How to treat a notice under section 143(1)?

Is a communication under section 143(1) a notice or an intimation?

For purposes of the Income Tax Act an intimation is an automated communication that is generated at the CPC without human intervention.
A notice is sent out after your pre-processed income tax return has been read by a tax official.
When you submit your return, a computer program checks computation errors and the workflow routine sends out an intimation under 143(1).

What is an intimation under 143(1)?

This communication is sent to the tax assessee whenever any tax becomes payable or refundable or there arises an increase/ decrease in reported profit or loss after comparing documents such as form 16/ form 16A, form 26AS, audit statements and so on.

Every tax notice need not be a cause for worry! You should relax and read the letter before trying to think up a response.

You are expected to read and understand what corrections the tax authority wants you to make, if any. There will be 3 such situations:

1. Neither demand nor refund (no increase or decrease in loss)
2. Demand required
3. Refund required

Here’s what each of these phrases means:

1. Neither demand nor refund (no increase or decrease in loss)
   
   In this case, no outstanding tax demand could be determined nor was a refund found due even after adjustments/ amendments were made.
   
2. Demand required
   
   In this case, CPC computations have determined that taxes are due from you to the department. You then have the following options:
   1. Agree with Demand: All the computations made in the letter are correct and you will pay the amount according to following modes: through a physically existing bank branch, pay online.
      Online Payment Options:
      
      1. Payment at notified bank branch: A challan must be filed by the taxpayer specifying his PAN, name, Assessment Year and value of tax that is due. You can download a blank challan copy from the income tax login portal. Fill in the details. And submit them to the bank. Ensure that you have ticked Tax on Regular Assessment (400), under the head “Type of Payment”. Your bank will return a stamped copy certifying receipt of money. The assessee is required to keep a copy of this challan for her personal record.
      2. You can also make the payment online at the tin nsdl site after selecting challan 280 and going on to the e-payment form.

1. Disagree with demand: If you have a genuine tax deduction or income that was inadvertently omitted in your ITR form or other errors apparent from record then you may file either a revised return or a rectified return.
   1. Revised Return: A revised return is filed to correct inadvertent mistakes/ omissions or commissions in the original return.
   2. Rectification/ rectified return: A Rectification return should be filed only if you find any error in an order passed by the IT Department. In this case it is necessary to mention the reference number for the last communication made to you by the tax authority.
2. Refund determined: An income tax refund amount may be determined to be due to the taxpayer by the Income Tax Department after adjustments have been made and your tax credit still exceeds what was due post addition of interest.
   Now, if the refund calculated in the intimation is less than what was owed as per your income tax return, then you must first check the computations in the intimation. Based on this scrutiny, you may decide upon any of the actions described below:
   1. Agree with less refund amount: After personal scrutiny you may choose this option if the computations are correct and you have no disputing fact to prove.
   2. Disagree with less refund amount: If you disagree with the reduced or less refund amount then, you will be required either to file a rectification or revised return which will depend upon the scrutiny of your income tax return and intimation u/s 143(1).
      1. Revised Return A revised return is filed to correct inadvertent mistakes/ omissions or commissions in the original return.

Rectification/ rectified return: A Rectification return should be filed only if you find any error in an order passed by the IT Department. In this case it is necessary to mention the reference number for the last communication made to you by the tax authority.