Demand Under Sec 143 (1) And Rectification

DEMAND U/S 143(1)

At times, income taxpayers get an intimation of demand from the Department u/s 143(1)/143(1A).

Most of such cases are generated due to the discrepancy in income tax return and the documents on the basis of which such return is prepared including TDS certificates, Form 16/Form 16Aor Form 26AS etc. 

RECTIFICATION U/S 154

Income Tax Act provides for the rectification u/s 154 for the cases where demand has been intimated under above said section 143(1)/143(1A).

The taxpayer should collect all relevant documents including Form 16 (in case of salaried employees), Form 16A, TDS Certificates, Form 26AS and Computation of total income etc.

On the basis of the above documents,a proper rectification request should be prepared and submitted to the income tax department.

PROVISION OF THE ACT WHERE TDS IS NOT DEPOSITED/WRONGLY DEPOSITED

The Income Tax Department may deny credit of TDS in cases where TDS is available in Form 16/Form 16A/TDS Certificates but not available in Form 26AS. Also in some cases, employer/deductor may not have deposited the said TDS or deposited in wrong PAN number. In such cases, provision u/s 5 of the Income Tax Act, 1961 shall be helpful to the taxpayer/professional.

SOME IMPORTANT CASE LAWS WHERE TDS IS NOT DEPOSITED/WRONGLY DEPOSITED

There are various judgments of the different Hon’ble High Courts where it has been decided that if the TDS is reflecting in Form 16/Form 16A or TDS certificates or the fact of TDS deduction is established, then the Department must provide the credit of the same to the concerned assessee and he/she shall not be called upon to pay the tax again to the extent to which tax has been deducted.

Taxpayers / Professionals may take help of following case laws in above-mentioned situations:

• SumitDevendraRajani Versus Assistant Commissioner Of Income Tax
• ACIT vs. Om PrakashGattani (2000) 242 ITR 638.
• YashpalSahni vs. ACIT(2007) 293 ITR 539.
• Smt. Anusuya Alva vs. Deputy Commissioner of Income Tax and Others(2005) 278 ITR 206 (Karn).
• Commissioner of Income Tax vs. Ranoli Investment P. Ltd. and Others(1999) 235 ITR 433(Guj).

The author is a Mumbai based, Practicing Chartered Accountant and can also be reached at  cabrijesh@yahoo.co.in

Disclaimer: This write up is only for awareness purpose and professional opinion may be required in specific cases depending upon the particular facts.