Section 143(1) Income Tax Notice– Every year, a tax return must be filed by anybody with taxable income. The income tax division would review the tax return once it was pointed out to look for any irregularities. A summary assessment under Section 143(1) may be done without contacting the assessee if the inaccuracies in an income tax notification are minimal.

As a result, Section 143 income tax notices are the most common type of tax notification issued by the IRS (1). When a taxpayer receives an income tax notice, they could try to understand it and obediently follow the tax officer’s instructions without becoming alarmed. In this piece, we’ll take a closer look at the Section 143 income tax notification (1).

Section 143(1) Income Tax Notice

When Section 143(1) Tax Notice is Issued

Without first calling the taxpayer, a tax notice under Section 143(1) of the Income Tax Act may be issued to start a quick assessment. Section 143(1) notifications are based on the automated processing of tax returns with no human intervention. In contrast to a scrutiny assessment, a summary assessment would not call for more data or paperwork from the Income Tax Department.

Summary Assessment under Section 143(1)

After automated verification of the tax return filed, an income tax notification under Section 143(1) will be issued in any of the following scenarios:

  1. Any mathematical mistakes in the return;
  2. It is an erroneous claim if a claim seems to be wrong in the tax return filed.
  3. If the return for the prior year for which the set-off of loss is claimed was filed after the deadline for submitting an income tax return, the loss claimed would be rejected.
  4. Disallowance of expenses recognized in the audit report but not included in the return’s total income computation (beginning with AY2017-18);
  5. The deduction claimed under Sections 10AA, 80-IA, 80-IAB, 80-IC, 80-ID, or 80-IE would be rejected if the return was filed beyond the due date specified in Section 139. (1).
  6. Revenue from Form 26AS, Form 16A, or Form 16 that hasn’t been incorporated into the return’s total income;
  7. Information in the same or separate return contradicts another entry;
  8. For example, donation information is required to authenticate an entry that has not been given.
  9. If any deduction exceeds the statutory maximum.

Responding to Tax Notice

After implementing the changes listed below and crediting the taxes and interest paid, the assessee must pay additional tax. The taxpayer will be required to pay the obligation in this instance within 30 days. After making the modifications outlined below and crediting the taxes and interest paid, the tax is refundable to the taxpayer. The assessee’s declared loss has changed, whether for the better or worse, and neither tax nor interest is due from the assessee.

Time Limit

Within a year after the end of the financial year in which the return of income is lodged, an assessment under section 143(1) may be made. As a result, the notice of tax or interest owed under Section 143(1) would not be issued till one year has passed since the end of the financial year in which the return was made.

Process for Responding to Income Tax Notice under Section 143(1)

The assessee receives a tax notice under section 143(1) stating the amount of tax determined to be owing by the taxpayer or the amount of refund payable to the taxpayer. The acknowledgement of the return of income shall be regarded as the intimation if there is no money due or refundable. The IRS should make the taxpayer aware that receiving a notification does not obligate them to appear in person before the authorities. The recipient’s physical or electronic response to the notice is adequate in many situations. If a taxpayer receives a notification under Section 143(1), they have 15 days from the date of the notice to alter their return.

If the taxpayer fails to reply to the income tax notice within the timeframe indicated in Section 143(1), the income tax return will be completed once the necessary changes mentioned in the income tax notice are made.

Follow the steps below to respond to an income tax notification issued under Section 143(1):

Step 1: Go to the IRS E-Filing website and log in to your account.

Step 2: Select E-Assessment/Proceedings from the E-Proceedings menu.

Step 3: Under Section 143(1), select Prima Facie Adjustment (a).

Step 4: The information of the notice you received will be shown. To begin the process of 

sending the response, click Submit.

Step 5: You will now see a list of all identified mismatches. To respond to the mismatch, click the drop-down next to the Response.

Step 6: If you have any further facts or explanations, add them to the rationale or remarks section.

Step 7: Before submitting your response, attach any supporting papers that pertain to the amount of the disparity.

Step 8: Press the “Submit” button. An acknowledgement will be sent once the response has been submitted.