SEC-143

Section 143 of the Income Tax Act: Assessment Procedures

Overview: Section 143 of the Income Tax Act, 1961, outlines the procedures for the assessment of income tax returns filed by taxpayers. It details the process for preliminary verification, scrutiny assessments, and regular assessments by the income tax authorities.

Key Provisions Under Section 143:

Section 143(1) – Summary Assessment Without Calling the Assessee:

• Initial Processing: The return of income filed by the taxpayer is initially processed by the Centralized Processing Centre (CPC) to check for any arithmetical errors, incorrect claims, disallowances, and mismatches between income and tax credit.
• Intimation to Assessee: If any adjustments are made during processing, an intimation is sent to the taxpayer under Section 143(1). The intimation serves as a notice of demand if there is any tax payable or a notice of refund if there is any excess tax paid.
• Time Limit: The intimation must be sent within 9 months from the end of the financial year in which the return is filed.

Section 143(2) – Notice for Scrutiny Assessment:

• Selection for Scrutiny: If the Assessing Officer (AO) considers it necessary to ensure the correctness of the return filed, they may issue a notice under Section 143(2) to the taxpayer. This notice is usually issued for detailed examination of the return.
• Time Limit for Issuing Notice: The notice under Section 143(2) must be served within 3 months from the end of the financial year in which the return is filed.

Section 143(3) – Regular/Scrutiny Assessment:

• Hearing and Verification: After issuing the notice under Section 143(2), the AO conducts a detailed inquiry and verification of the return. This includes examining the books of accounts, supporting documents, and any other evidence provided by the taxpayer.
• Assessment Order: Based on the inquiry, the AO passes an assessment order determining the total income or loss of the taxpayer and the amount of tax payable or refundable. The order must be passed within the specified time limits.

Section 143(1A) and 143(1B) – Adjustments and Provisions:

• Adjustments: Under Section 143(1A), the AO can make adjustments for arithmetical errors, incorrect claims, or any item inconsistent with information available with the department.
• Provisions for Certain Classes: Section 143(1B) allows the Central Government to make schemes for the centralized processing of returns for certain classes of taxpayers.

Section 143(1D) – Provisional Assessment:

• Provisional Assessment: This section provides that if a notice under Section 143(2) is issued, the processing of the return under Section 143(1) is kept in abeyance until the completion of scrutiny assessment.

Time Limits for Completion of Assessments:

• Regular Assessment (Section 143(3)): The assessment must be completed within 21 months from the end of the assessment year in which the income was first assessable.
• Extended Time Limit: In certain cases, the time limit may be extended as specified under the Act.

Taxpayer's Rights and Responsibilities:

• Responding to Notices: Taxpayers are required to respond to notices under Section 143(2) by providing necessary information and documents.
• Representation: Taxpayers have the right to be represented by a tax professional or legal counsel during the assessment proceedings.
• Filing of Appeals: If dissatisfied with the assessment order, taxpayers have the right to appeal to higher authorities, such as the Commissioner of Income Tax (Appeals) or the Income Tax Appellate Tribunal.

How GargeFilings Can Assist:

• Notice Handling: Assisting clients in responding to notices under Sections 143(1) and 143(2) promptly and accurately.
• Document Preparation: Helping prepare and organize necessary documents and evidence for scrutiny assessments.
• Representation: Representing clients before the income tax authorities during the assessment process.
• Compliance Advisory: Providing expert advice on compliance and mitigation of potential tax liabilities.
• Appeals Support: Assisting in the preparation and filing of appeals against adverse assessment orders.

GargeFilings ensures that you navigate the complexities of Section 143 with expert advice and support, safeguarding your interests and ensuring compliance with tax regulations.