Comprehending Section 143(2) of the Income Tax Notice and Section 143(3) of the Scrutiny

When filing income tax returns in India, taxpayers must adhere to the Income Tax Act of 1961. Following the filing of your return, the Income Tax Department may send you a notification pursuant to Section 143(2) asking that the data in your return be examined to confirm the accuracy of the tax that is owed. We shall examine the procedure and ramifications of receiving an income tax notification under Section 143(2) and the ensuing investigation under Section 143(3) in this article.

What does Section 143(2) define as an Income Tax Notice?

In accordance with Section 143(2), the Income Tax Department notifies taxpayers that their tax returns have been chosen for review. This notice is usually sent after the department reviews the return and requests more information or supporting documentation from the taxpayer in order to finish the review process. The taxpayer has thirty days from the date of the notice, which can be sent electronically or by mail, to respond.

Why is there a Notice issued under Section 143(2)?

If the income tax department finds any differences in your income tax returns, no matter how small or large, a notice under Section 143(2) is sent. Underreporting revenue or overreporting losses are two examples of these disparities. The purpose of the message is to confirm that you haven't underpaid taxes in any manner.

The Section 143(3) Scrutiny Process

The following actions are part of the Section 143(3) inspection process:

• Income Tax Return Filing: You file your income tax return.
• The assessing officer notifies the parties in accordance with Section 143(2).
• Submission of Arguments and documentation: You and/or your tax advisor make your case and turn in any necessary declarations and documentation.
• Final Order: Under Section 143(3), a final order is made following consideration of all submissions, indicating whether the income reported in the income tax return has been accepted or if additional income has been added to the returned income.

Notice Types As Per Section 143(2)

Notices fall into two categories under Section 143(2):

• Computer-Assisted Scrutiny Selection (CASS): Cases are chosen according to predetermined criteria, and the scope of the examination is restricted to the specific return area specified in the notification.
• Total Inspection: The submitted return and its supporting documentation are thoroughly examined.

Effects of Disregarding a Notice in accordance with Section 143(2)

Section 143(2) notices are subject to penalties, amended tax assessments, and prosecution if they are ignored. To prevent severe repercussions, it is imperative that you reply to the notice within the specified time range.

Deadlines for Issuing Final Assessment Orders and Notices

Within three months following the end of the fiscal year in which the return was filed, the notice required by Section 143(2) must be sent out. Following the taxpayer's answer, the final assessment order under Section 143(3) must be passed within the allotted time frame.

Conclusion

In conclusion, getting an income tax notification under Section 143(2) can be intimidating, but in order to prevent any unfavorable outcomes, you must reply accurately and soon. Taxpayers can manage the complexities of the income tax rules and ensure compliance with the Income Tax Act of 1961 by knowing the procedure and ramifications of receiving an income tax notice under Section 143(2) and the scrutiny that follows under Section 143(3).

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