What is 143 (1) section in income tax?

Introduction to ITR Intimation Password – Intimation Under Section 143 (1) of the Income Tax Act 

The taxpayers’ income tax returns are first processed online at the Centralised Processing Centre (CPC). Following the processing of the return, the IRS issues an intimation to the taxpayers under section 143(1) alerting them of the results.

A tax return can be filed voluntarily under Section 139 or on the income tax department’s demand under Section 142 (1).

It’s important to know what happens after a taxpayer files an income tax return. The Internal Revenue Service conducts a preliminary examination of all returns submitted and notifies taxpayers of the results of that examination. This examination focuses on arithmetical errors, internal inconsistencies, tax computation, and tax payment verification. 

Under Section 143 (1), such notice to the taxpayer after the preliminary assessment is referred to as intimation. The preliminary evaluation is completed entirely by machine, with no human participation, and is sent to the Centralised Processing Center (CPC).

Centralized processing centre

With the rapid increase in the number of income tax returns filed and a jurisdiction-based processing methodology for all returns filed, the tax department encountered issues that resulted in income tax returns being processed late.

As a result, the Finance Act of 2008 empowered the Central Board of Direct Taxes (CBDT) to devise a method for centralised return processing in order to determine the tax payable by, or the rebate due to, taxpayers more quickly. The department selected the strategy that CPC in Bangalore would process paper and e-returns without any engagement with taxpayers and in a jurisdiction-free manner, based on the suggestions of the Technical Advisory Group.

Citizens and the tax department both benefited from the CPC project. Citizens benefited from faster and easier preliminary processing of their returns, while the department was freed of the load of preliminary evaluation, which could be computerised, allowing them to focus on other important tasks.

Taxpayers become anxious whenever they receive communication from the IRS. Intimation under Section 143(1), on the other hand, is not something to be concerned about. In this post, we will go over in detail the intimation sent under Section 143(1) in order to make it easier for taxpayers to deal with such intimation.

What is the password for Section 143(1) intimation?

The Section 143(1) intimation is password-protected. Your PAN (in lowercase), followed by your date of birth in DDMMYYYY format.

For example, if your PAN is ABCDE1234E and your birthday is January 1, 2000, the password to open the notification will be “abcde1234e01012000.”

Time Limit for 143 (1) 

Intimation Section 143(1) intimation must be provided within one year after the end of the fiscal year in which the return is filed. For example, if a taxpayer files a return for the fiscal year 2019-20 in July 2019, an intimation can be delivered at any time until March 31, 2021. 

If a taxpayer does not get any intimation within that time frame, it simply implies that no adjustments have been made to the taxpayer’s return and no change in tax liability/refund has occurred, and the acknowledgement submitted itself is assumed to be Section 143(1) intimation.

Under 143 (1), a preliminary assessment has been made

CPC’s initial return processing is fully automated, and the Section 143(1) Intimation is similarly a computer-generated record. CPC compares data in each tax return to information in the income tax department’s own records (such as form 26AS created from information provided by collecting banks, form 16, TDS returns, and so on), and this warning normally only highlights obvious errors discovered by the mainframe system.

  • After the return is filed, the computerised system recalculates total income or loss based on the department’s records and compares it to the information provided by the taxpayer.
  • ‘As submitted by the taxpayer in the Return of Income’ and ‘As computed under Section 143 (1) are the two columns on the intimation.
  • Major categories are compared, including 
  1. income under various heads, 
  2. gross total income, 
  3. deductions under Chapter VIA (80C, 80D, and so on), 
  4. tax deducted at source, and 
  5. tax payments by taxpayers in the form of advance tax and self-assessment tax. 
  • Adjustments are made to income as calculated under Section 143(1), and the ultimate tax liability or rebate is calculated.
  • The changes are made only after the taxpayer has been notified of the proposed adjustments, either in writing or electronically, to the email address indicated in the income tax return field.
  • Before making the final adjustment, the taxpayer’s response must be received within 30 days of the intimation’s issuance date, and if no response is received within that time frame, the modifications made previously will be adopted.
  • After calculating the ultimate tax liability, it is adjusted for TDS, tax payments, and any other relief available under Section 90/91.
  • An affidavit must be written and given to the assessee. The following are examples of probable intimations:
  1. If the department has accepted the return as filed without making any changes, you will receive a notification with no demand or refund.
  2. Intimation determining demand – provided when a mismatch is discovered and a tax burden is determined under Section 143 (1).
  3. Intimation determining refund – sent when any interest or tax is found to be refundable, either because there is no disagreement in the previously filed return or after making the adjustments described in Section 143(1) and crediting the taxpayer’s taxes and interest.
  • If there is a final tax liability, a demand letter will be delivered, and any refunds will be given to the taxpayer.

What must a taxpayer do upon getting a receipt of a 143 (1)?

Following receipt of a 143 (1), the taxpayer should take the following steps:

  • Review some elements in Section 143(1) intimation as a first step to ensure the document is for your return and the data presented is for the same financial year as stated in Section 143(1) intimation.
  • Check the following information: name, PAN, address, assessment year for which notice was given, and e-filing acknowledgement number.
  • If you can identify the errors you made while submitting your return from the 143(1) notice and they may be corrected by filing a revised return, please do so by login onto the IRS efiling website. 
  • If no errors have been made and you disagree with the adjustments made by the CPC/computerised system, you can file an online rectification application under Section 154(1) intimating the repair of the mistake appearing in the Section 143(1) intimation. Please see our page on how to file a correction application for more information.
  • You can also file online grievances or contact your assessing officer if you are dissatisfied with CPC’s handling of your rectification return. If the CPC/assessing officer does not respond satisfactorily, you can register a complaint with the income tax ombudsman.

However, if the taxpayer agrees to the tax demand made by the income tax department after making the aforesaid changes, the taxpayer must pay the taxes.

Nature of Adjustments made under 143 (1) 

After applying the following adjustments, total income or loss is determined under Section 143 (1):

  • In the return, there was an arithmetic error.
  • Any inaccurate claim that is obvious from any information in the return, where incorrect claim is defined as:

Example, income from other sources is deducted from business income but not declared under income from other sources.

  1. Allowance of set-off of losses carried over from previous years in which the return was filed after the statutory due date is disallowed.
  2. The audit report mentions a disallowance of expenditure, but the return of income does not include it.
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