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What happens after you file your Income Tax Return?

Updated on: 23 Nov, 2023 01:22 AM

With the buzz of the Assessment Year 2018-19 Tax season, most of us are doing with the filing of Income Tax Returns (ITR). But have you ever wondered how exactly these ITRs are processed at the hands of Income Tax Department?

Let's decode the mystery of the after ITR filing processes of Income Tax Department step by step.

After Filing of Income Tax Return

The first step is to be taken care by the taxpayer himself i.e. verification of ITR. ITR can be verified either by

  • E-verification

There are numerous ways in which person can e verify his Income Tax Return. It may either be done through net banking, registered mobile number, ATM, EVC etc.Here is a link of the guide explaining all such available options, among which you can opt for the best suited. A Simple Guide To E-Verify Your Return!

E-verification is a sequential process which is often judged quite cumbersome by the users. To ease things out we have made a complete Step by Step guide to e verify your Income Tax Return| E verification After filing your ITR.

  • Sending signed ITR-V to CPC-Bengaluru

The second and most practiced option before couple of years was to verify your Income Tax Return offline. This method of verification was highly used but now radical shift to e verifying could easily be traced. The signed copy of Income Tax Return Acknowledgement is required to be sent by post to

Income Tax Department CPC
Centralized Processing Centre
Bengaluru 560500

The verification procedure of Income Tax Return needs to be done within 120 days of the filing of return. Non adhering to time limit i.e. if ITR is not verified, it will be treated as Never filed. And, further processing of the same cannot be done by the IT Department.

After Verification of Income Tax Return

There are two activities carried out by the Income Tax Department after you have completed the verification procedure

  • Sending ITR V Acknowledgement

In the case of E-verification

Income Tax Department sends an email containing ITR-Acknowledgement instantly on the provided Email-id which in the literal sense means that, the ITR has been E-verified and no further steps are required to be taken from taxpayer's end!! Also, at the Income Tax Dashboard, the status of the ITR changes to E-verified successfully

And, in the case of sending of ITR-V to CPC-Bengaluru physically

An email is sent to the taxpayers acknowledging that their ITR-V has reached to CPC-Bengaluru.

Processing of Income Tax Return

After Income Tax Return Acknowledgment, the processing of Income Tax Return starts through the Income Tax Department's software. It takes into account arithmetical errors and incorrect claims that are apparent from the information in the return.

After ITR Processing by the Income Tax Department:

On the completion of Income Tax Return Processing, if there's any discrepancy between the self declaration and Income Tax Department, then Intimation u/s 143(1) will be issued. Discrepancies can be in the form of

  • Difference in tax/interest payable or refundable or
  • Increase/decrease in Refund
  • Increase/decrease in the loss claimed during the year.

Intimation u/s 143(1)

Intimation u/s 143(1) is a computer-generated letter which contains side by side comparison of the Tax Computation of the taxpayer and the Income Tax Department which also takes into consideration the arithmetical errors and incorrect claims that are apparent from the information in the return.

On receiving Intimation u/s 143(1), there will be three possible cases:

  • There's increase/decrease in Tax/Interest Payable:
    In the case of increase in tax/interest payable, the taxpayer can deposit that additional tax/interest and satisfy the demand but if the taxpayer doesn't agree with the demand then he can file online rectification u/s 154. And, in the case of decrease in tax/interest payable, it will be refunded to the taxpayer's bank account.
  • There's increase/decrease in Refund:
    In this case, the revised refund will be credited to the taxpayer's account but just like the above case, if the taxpayer doesn't agree with the revised amount then he can file online rectification u/s 154.

Note: The Taxpayer also has the option to file "appeal u/s 246A" as an alternative to rectification u/s 154 as the former covers the cases on which two views are possible.

If there is no more additional tax payable or refundable or there is no adjustment resulting in a change in loss claimed during the year, then Intimation u/s 143(1) will not be sent to the taxpayer and Income Tax Return Acknowledgement will be deemed as Intimation u/s 143(1).

So, if you receive Intimation by the department next time, then, don't panic!! Because it might bring some good news too, in form of Refunds!!

Income Tax Scrutiny

Every year, IT Department also selects certain cases for Income Tax Scrutiny. Income Tax Scrutiny is the thorough examination of the ITR filed by the taxpayer. Wherein, the taxpayer is asked to submit proofs of the income, expenses, investments and losses declared by him in his ITR.

Basically, there are two procedures through which an ITR can be picked up for scrutiny:

  • Computer Aided Scrutiny Selection (CASS):
    In this system, ITRs are selected for scrutiny using centralised risk based electronic platform on the basis of some red flag indicators like multiple cash transactions in quick time, transactions of large unexplained sums and credit or debit of money from an assessee's account to an overseas location among others. The cases selected under this system are served with notice u/s 143(2).
  • Manual Selection of ITRs:
    In this system, ITRs are selected by the IT Department manually. The basis is certain criteria’s which are issued by the Ministry of Finance every year. Criterias for the financial year 2016-17 are specified in CBDT Instruction No. 4/2016 dated 13th of July, 2016.

The quantum of cases selected for the scrutiny is more through CASS as compared with the manual selection of ITRs for scrutiny. If your ITR is selected for scrutiny, you will be called by the Assessing Officer (AO) of your concerned ward in his office to submit your proofs pertaining to your ITR. After going through the proofs, the AO will pass an Assessment Order u/s 143(3) that whether he is satisfied with the calculations of ITR or not based on the proofs. In case, you are not satisfied with the order passed by AO, you can file the appeal before Commissioner of Income Tax (Appeals).

Hence, It is advisable that you keep all the relevant documents for filing Income Tax Return with yourself like Form-16, Rent receipts, Deduction claim documents, Donation receipts etc. because Income Tax Department can ask for proofs if your case gets selected for scrutiny. For any assistance with filing your taxes Contact Tax2win Now!!

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.