Intimation Under Section 143(1) of Income Tax Act

Section 143(1) of the Income Tax Act involves the initial assessment of a taxpayer’s return. The Central Processing Centre (CPC) calculates total income, tax liability, and potential refunds based on the provided information. After the assessment, the taxpayer receives an intimation detailing the computed tax liability or refund. If the taxpayer agrees with the adjustments then no action is required. However, if there are any discrepancies or disagreements then the taxpayer needs to provide clarification or file a revised return.

The Central Processing Centre (CPC) is being set up by the Central Board of Direct Taxes (CBDT). The purpose of the CPC is to centralize the processing of the returns with a view to promptly determining the tax liability or refund due to the taxpayer. The CPC project brought advantages to both taxpayers and the tax department. For taxpayers, it meant quicker and smoother initial processing of their returns. Additionally, it eased the department’s workload by automating preliminary assessments, allowing them to focus on more substantial tasks.

Preliminary Assessment

The initial processing of return is completely automated and the intimation u/s 143(1) is also a computer-generated document. While processing returns CPC validates the information provided in the filed return with the details available with the department such as TDS returns, Form 26AS, etc.

The process flow of the Preliminary Assessment is as follows:

• After submitting the return, the total income or loss will be re-calculated by the computerized system based on the information available to the department.
• Verification is to be done for major categories such as:
  • Incomes under various heads
  • Gross total income
  • Deductions under chapter VIA
  • TDS and tax paid by the taxpayer in the form of Self Assessment tax and Advance Tax
• Once the verification is completed, relevant adjustments will be made to income computed as per section 143(1), and final tax liability or refund will be calculated.
• Such proposed adjustments will be notified to the taxpayer by issuing an intimation letter. The taxpayer has to provide a response to such intimation within the prescribed time limit.
• If the response is received by the department then they will make final adjustments accordingly. However, if a response is not received by the taxpayer then the proposed adjustment will be considered as final adjustment.
• After determining the final tax liability, the same will be adjusted against TDS and other relief claimed u/s 90/91 if any.
• After such adjustments, the final intimation will be sent to the taxpayer.

Types of intimation:

• Intimation with No Demand or No Refund:
  The department accepts the taxpayer’s filed return without making any adjustments. In this scenario, there will be no additional tax liability or refund.
• Intimation with Demand:
  The department will issue an intimation with a tax demand when there are adjustments resulting in additional tax liabilities to be paid by the taxpayer.
• Intimation with Refund:
  If after making final adjustments the tax liability is lower than the taxes already paid by the taxpayer while filing the return, the remaining amount of taxes will be refunded to them.

Types of Adjustments under section 143(1)

The department may issue an intimation letter if it needs to make any of the following adjustments in the filed income tax return:

• Any arithmetical error.
• Incorrect claims which are apparent from the information in the filed return.
• Disallowance of expenses which are reported in audit report but not reported in income tax return.
• Disallowance of the set-off of losses from the previous year when the return for the related year is filed beyond the prescribed due date.
• Addition of income which is reflected in Form 26AS/16A/16 but not reported while filing the return.
• An inconsistency arises when a declaration within a tax return contradicts another entry within the same return or in a different section of the return.

Communication of Intimation under section 143(1)

The letter of intimation u/s 143(1) can be received by email or mobile number registered on the income tax portal. Further, the sender of the intimation will be the Central Processing Centre (CPC).

Time Limit for the issue of Intimation under section 143(1)

The income tax department can issue an intimation u/s 143(1) within 9 months from the end of the financial year in which the taxpayer has filed the return.

For example, Jay filed his income tax return on 20th July 2023 for the financial year 2022-23. In such case, the income tax department can send intimation u/s 143(1) up to 31st December 2024, which is 9 months from the end of the financial year 2022-23 in which the return was filed.

If a taxpayer doesn’t receive any communication within this timeframe, it indicates that there have been no alterations or revisions made to the initially filed Income Tax Return. This means there are no modifications in the tax liability or the refund due. Hence, the filed return is considered as having received an intimation under Section 143(1).

Steps to download Intimation under Section 143(1)

1. Login to the e-filing portalLogin to the income tax website using valid credentials.
2. Navigate to View Filed ReturnsGo to e-file > Income Tax Returns > View Filed Returns
3. Click on View DetailsFor the relevant Assessment Year, click on View Details

Download Intimation Order under Section 143(1)

In the next step, taxpayers can see the status of each filing stage. If it shows ‘Processed’, they can download the intimation by clicking on ‘Download Intimation Order’.

1. Open Intimation Order under Section 143(1)The intimation order is password-protected. The password to open the intimation letter is PAN in lowercase and the date of birth (DDMMYYYY) is without any space. Eg: PAN is AAAPA1234A and the date of birth is 01/01/2000. The password would be aaapa1234a01012000.

Response to Intimation under section 143(1)

Upon receiving the intimation, the taxpayer should initially verify the correctness of the information provided. This includes confirming details such as the Name, PAN, Assessment year, etc.

Case scenario	Action
The taxpayer’s filed return matches the department’s calculations, resulting in no additional tax demand or refunds.	In such cases, no actions are required from the taxpayer. And in cases where excess tax are paid the refund amount will be credited to their pre-validated bank account.
As per the calculations of the department, the tax liability is lower however while filing the return taxpayer has paid excess taxes.	In this case, no actions are required by the taxpayer and the refund will be credited to their pre-validated bank account.
There are a few errors in the return filed by the taxpayer.	The taxpayer needs to file a revised return u/s 139(5).
The tax liability as per the calculations of the department is higher than the tax paid by the taxpayer while filing a return.	If the taxpayer Agrees: They need to pay the outstanding demand and file a response. If the taxpayer Disagrees: They need to file a Rectification request u/s 154.

Consequences of Non-response

If the taxpayer receives the intimation letter under section 143(1), they must respond within the specified time limit. Failure to do so will result in the department treating the proposed adjustments as final. They will then calculate the ultimate tax liability or refund. Once these final calculations are done, the taxpayer will receive the final intimation letter.