This content provides information on various notices and provisions related to the Income Tax Return (ITR) process in India. It covers the following topics:
Intimation notice under Section 143(1): Explains the purpose of the intimation notice, which communicates the assessment outcomes to taxpayers. It highlights the steps to take upon receiving such a notice and the importance of responding within the designated time frame.
Defective ITR under Section 139(9): Describes the reasons a return can be considered defective and the actions to take when receiving a notice under this section, including filing a revised return and settling any additional tax liabilities.
Inquiry before scrutiny assessment under Section 142: Outlines the authority of the Assessing Officer to issue notifications to taxpayers, requiring them to submit income returns, provide necessary accounts or documents, and furnish relevant information related to the assessment.
Income escaping assessment under Section 148: Explains the provisions allowing the Assessing Officer to reopen an assessment if there is a reasonable belief that taxable income has evaded assessment. It mentions the steps to take upon receiving a notice under this section, including submitting a reply or initiating an appeal.
Adjustment of tax payable with refund amount under Section 245: Discusses the authority of the Income Tax Department to offset income tax refunds against any pending tax liabilities. It advises on the response to provide if objections arise concerning the adjustment.
The content emphasizes the importance of carefully reviewing and understanding the notices received, seeking guidance from tax professionals when necessary, and responding within the specified time frames.
Income Tax Return (ITR) for the financial year 2022-23, it is possible that you might have received an income tax intimation or notice at your doorstep for various reasons. Below are the kinds of notices under various sections of the Income Tax Act one can expect depending on the anomaly while filling out the ITR form.
Intimation notice under Section 143(1)
Section 143(1) of the Income Tax Act, 1961, pertains to the communication of assessment outcomes to taxpayers. According to this section, the Income Tax Department is obligated to issue an intimation to the taxpayer within a year from the conclusion of the financial year in which the tax return was submitted. This intimation outlines the determined amount of either payable tax or eligible refund as assessed by the Income Tax Department.
The intimation rendered under Section 143(1) constitutes a concise evaluation, implying that the Income Tax Department isn’t mandated to conduct an exhaustive scrutiny of the taxpayer’s return. Instead, the intimation is grounded in the data provided by the taxpayer in the return, alongside the information held by the Income Tax Department.
In instances where disparities surface between the taxpayer’s return and the data maintained by the Income Tax Department, the latter might dispatch an Income Tax notice under Section 143(2) or 143(3) of the Income Tax Act. These notices trigger a comprehensive assessment of the taxpayer’s return.
Should you receive an intimation under Section 143(1), it’s prudent to meticulously review its content and comprehend the stipulated tax payable or refund due. In situations where uncertainty arises, consulting a tax professional is advisable.
Outlined below are steps to take upon receiving an intimation under Section 143(1):
- Validate the intimation’s accuracy: The initial action entails verifying the precision of the intimation. Ensure that the stated amount of payable tax or eligible refund is accurate.
- Fulfill tax payment obligations: If tax payment is necessary, make sure to settle it within the stipulated deadline.
- Assert refund entitlement: In instances where a refund is due, you can assert your entitlement by initiating a refund claim through appropriate filing procedures.
There should not be any cause for concern if you have accurately furnished all requisite information to the Department during the filing process. However, if this isn’t the case, seeking advice from a tax expert is advisable in order to meticulously compose responses to any notices dispatched by the tax department.
In the event that the intimation notice is issued due to a refund or if there exists no disparity between your calculations and those of the tax department, responding may not be necessary. Conversely, when a tax demand arises, it is expected that the taxpayer provides a response within 30 days following the issuance of the intimation notice. This response should indicate agreement or disagreement with the proposed adjustments.
If you find yourself in disagreement with the suggested adjustments, it is imperative to furnish your reasons for dissent within your response. Additionally, you might consider appending supportive documentation to substantiate your standpoint.
Failure to respond to the intimation notice within the designated 30-day period could prompt the Income Tax Department to initiate actions against you, which might involve imposing penalties or issuing notices for further assessment.
