Budget 2016: Under the existing provision of sub-section (1 D) of section 143, processing of a return is not necessary where a notice has been issued to the assessee under sub-section (2) of the said section.

It is proposed to amend sub-section (1D) of the aforesaid section to provide that before making an assessment under sub-section (3) of section 143, a return shall be processed under sub-section (1) of section 143.

The amendment will take effect from the 1st day of April, 2017 and will, accordingly apply in relation to assessment year 2017-2018 and subsequent years.

Clause 66 of Finance Bill 2016

Clause 66 of the Bill seeks to amend section 143 of the Income-tax Act relating to assessment.

Sub-clause (a) of the said clause seeks to amend clause (a) of sub-section (1) of said section.

Clause (a) of sub-section (1) of the aforesaid section provides that a return filed is to be processed and total income or loss is computed after making the adjustments on account of any arithmetical error in the return or on account of an incorrect claim, if such incorrect claim is apparent from any information in the return.

It is proposed to expand the scope of adjustments that can be made at the time of processing under sub-section (1) of the said section to further include adjustments as under:–

(v) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed is furnished beyond the due date specified under sub-section (1) of section 139;

(vi) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return;

(vii) 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 sub-section (1) of section 139; or

(viii) addition of income appearing in Form 26AS or Form 1 6A or Form 16 but not included in computing the total income in the

It is further proposed to provide an opportunity to the assessee, before making any adjustment under clause (a) of sub-section (1) of section 143 to explain and rectify the same within thirty days of issuance of such intimation and the response so received be considered before making such adjustments. In case no response is received within such time, the adjustment of the amount indicated in the intimation be made.

Under the existing provision of sub-section (1D) of the said section 143, processing of a return is not necessary where a notice has been issued to the assessee under sub-section (2) of that section.

It is proposed to amend sub-section (1D) of the said section so as to provide that before making an assessment under sub-section (3) of that section, a return shall be processed under sub-section

(3) of section 143.

These amendments will take effect from the 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years.

Sub-clause (b) of the said clause seeks to substitute sub-section

(4) of the said section. The existing provisions of sub-section (2) of the aforesaid section provide that, if the Assessing Officer under the circumstances specified therein shall serve on the assessee a notice requiring him to produce, or cause to be produced on a specified date, any evidence on which the assessee may rely in support of the return.

It is proposed to substitute the said sub-section (2) so as to provide that notice under the said sub-section may be served on the assessee by the Assessing Officer or, as the case may be, the prescribed income-tax authority under the circumstances specified therein requiring him to produce or caused to be produced on a specified date before the Assessing Officer any evidence on which the assessee may rely in support of the return.

This amendment will take effect from 1st June, 2016.

[Clause 66]

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