanding Intimation Notices: Section 143(1) Explained

Introduction

The Notice of Intimation under Section 143(1) of the Income Tax Act is a fundamental component of India’s tax administration system. This notice, issued by the Income Tax Department, serves as a critical communication tool between taxpayers and the tax authorities. It plays a pivotal role in informing taxpayers about the outcome of their filed tax returns, highlighting any discrepancies, adjustments, or refunds. Understanding the significance of this notice is essential for taxpayers and tax professionals alike, as it provides valuable insights into the assessment process and ensures compliance with tax regulations. In this guide, we will explore the intricacies of the Notice of Intimation under Section 143(1) and provide essential guidance on how to interpret, respond to, and navigate through its implications effectively.

What is Intimation u/s 143(1)?

Intimation u/s 143(1) is issued by the income tax department once taxpayer’s return is processed.

Intimation u/s 143(1) of the income tax act is a summary of the details taxpayer have submitted to the tax department and the details the department has considered while processing your return.

Why is the intimation u/s 143(1) issued?  

Basically, when a return is submitted to the Income Tax Department, the department applies the following computerized checks as a part of its review procedure:

• Arithmetical errors in the return.

• An incorrect claim, which is apparent from any information in return. For example, if the deduction u/s 80C is claimed more than the maximum permissible deduction u/s section 80C, i.e., Rs 1,50,000, the excess shall be disallowed and reflected in your section 143(1) intimation. Another example may be that rent income is deducted from business income, which is not shown under Income from House Property.

• Disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the income tax return

• Comparison of Advance Tax, Self-assessment Tax and TDS, etc., from 26AS (discrepancies like incorrect challan no., BSR code, date etc can lead to notice).

• Addition of income appearing in Form 26AS or Form 16A or Form 16 which is not included in ITR

• Claiming the losses for carry forward to next year when the return is submitted after the due date / set off of losses of the previous year where the return was filed after the due date.

• Whether deduction under section 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID, 80-IE has been taken after the due date of the Income Tax Return

• Calculation of Tax, Late filing fees, Interest, etc.

Intimation u/s 143(1) is sent to all taxpayers by the Income Tax Department

When does one receive an Intimation under Section 143(1) ? 

The following are the primary instances for receiving a section 143(1) intimation:-

1. Tax Refund: If the taxpayer has paid an excess amount of tax, the notification will mention the refund amount. Refunds exceeding Rs. 100 will be disbursed to the taxpayer, while amounts below this threshold will not be paid out.

2. Tax Shortfall: If the taxpayer has underpaid taxes, as determined through computation, the notice will specify the deficient amount. Additionally, a challan for making the required payment will be enclosed with the notice.

What is the time Limit for issue of 143(1)?  

Intimation u/s 143(1) of income tax act can be issued only up to 1 year from the end of the financial year in which the return is filed and not after that.

For example,

1. If tax payer has filed his return for the Financial Year 2022-23 on 21.07. 2023, then in that case, the financial year-end will be on 31st March 2024, and intimation can be issued for 1 year, i.e., intimation u/s 143(1) can be issued for the FY 2022- 23 only up to 31st March 2025.

2. The taxpayer should not ignore this notice of intimation, as he must submit his response within the time specified in such intimation in case any action is required.

What should be done on receiving intimation u/s 143(1)?  

On receiving the notice of intimation u/s 143 (1) of income tax act, there’ll be two cases, either taxpayer agree with the computation done by the department or he will not.

• In case taxpayer agree with the tax amount payable or the amount of refund due, he would be required to pay the amount of outstanding taxes, or he will simply receive the amount of refund shown in the notice of intimation u/s 143(1).

• In case you taxpayer do not agree with the calculations done by the income tax department, he can opt to file an online request to rectify your income tax return under section 154 or file an appeal under section 246A.

• And, if the net amount refundable or payable is zero, then he can treat the notice of intimation received u/s 143(1) of income tax act as the completion of the return filing process from the Income Tax Department for the financial year in relation to which the return was filed. No further action is required in this case.

How is the intimation u/s 143(1) received?  

These intimations are auto-generated and are sent to the Email address provided by taxpayer at the time of filing income tax returns online / mail id given at the time of registration on the income tax website after thorough ITR processing and a  text message is also sent to the registered mobile number.

What is the password to open intimation u/s 143(1) of Income Tax Act?  

The attachment received is a password-protected file. The ITR intimation password for opening the attachment/file received is your PAN number in lowercase followed by your date of birth in DDMMYYYY format.

For example,

Suppose your PAN is AAGRK5803P and your birth date is 2nd November 1982, then the intimation order password to open your online intimation u/s 143 1 shall be “aagrk5803p02111982”.

Conclusion

Intimation under Section 143(1) of the Income Tax Act serves as a vital communication tool between taxpayers and the Income Tax Department. It summarizes the details submitted by taxpayers and the department’s computations, highlighting any discrepancies or adjustments made during the assessment process. Taxpayers receive this notice to rectify any errors or omissions in their tax returns. Understanding the reasons for receiving this notice, such as arithmetical errors, incorrect claims, or discrepancies in tax payments, is crucial for taxpayers to ensure compliance with tax regulations. Upon receiving the intimation, taxpayers should carefully review the computations and take appropriate action, whether it involves agreeing with the department’s calculations, filing for rectification, or lodging an appeal. Timely response and adherence to the instructions provided in the intimation notice are essential for taxpayers to fulfill their tax obligations effectively.