Importantly, it’s worth noting that the Department retains the authority to effect modifications to your tax liability even after the issuance of the intimation notice. Nevertheless, if you disagree with any adjustment, you possess the right to challenge the decision of the Department through the appeals process.
Defective ITR under Section 139(9)
Section 139(9) of the Income Tax Act, 1961, pertains to defective returns. In accordance with this section, the Income Tax Department is empowered to issue a notice to the taxpayer, necessitating the submission of a revised return if the initially filed return is deemed defective.
A return is categorised as defective if it lacks essential information or contains inaccurate details. Common reasons for a return to be deemed defective encompass:
- Missing or inaccurate information: The return might lack crucial details concerning your income, deductions, or exemptions. It could also feature incorrect particulars, such as an erroneous PAN number or address.
- Incorrect Return Form: It’s possible that you filed an inappropriate return form considering your income type. For example, if you’re a salaried employee, Form 16 should be submitted instead of Form 12A.
- Delayed filing: The return could have been submitted after the stipulated due date, which is typically July 31st of the ensuing year.
- Non-filing: There’s a possibility that you haven’t filed a return at all.
Upon receiving a notice under Section 139(9), it’s advisable to thoroughly peruse its contents and comprehend the underlying reason for the notice. In cases of uncertainty, seeking guidance from a tax expert is prudent.
Outlined below are steps to take upon receiving a notice under Section 139(9):
- File a revised return: The initial course of action involves submitting a revised return. This revised return should rectify the discrepancies present in the original filing.
- Settle additional tax liabilities: If the revised return underscores additional tax obligations, it’s important to duly settle the corresponding tax liabilities.
- Assert refund entitlement: In scenarios where the revised return reveals a refund due, you can lay claim to the refund by initiating the appropriate refund claim procedure.
A notice related to income tax under section 139(9) can be issued within a span of nine months following the conclusion of the financial year in which the tax return is submitted. Consequently, for the Income Tax Return filed for the fiscal year 2022-23 (Assessment Year 2023-24) with a deadline of July 31, 2023, the tax authority possesses the authority to dispatch a notice until December 31, 2024.
The tax notice will explicitly specify the deadline by which the individual is expected to furnish a response. Typically, the tax department extends a window of 15 days for individuals to provide their responses.
Inquiry before scrutiny assessment under Section 142
Section 142 of the Income Tax Act, 1961, governs the authority of the Assessing Officer to issue notifications to the taxpayer. In accordance with this section, the Assessing Officer possesses the prerogative to dispatch notifications to the taxpayer, mandating them to:
Submit an income return, even in instances where no return has been filed under Section 139(1). Also, you must produce the necessary accounts or documents indispensable for conducting an assessment. Furnish in written form any pertinent information related to the assessment.
Notifications under Section 142(1) are issued when the Assessing Officer has grounds to suspect that the taxpayer has either not filed their income return or has not furnished requisite information. These notifications can be issued even if the taxpayer has already filed their income return if the Assessing Officer has reason to believe that the filed return is flawed or erroneous.
Notifications under Section 142(2) are dispatched when the Assessing Officer necessitates the taxpayer to provide accounts or documents to authenticate the information declared in the income return. Such notifications can also be issued if the Assessing Officer wishes to validate the taxpayer’s income from sources beyond those indicated in the return.
Notifications under Section 142(3) are released when the Assessing Officer calls for the taxpayer to provide written information pertaining to assessment-related matters. This could encompass particulars about the taxpayer’s assets, liabilities, business transactions, and income originating from diverse sources.
It’s worth noting that there isn’t a stipulated upper limit for issuing a notice under Section 142(1) of the Act. However, the notice itself will specify the timeframe within which a response is expected. In practice, tax experts commonly indicate that the income tax department generally grants a 15-day window for responding to such notices.
Income escaping assessment under Section 148
Section 148 of the Income Tax Act, 1961, encompasses the authority of the Assessing Officer to initiate the reevaluation of an assessment. Under this provision, the Assessing Officer holds the prerogative to reopen an assessment when there exists a reasonable belief that taxable income has eluded the process of assessment.
