An intimation u/s 143 (1) serves as a preliminary assessment of the taxpayer’s income tax return filed for a particular financial year. It is a message which notifies the taxpayer of any kind of error prevailing in his/her tax filing. It also tells the taxpayer of any kind of interest payable or refundable in his account. 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.
What is Intimation u/s 143 1?
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 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, the system generates the intimation under Section 143(1), which generally indicates obvious errors identified by the mainframe system.
Intimation u/s 143(1) of the income tax act is a summary of the details you have submitted to the tax department and the details the department has considered while processing your return. Basically, the intimation u/s 143(1) contains the following information:
- Permanent Details of the assessee like name, address, etc.
- Income Tax Return filing details like acknowledgment number, filing date, etc.
- Refund sequence number
- Tax Calculation as provided by you in the Return of Income
- Tax as Computed under section 143(1) of the income tax act {i.e. As per Department}
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 intimation u/s 143(1). 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 return
- Comparison of Advance Tax, Self-assessment Tax and TDS, etc., from 26AS.
- 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.
When does one receive an Intimation under Section 143(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.
- 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.
- Conformance Notice: A straightforward notice will be issued in cases where the tax returns filed by the taxpayer align with the assessment conducted by the assessing officer. In such instances, no separate 143 1 intimation is sent, and the taxpayer should consider the ITR V acknowledgement of filing the return of income as the intimation notice.
Centralized Processing Center
The Finance Act, 2008 empowered the Central Board of Direct Taxes (CBDT) to make a scheme for the centralised processing of returns with a view to expeditiously determine 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, enabling 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 the intimation sent under Section 143(1) in detail to help taxpayers easily deal with such intimation.
Preliminary Assessment under 143(1)
Initial processing of returns by CPC is completely automated and Section 143(1) Intimation is also a computer generated record. CPC validates data provided in each tax return with details available with the 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.
- Once the return is filed, total income or loss is recomputed by the computerised system as per the department’s record and provides a comparison with data filed by the taxpayer
- The intimation has two columns: ‘As provided by the taxpayer in the Return of Income’ and ‘As computed under Section 143 (1)’
- Comparison is made for major categories such as
- Income under various heads,
- Gross total income,
- Deductions under Chapter VIA (80C, 80D, etc.), and
- Tax deducted at source, and tax paid by taxpayers in the form of advance tax and self assessment tax
- Appropriate adjustments are made to income as computed under Section 143(1) and final tax liability or refund is arrived at
- The adjustments are carried out only after giving an intimation to the taxpayer of the proposed adjustments either in writing or electronic mode i.e., to the email id provided in the income tax return filed
- Response received from the taxpayer within 30 days from the issuance date of intimation will be considered before making the final adjustment and in case no response is received within such period, adjustments arrived at initially will be incorporated.
- After arriving at final tax liability, the same is adjusted against TDS and tax payments and other relief under Section 90/91, if any.
- An intimation shall be prepared and sent to the taxpayer.
Kind of intimations possible are discussed below:- Intimation with no demand or no refund – This generally happens if the department has accepted the return as filed without carrying out any adjustments to it.
- Intimation determining demand – Issued in case of adjustments made under Section 143(1) due to a discrepancy found and tax liability is arrived at.
- Intimation determining refund – Issued where any tax is found to be refundable either where no discrepancy in the return filed or after making adjustments as referred to in Section 143(1) and after giving credit to the taxes and interest paid by the taxpayer.
- While demand notice is sent in case of final tax liability, refunds if any shall be granted to the taxpayer.
Time Limit for issue of 143(1)
Intimation u/s 143(1) 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,
- If you filed your return for the year 2021-22 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.
- Lastly, do not ignore this notice, as you must submit your response within the time specified in such notice in case any action is required.
Nature of adjustments under 143(1)
- Arithmetical error in the return
- Any incorrect claim which is apparent from any information in the return where incorrect claim which may include the following:
- The claim of an item in the return which is inconsistent with another entry of the same or some other item in such return – for example, income from other sources are deducted from business income but not declared under income from other sources.
- Disallowance of set-off of loss in the financial year which is carried forward from previous years in which return was filed beyond the specified due date
- Disallowance of expenditure is indicated in the audit report but not indicated in the return of income.
Action to be taken by the taxpayer after receiving a 143(1)
- As a first step, review certain things in Section 143(1) intimation to ensure the document pertains to your return itself and the data provided pertain to the same financial year as mentioned in Section 143(1) intimation.
- Check the name, PAN, address, assessment year for which notice has been sent and e-filing acknowledgement number.
- In case you are able to identify the mistakes you have made while filing your return from the 143(1) intimation, and they can be rectified by filing a revised return, please do so by logging into the income tax e-filing website.
- However, if no mistakes have been made and you do not agree with the adjustments made by CPC/computerised system, you can file an online rectification application under Section 154(1) intimating the correction of mistake appearing in the Section 143(1) intimation. Refer our article on filing rectification application.
- Also, submit your response in the e-filing portal where there is a tax demand- whether you agree or disagree with the same.
- In case you are not satisfied with the processing of your rectification return by CPC, you can also file online grievances or contact your assessing officer. In case of no satisfactory action from CPC/assessing officer, you can file a complaint to the income tax ombudsman.
FAQs
When you receive intimation under section 143 (1)?
The taxpayer has to verify the Income Tax return after filing it. The income tax department then sends a notice under section 143(1) of the income tax act to the taxpayer’s registered email address and mobile number, confirming that the ITR has been processed.
Can I revise my income tax return after receiving intimation u/s 143(1)?
You can revise your return till 31 December of the relevant assessment year even after receiving intimation u/s 143 (1) as this intimation is not an assessment.