Response to Income tax notice u/s 143(1)(a)

Have you received any notice u/s 143(1)(a). No worries here is what you have to do!

Central Processing Centre (CPC) a branch of Income tax department (ITD) who is responsible for accurate processing of return.

Following are different stages of filing and processing of return

1. Filing of Income tax return  (Status : Return Filed/Pending of e-verification)

2. E-Verification of Return (Status : E-Verified)

3. Completion of Processing

4. Issuance of Refund if any

There is no specific timeline for completion of processing of return. It depends of ITR form, Income level etc. CPC uses advanced risk management tool leveraging of data analytics, AI and other tool for detecting any mistakes or fraud committed during filing of return.

Such mistakes are identified and before such completion of processing, notice u/s 143(1)(a) is issued for adjustment. If you do not provide any reply to such notice within the time limit provided then deparment will assume such adjustment is true and process the return after taking into consideration of such adjustment.

I have observed following notices being issued to tax payers

1. Notice u/s 143(1).

If you received notice 143(1) and not the 143(1)(a) then there is no need to worry. CPC after every successful processing sends this intimation
This will contain the comparison of income / deduction declared in the return and accepted by the department.
Password to open such document is you PAN (lower case) + DDMMYYYY Turn to 4 page and if Net amount payable is 0 or if it is refund then there is nothing to worry

2. Taxpayer has claimed house rent allowance(HRA u/s 10(13A)), hence 80GG not allowed

If you have claimed both HRA exemption and section 80GG deduction then you will get this notice. As per section 80GG you can claim this deduction only if you have not receiving any House rent Allowance. Even if for a part of the year you have received HRA still this rule will apply you cannot claim 80GG for the balance period.

Action to be taken : 
You will have to file a revised or rectification return and recalculate the Income tax liability. If any additional liability is found you will have to make such payment and file the revised/rectification return.

3. Claim of dedcution u/s 10(10) – death-cum-retirement gratuity received is more than the threshold limitI have observed that any tax payer you have claim exemption for the gratuity u/s 10(10) have received the above notice for adjustment. After studying the case i did not observe any inconsistency in the return which has been filed and have assumed it as an incorrect processing from CPC

Action to be taken : 
Tax payer has to login to his income tax portal, under e proceeding assessee has to disagree with such notice.

4. There is inconsistency in the amounts /Totals entered in schedule CG OR Taxpayer is claiming deductions u/s 54 which are more than the amounts allowable as per the respective sections.

Any tax payer who had any capital gain from Sale of Listed equity shares or Sale of equity oriented mutual fund has received the above notice. Such notice where issued dated 02 Dec 2019.  It is of my observation that it is a processing error from the CPC.

Later CPC has issue a clarification of such mistake and has reverted the order