Section 143(1) of the Income Tax Act - Summary Assessment without Presence or Calling of an Assessee

SECTION 143(1) OF THE INCOME TAX ACT,1961

An Assessing Officer completes an assessment on the basis of return and other documents submitted by an assessee. In this process, an Assessing Officer can complete the assessment without passing a Regular Assessment Order. The presence of an assessee or his/her Authorised Representatives is not required.

Generally, there are two steps procedures followed by Income Tax Authorities for assessment of an entity.

First Stage: Generation of Intimation through computerised processing

In the first stage all filed returns are processed to correct arithmetical mistakes, internal inconsistency, tax calculations and verification of tax payment. At this stage no verification of income has been taken and assessment completed through computerised processing and it is generally known as Intimation under Section 143(1) of the Income Tax Act, 1961.

Second Stage: Scrutiny Assessment

In this stage, certain percentage of returns filed are selected for scrutiny /audit on the basis of the probability of detecting tax evasion. At this stage, the Income Tax Department is concerned with verification of income of the assessee and tax evasion if any. This stage will be completed after passing an order under provisions of Section 143(3) of the Income Tax Act, 1961.

LET'S DISCUSS INTIMATION UNDER SECTION 143(1) [SUMMARY ASSESSMENT]

Total Income of an assessee shall be calculated under provisions of Section 143(1) of the Income Tax Act,1961 after below mentioned adjustments;

i) Any arithmetical error on the return or;

ii) An 'incorrect claim', if such incorrect claim is apparent from any information in the return;

iii) Disallowance of the expenditure indicated in the audit report but not taken into account in computing the total income in the return;

iv) Disallowance of loss claimed, if return of the previous year for which set off loss is claimed is furnished beyond the due date specified under Section 139(1) of the Act;

v) Disallowance of deduction claimed under Sections 10AA,80-IA,80-IAB,80-IC,80-ID or 80-IF, if the return is furnished beyond the due date specified under provisions of Section 139(1) of the Act;

vi) Other genuine mistakes, excess deductions claimed, doubtful claims under Chapter-VI A of the Act,1961.

OPPORTUNITY

Before making any adjustment, an opportunity shall be provided to the assessee to explain and rectify the same within 30 days of issuance of such intimation and the response so received shall be considered before making such adjustment.

If no response is received within period allowed, the adjustment of the amount indicated in the intimation to be made.

INTIMATION

After the adjustment/corrections, an intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to, the assessee. The amount of refund due to the assessee shall be grated to him.

Note: No intimation shall be sent after the expiry of one year from the end of financial year in which return is made. The acknowledgement of the return shall be deemed to be in the intimation in a case where no such is payable by, or refundable to, the assessee, and where no adjustment has been made.

SOME JUDICIAL DECISIONS

1. Easter Industries Limited Vs. UOI [2013]213 Taxmann 56(Delhi)

Where there is no information available in return that prima facie a claim or allowance is inadmissible, adjustments under Section 143(1)(a) cannot be made for lack of proof in support of claim made by the assessee.

2. Easter Industries Limited Vs. CIT [2014]220 Taxmann 159(Delhi)

Adjustment under Section143(1) is not possible to apply provisions of MAT.

3. Radharaman Jew Trust Fund Vs. ITO [2017] 83 Taxmann 159(Kolkata)

Assessing Officer has no power to change the status of an assessee under provisions of Section 143(1) of the Act.

4. Some High Courts / Tribunals decided that adjustments under provisions of Section 143(1)

are not possible in case of debatable issues. Suppose in a return filed by an assessee, there is a debatable issue, whether an expense falls under provisions of Section 35D or 37 then in this case adjustment is not possible.

TIME LIMIT FOR INTIMATION

Intimation for tax or interest or fee due under Section 143(1) should not be sent after expiry of one from the end of the financial year in which return is made.

Let’s consider for AY 2019-20 or FY 2018-19 the due date of filing of return of Income was 31^st July, 2019. Intimation may be sent up to March 31,2020.

DISCLAIMER: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness, and reliability of the information provided, author assume no responsibility, therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws and take appropriate advice of consultants. The user of the information agrees that the information is not professional advice and is subject to change without notice. Author assumes no responsibility for the consequences of the use of such information.