Consequences of failure to respond to Section 143(2) notice

 1. What is Sec 143(2)?

Where a return has been furnished u/s 139, or in response to a notice 142(1), the Assessing Officer (AO) or the prescribed income-tax (IT) authority, as the case may be, if, considers it necessary or expedient:

♦ to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the 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 Assessing Officer 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:

2. What is the time limit for AO issue of notice u/s 143(2)?

Notice u/s 143(2) shall be served on the assessee within 6 months from the end of the financial year in which the return is furnished.

Eg: If Mr. Raju has filed his ITR for FY 2020-21 / AY 2021-22 on 31^st Dec 2021 then notice u/s 143(2) has to be issued by AO / IT Authority within 30^th Sep 2022.

3. What are the consequences for failure to respond to the notice u/s 143(2)?

1. Penalty u/s 272A – 10,000/- (for each such default or failure)
2. AO will complete the assessment u/s 144 (Total income shall be calculated by AO to the best of his judgment and determine the tax payable by the assessee on the basis of such judgement – which in most cases results in higher payment of tax.)