Introduction
As the Income Tax Department initiates scrutiny for Assessment Year (AY) 2024–25, many taxpayers are receiving notices under Section 143(2) of the Income Tax Act, 1961. If you’ve received one, don’t panic—but don’t ignore it either.
This blog provides a complete guide on:
– What the notice means
– Why you received it
– What steps to take next
– How to respond
– What happens if you ignore it
What is a Section 143(2) Notice?
A Section 143(2) notice is issued by the Income Tax Department when your Income Tax Return (ITR) is selected for scrutiny assessment. This means the department has some reason—based on discrepancies, risk indicators, or even random selection—to further investigate the details of your filed return.
Why Was Your Return Selected for Scrutiny?
The selection is often automated under the Computer Aided Scrutiny Selection (CASS) system. Common triggers include:
– High-value transactions (property, cash, foreign assets)
– Mismatch in Form 26AS, AIS, or TIS vs ITR
– Incorrect claim of deductions (e.g. 80C, 80D) or losses (e.g. business or capital)- GST mismatch (for businesses)
– Use of incorrect ITR form
– Claims under HRA or LTA without proof
– Reporting of cryptocurrency or mutual fund gains without documentation
Timeline & Assessment Process
All communication happens via the e-Proceedings portal under the Faceless Assessment Scheme (Section 144B).
Timeline Overview:
– 143(2) Notice: Within 3 months from end of FY in which return was filed
– Section 142(1) Notice: Detailed questionnaire and document reques
– Submission Deadline: 7 to 30 days; extensions possible
– Final Assessment: Within 12 months from end of AY
Types of Scrutiny
– Limited Scrutiny: Focus on specific issues (e.g., capital gains)
– Complete Scrutiny: Entire return is reviewed
– Manual Scrutiny: Based on specific CBDT criteria
Documents Required
– Filed ITR and computation
– Bank statements
– Form 26AS, AIS, TIS
– Proof of deductions (80C, 80D, etc.)
– Rent agreements, travel bills (for HRA/LTA)
– Business documents, GST filings, Form 3CD
Consequences of Ignoring the Notice
– Best Judgment Assessment under Section 144
– Disallowance of deductions and losses
– Additional tax liability up to 78% under Section 115BBE
– Interest and Penalties
– Prosecution Risk under Section 276C (up to 7 years)
How to Respond Effectively
– Login to incometax.gov.in and check for notices
– Read and understand the notice
– Gather documents
– Submit point-wise reply
– File for extension if needed
– Consult a CA for complex matters
Best Practices for Compliance
– Monitor your email, SMS, and tax portal regularly
– Respond on time
– Maintain documents digitally
– Keep PAN, email, and mobile updated
Professional Help Matters
Professionals can:
– Identify legal flaws
– Raise procedural objections
– Defend based on deadlines and errors in notice
– Protect your rights effectively
How Apurv Kansal & Co. Can Help
– Review your ITR, AIS/TIS, and 26AS
– Draft replies to notices
– Upload documents and communicate with the department
– Represent you under the faceless assessment scheme
– Appeal support if needed
Conclusion
Receiving a notice under Section 143(2) doesn’t have to be stressful. With timely response, proper documentation, and expert support, you can manage the scrutiny process smoothly.
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Author: CA Ena Kansal, Apurv Kansal and Company, Chartered Accountants, Indore. The author is a practicing Chartered Accountant and a renowned trainer with expertise in Audits, Direct and Indirect Taxes. She can be reached at ena@apurvkansal.co.in or 8109825451.
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