How to Respond to Notice Under Section 143(2) Getting a notice from the income tax department can leave you in panic mode. You may not be sure if you have to accept the notice in the first place. Even if you do, you may be unsure how to respond to it. You must know that different notices would mean different things.
Read through to know what a notice u/ 143(2) means, how to respond to it, and other details. What Does a Notice Sent u/ 143(2) Mean?When the income tax department finds discrepancies, minor or major, in your income tax returns, a notice will be issued under Section 143(2). The discrepancies can be under-reporting income or over-reporting losses. The notice is issued to make sure that you have not underpaid tax in any way.What is Section 143(2) of the Income Tax Act?ANotice under Section 143(2)of the income Tax Act, 1961, is sent by the income Tax Departmentto a taxpayer after they have submitted theirincome tax return (ITR).
This noticeinforms the taxpayerthat theirreturn will be scrutinizedas part of the review process.When is a Notice Under Section 143(2) Issued?A notice underSection 143(2)of the income Tax Act, 1961, is issued by the income Tax Departmentafter a taxpayer files theirincome tax return (ITR). This notice is generally sent for ascrutiny assessment.Process of Issuance:Filing of Return– After a taxpayerfiles their ITR, the income Tax Departmentprocesses it.Selection for Scrutiny– If thereturn is selected for scrutinybased oncertain criteria(such as discrepancies, high income, etc.), a notice underSection 143(2)is issued.Timeframe– Thenotice must be issued within six monthsfrom the end of theassessment yearin which the return was filed.For example, if theITR is filed for AY 2022-23, the notice must beissued by September 30, 2023.Response Required– The taxpayer mustrespondto the notice by providing the necessarydocumentation and evidencesupporting the claims made in theITR.Assessment Process– After receiving the response, theassessment process continues, which may involvefurther notices or discussionswith the department.What You Should Know About the Notice?You may receive a notice in the form of a PDF via email to your registered email address. It will also be sent to the postal address.Under theFaceless Assessment Scheme, income tax notices are uploaded directly on the income tax portal, which you can check by logging into your account. You will also receive ane-mail intimation and an SMSto your registered -mail and registered mobile number about the issue of such notices.If you havenot filed returnsfor the financial year, the assessing officercannot issue a notice u/ 143(2).
He must first issue anotice u/ 142(1), asking you to first file returns.For those who have filed their return, the officer can issue a142(1) noticecalling for further information basis which return has been filed which can includedocuments supporting the deductions, exemptions, allowances, reliefs, and other claimsmade while filing the returns.You must provideproof related to all your income sources.the assessing officer does a detailed enquiry.How Does this Work?Step 1:Yourincome tax return has been filed.Step 2:Anotice is issued under Section 143(2)by the assessing officer.Step 3:You and/or yourtax representative will place your argumentsin front of the assessing officer and submitdocuments and declarations as required.Step 4:After considering all submissions, afinal order will be passed u/ 143(3)confirming whether the income shown in the income tax return has been accepted or whether there are any further additionsto the returned income. You also come to know if there is anyadditional tax payable.Types of Notices u/ 143(2)1. Limited ScrutinyThis is aComputer-Assisted Scrutiny Selection (CASS)where cases are selected based onset parameters. These are cases withinaccurate returns information or mismatches.
The scrutiny will belimited to the particular area of return mentioned in the noticesuch as:Theclaim of foreign tax creditSale of a propertyMismatch of income between income shown in the income tax return and income appearing in Form 26AS2. Complete ScrutinyComplete scrutiny will be carried out on the return filed and all supporting documents.The cases will be flagged based onCASS.Though thescope of scrutiny is not limited, the assessing officer cannot verify documents beyond the particular assessment year.3. Manual ScrutinyCases are selected forcomplete scrutiny based on the criteria defined by the Central Board of Direct Taxes.Thecriteria may vary every year.Time Limit to Issue the NoticeThe notice underSection 143(2)can be issuedafter an income tax return has been filedbutwithin a period of three monthsfrom the end of the financial year in which the return was filed.For example, say,Mr. Satish filed his returns on 31 July 2023for the financial year2022-23.
The assessing officer can issue a notice underSection 143(2) only within 30 June 2024. This is because he can only issue the noticewithin a period of three months from the end of the financial year 2023-24, the financial year in whichMr.Satishfiled the returns.What Happens if You Fail to Respond?Youcannot take the notice lightlyand ignore it.