ALL YOU NEED TO KNOW ABOUT VARIOUS NOTICES UNDER
INCOME TAX ACT, 1961
In this blog we shall be discussing about various notices and Intimations under the Income Tax Act 1961 which as a CA student or Taxpayer you must be aware of. Following Notices and the Intimations under the Income Tax Act 1961 shall be discussed in detail in this blog :
1) Notice u/s 133(6) Power to call Information
2) Intimation u/s 139(9) Defective Return
3) Intimation u/s 143(1)(a) Prima facie Adjustments
4) Notice u/s 142(1) Inquiry before Assessment
5) Notice u/s 143(2) for Scrutiny Assessment
6) Notice u/s 148 Power to make Reassessment
7) Notice u/s 154 Rectification of Mistake
8) Notice u/s 156 Notice of demand
9) Notice u/s 153A/153C Assessment in Search Cases
10) Intimation u/s Set off of refunds against tax remaining payable 245
To start with we must understand the difference an Intimation and a notice. Intimation is just the outcome of processing of return and we are not required to act on every intimation except in case of certain intimations whereas we are mandatorily required to act when notice is received from the income tax act.
I) Notice u/s 133(6) Power to call Information
Under Section 133(6) AO, Deputy Commissioner Appeal, Joint commissioner or the commissioner (Appeals) may for the purposes of the act require any person, including a banking company or any officer thereof to furnish information in relation to such point or matters or furnish statements of accounts which in their opinion will be useful for or relevant to, any enquiry or proceeding under the act.
For Example: Assessee may be required to required to furnish names and addresses of persons to whom he has paid interest, commission, brokerage, royalty etc. or a dealer of stock or commodity exchange may be required to furnish the details of persons who have purchased or sold shares/commodities. Moreover, Notice u/s 133(6) can be served on a Banking company requiring it to furnish details of the saving bank account holders where cash deposit exceeds a specified limit during say Rs. 10 lakhs.
The information may be sought from any person whether he has filed return or not and whether any proceeding under the act is pending or not in respect of such person. Provided that the power in respect of an inquiry, in a case where no proceeding is pending, shall not be exercised by any income-tax authority below the rank of Principal Director or Director or Principal Commissioner or Commissioner, other than the Joint Director or Deputy Director or Assistant Director, without the prior approval of the Principal Director or Director or, as the case may be, the Principal Commissioner or Commissioner.
II) Intimation u/s 139(9) Defective Return
Where AO considers that ROI furnished by assessee is defective, he may intimate the defect to the assessee and give opportunity to rectify the defect within a period of 15 days from the date of such intimation or within such further period as may be allowed by assessing officer.
If the defect is not rectified within said period of fifteen days or such further period as may be allowed by AO, the return shall be treated as invalid.
Some reasons where Notice u/s 139(9) can be sent for defective Return:
1) If all columns relating to COI chargeable under each head of income, GTI (before deductions) and Total Income has not been duly filled.
2) Where ROI has been filed but no details of audit has been given where tax audit is mandatory u/s 44AB.
3) If details of TDS, TCS, Advance Tax have not been paid or erroneously claimed.
4) In case where regular books of account are maintained, the balance sheet or profit & loss account have not been filled.
III) Intimation u/s 143(1)(a) Prima facie Adjustments
Where a return has been furnished u/s 139 or in response to a notice u/s 142(1), total income or loss hall be computed after making the following exhaustive list of adjustment:
(i) any arithmetical error in the return;
(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return;
(iii) disallowance of loss claimed, if return of income of the PY for which set off was claimed was furnished after due date u/s 139(1)
(iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return;
(v) disallowance of deduction claimed under sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80-IE, if the return is furnished beyond the due date specified under 139(1)
No adjustment shall be made u/s 143(1)(a) unless intimation is given to assessee of such adjustment either in writing or electronic mode. Assessee will be required to respond to the intimation within 30 days of issue of such intimation and the response received (if any) shall be considered before making any adjustment.
Intimation u/s 143(1) shall be sent in the following three cases only:
1) Where tax or interest or fee u/s 234F is found payable after making adjustments u/s 143(1) and after giving credit of taxes and interest paid.
2) Where any tax or interest is found refundable after making adjustments u/s 143(1) and after giving credit of taxes and interest paid.
3) Where adjustment referred to in section u/s 143(1) have been made resulting in increase/reduction of loss declared by the assessee and no tax or interest or fee u/s 234F is payable by the assessee
In any other case acknowledgement is deemed intimation u/s 143(1). No revision u/s 263/264 can be made against the intimation however intimation and deemed intimation can be rectified u/s 154 and appeal can be filed to CIT(A) against intimation u/s 143(1). The Intimation u/s 143(1) is deemed notice of demand u/s 156 and demand in intimation should be paid within 30 days from the date of receipt of intimation. Intimation can be sent till 1 year from the end of FY in which return is filed.
