Intimation letter under section 143(1) of the Income Tax Act

Once an assessee files a return for a given assessment year, it is sent to the department for processing. The assessee receives an intimation from the income tax department under Section 143(1) once the return has been processed. It will be sent to the assessee’s registered email address.

The assessee files an income tax return under section 139 or section 142(1), which is done on the income tax department’s demand. The entire procedure is carried out in a computerized setting with no human involvement. While processing the return, the program already performs many checks and notifies the assessee if there are any problems. An intimation under section 143(1) is not the same as an assessment order. It is an automatic answer given by the department following a preliminary review of the taxpayer’s return.

Centralized processing center

According to data released by the Income-tax department, more than 4.15 crore income tax returns had been filed for the fiscal year 2020-21 as of December 26, 2020. Given the large number of returns filed, it is critical to process all of them in a timely and accurate manner. The Centralized Processing Center enters the picture at this point.

The Income-tax department has been given authority to establish a centralized processing center for returns. The goal is to figure out how much tax should be paid and how much should be refunded to taxpayers. The assessee’s returns are processed by the CPC center in Bangalore without the involvement of the taxpayer or the jurisdictional officer. To ensure that returns are processed in a timely manner and that both information is provided in a timely manner.

An indication is issued to the taxpayer once the department has processed the return. They have the opportunity to respond to the department after receiving the notification. The response will be in opposition to a change made by CPC in the intimation. The taxpayer has 30 days to reply to the modification after receiving notification.

Preliminary assessment under section 143(1) of Income Tax Act

When a taxpayer files a return, the CPC begins the processing procedure in a fully automated manner. CPC performs a number of checks. It also adjusts the return for any arithmetical errors, improper claims, expense disallowances, and so forth. After that, CPC verifies the information provided by the taxpayer against their own records. COC then issues a notification to the taxpayer.

The steps involved in processing a refund are as follows:

  • The department recalculates the overall income or loss once a taxpayer files a return and compares it to the data on their end.
  • CPC creates a notification that it sends to the taxpayer. It has two columns, one for data provided by the taxpayer and the other for data provided by the department. It displays the difference between the taxpayer’s total income and claims and the department’s.
  • The revisions are then reflected on the intimation by the department. This aids in the calculation of the ultimate tax due or refundable, which it then distributes to the taxpayer.
  • Any changes to the taxpayer’s return are communicated to them in writing. The taxpayer might also respond to the adjustments that have been made.

The assessee is notified by way of an intimation. The many forms of intimations are as follows:

  • Intimation with no demand and no refund. This occurs when the taxpayer’s return is accepted by the department. In this scenario, the taxpayer does not need to take any more action.
  • Intimation determining demand. If any adjustments are made under section 143(1) as a result of a mismatch between the tax return filed and the total tax liability calculated, this form of intimation is provided.
  • Intimation determining refund. When there is no dispute in the return and any tax or interest is found to be refundable to the taxpayer, this form of intimation is provided.

The following are the reasons for receiving an intimation under section 143(1) of the Income Tax Act:

There is usually a sense of urgency when an email from the income tax department arrives. Furthermore, taxpayers are concerned about paying higher taxes. While a few of them will benefit from a tax refund. Some taxpayers will be subject to further penalties. An intimation under section 143(1) of the Income Tax Act is issued for a variety of reasons:

  • The tax paid by the taxpayer is greater than what they were legally obligated to pay under the act’s provisions. The amount of the tax refund will be included in the notification. If the amount of the refund exceeds Rs. 100, the refund will be given to the taxpayer. Refunds of less than Rs. 100 will not be issued.
  • According to his actual liabilities, the taxpayer has paid taxes that are less than what he owes. The amount that the taxpayer must pay will be included in the notification. The real obligation as well as the interest component will be included.
  • The tax returns are in line with the assessing officer’s computation, according to a short note. In this scenario, the assessee is not needed to receive a specific notification.

Adjustments made under section 143(1) are of the following types:

If any interest or tax is required after the taxpayer files a return under section 139, an intimation is provided to the assessee. If the assessee is due a refund, the same rules apply. This occurs when a taxpayer’s tax liability is more than the amount of tax they have already paid.

Section 143(1) of the Income Tax Act allows for the determination of an assessee’s gross income after applying the following adjustments:

  • Any arithmetic inaccuracy in the filed return.
  • An incorrect claim, if such an incorrect claim can be seen in the return’s details.
  • If a prior year’s return for which set-off is requested was filed after the due date, disallowances of loss are claimed.
  • Disallowances of spending listed in the audit report but not taken into account when calculating total income

The time limit for issue of intimation u/s 143(1)

An indication must be submitted to the assessee within one year of the end of the financial year, according to section 143(1). The financial year begins with the year in which the return is filed and ends with the year in which the return is filed. For example, in August 2019, a taxpayer submits a return for the fiscal year 2019-20. Until March 31, 2021, an intimation can be made at any moment.

If a taxpayer does not receive any notification within the time frame, it simply implies that:

  • No modifications have been made to the taxpayer’s return
  • No change in the amount of tax due/refund
  • The acknowledgement itself is considered a Section 143(1) intimation.

Action to be taken by the taxpayer after receiving letter of intimation under section 143 (1)

  • When a taxpayer receives an intimation from the Income tax department, he or she should evaluate several key components of the return. This includes information from the return. For instance, income information, financial year, PAN, residence, assessment year for which the notice was issued, and so on.
  • The taxpayer can detect and verify the mistakes made throughout the filing process after reading the intimation. By logging into the income tax website, the taxpayer can file an amended return. However, the taxpayer may not detect any errors in the return or disagree with the CPC’s proposed adjustments. The taxpayer can use this page to submit an online rectification under section 154.
  • If the taxpayer is unhappy with the way the correction submitted under section 154 was handled, he or she can file an online grievance or contact the assessing officer. If the modifications are agreed upon, the taxpayer will pay the additional tax plus interest. This can be accomplished by submitting an online challan payment. In this situation, the taxpayer must select ‘Tax on regular assessment (400)’ as the challan’s kind of payment.

How do I open an email intimation u/s 143 (1)?

The warning will be a password-protected file that the taxpayer gets via e-mail. The PAN in lowercase, coupled with the date of birth, is the password to open the file. If your PAN is ABCDE1234F and your birthday is August 5, 1988, your password will be abcde1234f05081988.

Related posts

How to Calculate Your Tax Liability in Debt Mutual Funds with Indexation?
Tips to Save Income Tax in FY 2020-21