Intimation under Section 143(1) of the Income Tax Act refers to the statutory, automated processing of all Income Tax Returns (ITRs) by the Centralised Processing Centre (CPC). This process applies to returns filed under Section 139 or in response to a Section 142(1) notice, focusing on verifying and correcting arithmetical errors, apparent errors, tax calculations, and tax payments. Crucially, the CPC undertakes no verification of the income at this preliminary stage. The computation of total income or loss involves making six specific adjustments. These include correcting any arithmetical error and disallowing an incorrect claim apparent from the information in the return. An “incorrect claim” is defined as a claim inconsistent with another entry, one lacking required substantiating information, or a deduction exceeding a specified statutory limit (monetary or percentage-based). Furthermore, the CPC must disallow any claimed loss set-off if the previous year’s return was filed after the due date, and similarly disallow deductions under Section 10AA or Chapter VI-A if the return was furnished beyond the specified due date. Any expenditure disallowance or income increase indicated in an audit report but not reflected in the return is also factored in. The intimation must be issued within nine months from the end of the financial year in which the return was furnished. Prior to making any adverse adjustment, the assessee is granted an opportunity to explain and rectify the error or claim within 30 days of the intimation’s issue date. This response must be submitted electronically through the taxpayer’s e-filing account, without requiring any physical departmental visit.
Q.1 What is intimation under Section 143(1)?
Ans. Intimation refers to the processing of returns by the Centralised Processing Centre (CPC). In this, all Income-tax returns filed under Section 139 or in response to a notice under Section 142(1) are processed to verify and fix the arithmetical errors, apparent errors, tax calculation, and tax payments. At this stage, no verification of the income is undertaken.
Q.2 Which adjustments shall be made by CPC to compute total income or loss while processing the ITR?
Ans. Income-tax return is processed to compute total income or loss after making the following adjustments:
a. Any arithmetical error in the return;
b. An incorrect claim apparent from any information in the return;
c. Any such inconsistency in the return, with respect to the information in the return of any preceding previous year, as may be prescribed
d. Disallowance of loss claimed if the return of the previous year for which set-off of loss is claimed was furnished beyond the due date;
e. Disallowance of expenditure or increase in income indicated in the audit report but not considered in computing the total income in return;
f. Disallowance of deduction claimed under Section 10AA or Chapter VIA under the heading “C-Deductions in respect of certain incomes”, if the return of income is furnished beyond the specified due date;
Q.3 What is the meaning of an incorrect claim?
Ans. ‘An incorrect claim apparent from any information in the return’ means a claim on the basis of an entry in the Income-tax return:
a. Which is inconsistent with another entry of the same or some other item in such return;
b. In respect of which, information required to be furnished to substantiate such claim, has not been furnished;
c. In respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction.
Q.4 What is the time limit to issue intimation under section 143(1)?
Ans. Intimation is required to be issued within 9 months from the end of the financial year in which the return is furnished by the assessee.
Q.5 What is the time limit allowed to the assessee to explain and rectify the arithmetical error or incorrect claim found by the CPC?
Ans. Before making any adjustment, an opportunity shall be provided to the assessee to explain and rectify the arithmetical error or incorrect claim within 30 days from the date of issue of intimation.
Q.6 How to submit the response against the adjustment made by the CPC?
Ans. The response against the adjustment made by CPC has to be submitted through the e-filing account of the assessee without any need to visit the income tax department.
(Republished with amendments)