The Assessing Officer is empowered to reopen an assessment within six years from the culmination of the pertinent assessment year. Nevertheless, this timeframe can be extended under specific circumstances, particularly if the taxpayer has concealed their income or furnished erroneous information.
Before instigating the process of assessment reopening, the Assessing Officer is obligated to serve the taxpayer with a notice under Section 148A(b). This notice should comprise the following elements:
- A delineation of the reasons behind initiating the assessment reopening.
- The span for which the assessment is subject to reopening.
- An indication of the probable additional tax amount.
The recipient of the notice has the right to respond within 30 days of submitting their reply. Subsequently, the Assessing Officer evaluates the response to make a determination regarding the assessment reopening.
If the Assessing Officer decides to proceed with the assessment reopening, a notice of demand specifying the due tax amount is issued to the taxpayer. The taxpayer retains the right to challenge this notice by means of an appeal.
Upon receipt of a notice under Section 148, it is crucial to meticulously peruse its contents and comprehend the underlying rationale. Here are a few actions you can consider taking in response to a Section 148 notice:
- Submit a reply to the notice: Filing a response to the notice within 30 days of receipt is recommended.
- Initiate an appeal: You possess the right to launch an appeal against the notice, should you choose to do so.
Individuals will be afforded the chance to present their reasons for opposing the commencement of reassessment proceedings. Subsequent to reviewing the information provided by the individual, the assessing officer retains the discretion to proceed with the reassessment process or conclude the matter.
The issuance of a notice under this section is contingent upon the extent of income that has eluded assessment. In cases where the income is less than ₹50 lakh, the tax notice will be dispatched within three years from the conclusion of the pertinent assessment year.
In scenarios where the income surpasses ₹50 lakh, the reassessment of the filed ITR can be undertaken within a span of up to 10 years from the relevant assessment year. However, this extension necessitates prior approval from the designated tax authority.
Adjustment of tax payable with refund amount under Section 245
The Income Tax authority possesses the authority to offset income tax refunds due for a specific year against any pending tax liabilities from previous years. This adjustment is implemented only when there exist outstanding income tax obligations or pending tax refunds in the present year.
Should the Department intend to allocate the current year’s income tax refund toward any unsettled tax demand from the taxpayer’s previous years, an intimation notice pursuant to Section 245 of the Act might be dispatched to the taxpayer.
In cases where objections arise concerning this notice or if the taxpayer has already settled the outstanding demand, it is recommended to provide a response furnished with evidence of payment and a request to refrain from executing the proposed adjustment.
It’s noteworthy that there is no predefined time frame for the issuance of this tax notice under Section 245 of the Act. This implies that if, according to the income tax department’s assessment, a taxpayer has a pending tax demand from Fiscal Year 1999-2000 (Assessment Year 2000-01) and is entitled to a tax refund for Fiscal Year 2022-23 (Assessment Year 2023-24), the tax officer can offset the refund against the pending demand.
The time limit for responding to this notice will be explicitly stated within the notice itself. Typically, individuals are allowed 30 days from the notice’s issuance date to formulate their response. Following your response to this tax notice, the income tax department will evaluate the rationale behind your objection or concurrence with the tax demand specified in the notice.
The Income Tax Act establishes distinct timeframes for the issuance of specific tax notices. Beyond these specified limits, the issuance of particular tax notices is not permissible. However, in practical scenarios, individuals occasionally receive tax notices after these stipulated timeframes have lapsed. It becomes crucial for individuals to verify whether the issuing of a tax notice has transgressed the applicable time limit. It’s plausible that the tax notice was dispatched prior to the expiration of the timeframe. Irrespective of whether the Department adhered to the notice issuance timeframe, it is advisable for taxpayers to respond to the required information.
Furthermore, taxpayers who encounter challenges in resolving their tax matters should seek assistance from tax professionals. This step ensures the proper resolution of the concerns raised in the notice by the Income Tax Department.