Income Tax Notice u/s 143(2): Scrutiny & Deadlines

Income Tax Notice u/s 143(2) for AY 2024-25: Understanding Scrutiny Assessment, Faceless Procedure, Deadlines, and Why Professional Guidance is Crucial

1. Massive Issue of Income Tax Notices u/s 143(2) – A Practical Overview

In June 2025, the Income Tax Department initiated a large-scale issue of scrutiny notices under Section 143(2) for Assessment Year 2024-25.

This widespread action was mainly driven by the following reasons:

1. Mismatches detected between ITR, AIS, and Form 26AS records

b. Unreported gains from mutual funds, cryptocurrency transactions, and dividend income

c. Taxpayers filing incorrect ITR forms

d. Large cash deposits and mismatches in GST and TDS records

The Central Board of Direct Taxes (CBDT) has been actively using its Computer Assisted Scrutiny Selection (CASS) system to automatically flag such returns. The Income Tax Department is now strictly following the faceless assessment framework with stringent timelines.

2. What Does a Notice under Section 143(2) Mean?

A notice under Section 143(2) is issued when the Income Tax Department selects a return for detailed scrutiny.

The key purpose of this notice is to:

a. Check whether the income has been understated

b. Verify that deductions or losses have not been over-claimed

c. Ensure that tax calculations and payments are correct

Professional Insight:

The Assessing Officer (AO) carries out a detailed review to verify if the return filed is accurate and whether there has been any income escapement.

3. Critical Deadlines to Keep in Mind for 143(2) Notices

Example:

If the ITR is filed on 31 July 2025 (for FY 2024-25), the deadline for issuing a scrutiny notice is 30 June 2026.

• Types of Scrutiny Notices under Section 143(2)
• Limited Scrutiny: Focuses on specific points like high-value transactions, capital gains, or mismatches.
• Complete Scrutiny: Involves a comprehensive review of all incomes, deductions, and supporting documents.
• Manual Scrutiny: Selected based on special risk parameters announced by the CBDT from time to time.

4. Documents Commonly Required in 143(2) Scrutiny Cases

During the assessment process, the AO may ask the assessee to submit certain documents within a fixed timeline.

Generally requested documents include:

a. Copy of the filed ITR, Computation of Income, and Form 26AS

b. TDS Certificates, Bank Statements, Capital Gains calculations

c. Supporting documents for deductions under Sections 80C, 80D, HRA, etc.

d. Business financials, GST returns, Stock Statements, and Tax Audit Reports (Form 3CD)

Important:
All submissions must be made via the Income Tax Portal. Physical submissions are no longer accepted in faceless assessments.

Professional Note:

The AO may conduct further analysis based on these documents and, if discrepancies are found, may propose additions to the declared income.

5. How the Faceless Assessment Works for 143(2) Notices (Section 144B)

Under the Faceless Assessment Scheme (Section 144B), all scrutiny proceedings, including those under Section 143(2), follow a fully digital process.

Key features:

a. All communications take place through the Income Tax Portal, registered email, and SMS

b. The identity of the AO remains anonymous; the case is allocated electronically across India

c. Video conferencing can be arranged upon request

d. Every notice or communication carries a unique Document Identification Number (DIN) for tracking

6. Consequences of Ignoring or Delaying a Response to Section 143(2) Notices

If a taxpayer does not respond to a Section 143(2) notice within the given time, the following actions may be initiated:

i. Best Judgment Assessment under Section 144

ii. A penalty of ₹10,000 per instance under Section 272A(1)

iii. Possible prosecution under Section 276D for deliberate default

iv. Ex-parte assessment based solely on available departmental records

7. Best Practices to Properly Handle Section 143(2) Notices

i. Regularly monitor the Income Tax Portal and registered email for updates

ii. Provide well-structured, point-wise replies to each question raised

iii. Submit all supporting documents within the 15 to 30-day timeline mentioned in the notice

iv. Engage a Chartered Accountant (CA) to handle the process professionally

v. If additional time is needed, file adjournment requests promptly through the portal

vi. Make sure to submit a valid Power of Attorney (POA) if an authorized representative is responding

8. Why Professional Help is Essential in Section 143(2) Scrutiny Cases

Scrutiny assessments under Section 143(2) involve complicated legal procedures, fixed deadlines, and detailed technical requirements that are not commonly known to a layperson.

Professional support ensures:

a. Errors in procedure or missed timelines, which could lead to large tax demands, are avoided

b. Properly drafted and legally compliant submissions are made

c. Chartered Accountants understand the precise formats and legal defenses applicable to each case

d. Professionals carefully track deadlines and monitor all department communications

Critical Defenses That Only Professionals Usually Know in 143(2) Scrutiny Proceedings

i. Principle of Natural Justice

• • The department must provide sufficient time for a proper response. If an unreasonable timeline is given, the proceedings can be legally challenged.

ii. Defects in Show Cause Notices (SCN)

• • If the SCN lacks specific proposed additions or is vague, it may not be valid.

iii. Invalid Service of Notices

• • If the notice is not correctly served to the registered email or address, the assessment may be void.

iv. Violation of Statutory Time Limits

• • Notices issued beyond the legally prescribed deadlines can render the assessment invalid.

v. Non-Consideration of Submitted Evidence

• • If the AO does not examine or mention evidence submitted by the assessee, it can be challenged.

vi. Failure to Disclose Reasons for Scrutiny Selection

• • If the case selection reason is not properly communicated, the entire proceeding may be defective.

These protections are highly technical and not usually known to non-professionals but are extremely useful in defending scrutiny assessments.

9. Final Words: Section 143(2) Notices Must Be Handled With Utmost Care

Receiving a Section 143(2) notice is a serious matter, but with timely, well-prepared replies and professional assistance, the scrutiny process can be successfully managed under the faceless assessment framework.

At Varun Amita Gupta & Co., Chartered Accountants, Delhi, we specialize in:

a. Handling Income Tax Scrutiny cases

b. Managing Faceless Assessment Proceedings

c. Representing clients throughout the assessment and appeal stages

Our services cover:

• Detailed review of the scrutiny notice
• Preparation of fully compliant, professional responses
• Raising legal objections wherever required
• Complete representation before the Income Tax Department

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For assistance, you can reach us at:
Email: varunmukeshgupta96@gmail.com
Phone: +91-9818640458

We will handle the entire process with precision and care, ensuring you remain fully compliant and well-protected.

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