In the realm of income tax filing, understanding the intricacies of Section 143(1) and the subsequent intimation process is crucial. In this blog post, we’ll explore frequently asked questions to shed light on what intimation under Section 143(1) entails.
What is Intimation under Section 143(1)?
Intimation involves the meticulous processing of income tax returns by the Centralised Processing Centre (CPC). This process scrutinizes all returns filed under Section 139 or in response to a notice under Section 142(1). The primary focus is on verifying and correcting arithmetical errors, apparent errors, tax calculations, and tax payments. Notably, at this stage, there is no examination of the reported income itself.
Which Adjustments Does CPC Make to Compute Total Income or Loss?
The computation of total income or loss involves several adjustments made by the CPC during the processing of Income Tax Returns (ITR). These adjustments include:
- Arithmetical Errors: Correction of any mathematical errors in the return.
- Incorrect Claims: Rectification of claims that are inconsistent with other entries in the return, lack required substantiating information, or exceed specified statutory limits.
- Loss Disallowance: If the return claiming a set-off of loss was furnished beyond the due date, the loss may be disallowed.
- Audit Report Discrepancies: Disallowance of expenditure or an increase in income indicated in the audit report but not considered in the total income computation.
- Deduction Disallowance: Disallowance of deductions under Section 10AA or Chapter VIA if the return is furnished beyond the specified due date.
What Constitutes an Incorrect Claim?
An incorrect claim, as per Section 143(1), refers to a claim based on an entry in the income tax return that:
- Is inconsistent with another entry in the return.
- Lacks the necessary information to substantiate the claim.
- Exceeds specified statutory limits expressed as a monetary amount, percentage, ratio, or fraction.
Time Limit for Issuing Intimation under Section 143(1)
Intimation must be issued within 9 months from the end of the financial year in which the taxpayer furnishes the return. This ensures a timely communication of any adjustments made during the processing.
Assessee’s Opportunity to Explain and Rectify
Before implementing any adjustments, the assessee is granted a 30-day window from the date of intimation issuance to explain and rectify arithmetical errors or incorrect claims. This ensures a fair and transparent process, allowing taxpayers to address discrepancies promptly.
How to Respond to CPC Adjustments?
Responding to CPC adjustments is a streamlined process through the e-filing account of the assessee. There’s no need for a physical visit to the income tax department. This electronic submission simplifies the communication channel and facilitates a more efficient resolution of discrepancies.
In conclusion, understanding the nuances of intimation under Section 143(1) empowers taxpayers to navigate the income tax filing process with confidence. Being aware of the adjustments made by the CPC and the corresponding procedures for explanation and rectification ensures a smoother and more transparent tax compliance experience.
If you get a notice about changes in your taxes from the CPC, it’s a good idea to get help from a Chartered Accountant (CA). A CA knows a lot about taxes and can guide you through the process. They’ll check your financial records carefully, find any mistakes, and make sure you’re following all the tax rules. Having a CA on your side helps you deal with the tax adjustments properly, avoids potential issues, and makes sure everything gets sorted out smoothly.