IV) Notice u/s 142(1) Inquiry before Assessment
This notice is sent by department when they want to do investigation and wish to gather evidence before making assessment.
142(1)(i): If ROI has not been furnished u/s 139(1) then AO may issue notice requiring assessee to furnish ROI within time specified in the notice and this notice can be given even after the end of relevant AY.
142(1)(i): By issuing notice u/s 142(1)(ii) the assessing officer can require assessee to furnish accounts, documents, other information, statement of assets and liabilities whether included in books or not. However, AO shall obtain previous approval of JCIT before requiring assessee to furnish statements of Assets and liabilities not included in Books of Accounts and moreover such notice cannot require production of accounts relating to period more than 3 years prior to previous year.
Service of Notice u/s 142(1) is mandatory and with E-Assessment now, service of the Notice u/s 142(1) under E-mode is compulsory.
If assessee fails to comply with Notice u/s 142(1) then it may lead to BJA u/s 144, Penalty u/s 272A of Rs. 10000/- for each failure or Prosecution u/s 276D wherein imprisonment can extend upto 1 year.
V) Notice u/s 143(2) for Scrutiny Assessment
Notice u/s 143(2) is given for making assessment u/s 143(3) which is commonly called as Scrutiny Assessment and such notice has to be served within 6 months from the end of financial in which return is furnished.
Where a return has been furnished u/s 139 or in response to notice u/s 142(1) and AO or the prescribed IT Authority considers it necessary or expedient to ensure that assessee has not understated income, or has not computed excessive loss, or has not underpaid tax in any manner shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the AO or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return.
Where no return of Income has been furnished, notice u/s 143(2) cannot be issued and hence assessment cannot be made u/s 143(3)
If assessee fails to comply with Notice u/s 143(2) then it may lead to BJA u/s 144, Penalty u/s 272A of Rs. 10000/- for each failure or Prosecution u/s 276D wherein imprisonment can extend upto 1 year.
VI) Notice u/s 148 Power to make Reassessment
For making assessment u/s 147 in case of income escaping assessment, notice is required to be issued u/s 148 within the time limit as prescribed u/s 149(1).
Notice shall require assessee to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act
The AO shall, before issuing any notice under this section, record his reasons for doing so. AO is bound to supply to the assessee, the reasons recorded by him for issue of notice u/s 148 after assesee has filed ROI in response to issue of notice u/s 148.If reasons are invalid then assessee can file a writ petition in HC challenging issue of Notice and HC can quash the notice u/s 148.
Where a ROI has been filed in response to sec 148, then notice u/s 143(2) must be served within 6 months from the end of the month in which return was filed otherwise assessment/reassessment u/s 147 shall be void.
VII) Notice u/s 154 Rectification of Mistake
To rectify any mistake apparent from record i.e. where no two views are possible, an Income tax authority u/s 116 may:
a) amend order passed by it.
b) amend any intimation or deemed intimation u/s 143(1)
c) amend any intimation passed u/s 200A- TDS Intimation
d) amend any intimation passed u/s 206CB- TCS Intimation
The amendment/rectification can be made only by passing an order. No amendment shall be made u/s 154 after the expiry of 4 years from the end of FY in which order sought to be amended was passed.
The Income tax authority can disallow a deduction u/s 154 on the basis of later SC Judgement. But in this case to the rectification order has to be passed within the prescribed period of 4 years.
VIII) Notice u/s 156 Notice of demand
When any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under Income Tax Act 1961, the Assessing Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable.
Where any sum is determined to be payable by the assessee or the deductor or the collector under sub-section (1) of section 143 or sub-section (1) of section 200A or sub-section (1) of section 206CB, the intimation under those sub-sections shall be deemed to be a notice of demand.
IX) Notice u/s 153A/153C Assessment in Search Cases
Sec 153A provides that Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, the AO shall issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years preceding AY relevant to PY in which search is initiated.
As per amendment by FA 2017 the period of 6 shall be extended to 10 AY if AO has evidence that income escaped or likely to escape assessment is Rs. 50 lakhs or more in any or all of these Relevant AYs
Sec 153A provides that Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where AO is satisfied
a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or
b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to,
a person other than the person referred to in section 153A, then, the books of account or documents or assets, seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A.
X) Intimation u/s Set off of refunds against tax remaining payable 245
Where under any of the provisions of this Act, a refund is found to be due to any person, the Assessing Officer, Deputy Commissioner (Appeals), Commissioner (Appeals) or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, as the case may be, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this section.
I have tried to give overview of each notice under income tax act which assesses usually get. The contents of this Blog are solely for informational purpose. It does not constitute professional advice.
Jeet Parekh: Thanks for sharing!