As we all are aware that, Finance Act, 2017 has come up with an amendment in Section 143(1)(a) i.e an insertion of point (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return.
After this amendment most of the tax payer has received notices u/s 143(1) regarding Mismatch of Income with Form 16/16A. Therefore this post is dedicated to this matter and discussing in details the reason behind issuing notices to taxpayers and how to respond to the communication (notice) received from CPC regarding this matter.
This amendment is going to hit hard for those Income Tax Assessee’s (Majorly Salaried Employees) who used to make manipulative claims of allowances (LTA, medical, HRA etc) or deductions (Section 80C, 80D) in Return of Income and claims refund of TDS deducted from Salary. Let’s discuss the section and the impact of amendment made. According to this section, on filing Return of Income, Department will process the return of income after making following adjustments:
(i) any arithmetical error in the return;
(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return;
1. If assessee has claimed any allowance or deduction while filing return of income, which was not considered by employer in Form 16, then he/she must compulsorily face the Income Tax Notice enquiring the same. If assessee failed to response that notice within 30 days, then differential amount between Form 16 and Return of Income will be automatically added to his income and return would be processed accordingly. In simpler language, everyone will get notice unless Income shown in Return matches exactly or more than the Form 16/16A. So, before making any such claim now in return of income, ensure that you have valid evidences for same. Sample Notice image is produced below:
Adjustments u/s 143(1)(a)
|(vi)||Additional of Income Appearing in form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return-143(1)(a)(vi)|
|Sr. No.||Form used for Comparision||Income as per Return||Income as per Form||Proposed additional of income|
|(i)||(ii)||(iii)||(iv) (v) (vi)|
|1.||Form 16A/16-Other Income||0||11048||11048|
|2.||Form-16 Gross Total Income||378584||389632||11048|
|3.||Form 16 Taxable Total Income||277980||289024||11048|
2. If assessee has not shown Interest Income or other income in ITR as per Form 16A or Form 26AS, then it would also attract Income Tax Notice. This would cause problem for those also who shows Interest Income in their return of Income from Form 26AS only, the statement which gets updated time to time. For an example, It might happen that while filing return of Income it shows Rs.20,000/- amount and at the time of processing ITR it shows Rs.25,000/- as the Form 26AS gets updated by that time.
3. Unlike earlier year, you will not get your Income Tax Refund within one or two week, because of this prolonged process introduced right before processing the Income Tax Return. This would cause serious harassment for those genuine tax payers or assessee who was unable to file their genuine proofs of allowances and deduction to employer timely and now claiming refund. They will also face these notices and have to wait for disposal of their responses against this notices and subsequent action by the department.
Before responding these notices, carefully analyse the reason asked in notice and then submit the appropriate explanation as per the facts of your case under the tab “e-proceeding” after Login your Income Tax Account.
Follow the following steps to submit the response for Adjustments u/s 143(1)(a)
|Step 1||Logon to ‘e-Filing’ Portal www.incometaxindiaefiling.gov.in|
|Step 2||Go to the ‘e-Proceeding‘ menu located at upper-middle side of the page and click on ‘e- Proceedings’ then Proceed further if data is available and click on Proceeding Name link that is ‘Adjustment u/s 143(1)(a)‘ located under ‘Proceeding Name’ column|
|Step 3||Click Submit provided at ‘Response’ column and then select the type of Response from the following options:
|Step 4||If Assessee choose option 1 i.e. Agree (Agree with the variance and file a revised return)
|Step 5||If Assessee choose option 2 i.e. Partially Agree (Partially Agree with variance and file a revised return)
|Step 6||If Assessee choose option 3 i.e. Disagree (Disagree to adjust the variance)
Note: You will be able to view only those tables for which there is a variance in your return and for which you are expected to provide you response in contention to your disagreement.
|Step 7||Click the link available under ‘Reference ID’ to download the communication/intimation in form of PDF file.|
One should consult their CA or tax expert before proceeding or submitting any response to these notices. As in some cases I personally observed that Income Tax Website Considered Income twice or thrice of the amount proposed to be added.
So, beware before filing return of income with any such claims unless you don’t have sufficient evidence or proof. Though this kind of action will help government to eliminate few thousands tax evaders, but at the same time it would cost delay in Income Tax refunds for Lakhs of genuine tax payers also.
(Republished with Amendments)