When is notice u/s 143(2) issued?

Notice u/s 143(2) is issued to you by the Income Tax Department when your Income Tax Return is selected for scrutiny assessment or detailed assessment u/s 143(3).

In simple words, Scrutiny assessment or detailed assessment u/s 143(3) means a scrutiny is carried out to confirm the correctness and genuineness of various claims, deductions, etc. made by you in your Income Tax Return.The basic purpose of this scrutiny assessment is to ensure that you have filed the return with the correct income and paid the tax accordingly.

The objective of this scrutiny is to check that:

  • You have not understated your income

  • You have not computed excessive loss

  • You have not under-paid the tax in any manner

So, we can conclude, to carry out scrutiny u/s 143(3) of the Income Tax Act, notice u/s 143(2) is issued by the Income Tax Department.


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

A notice u/s 143(2) for scrutiny assessment can only be issued upto a period of six months from the end of the financial year in which the return was furnished by you.

For example, Ms Sharma filed her return on 25.07.2017 for the financial year 2016-17. In such a case, the notice u/s 143(2) can be issued to Ms Sharma only upto 30.09.2018 being end of six months’ period from the FY 2017-18 in which the said return was filed.


So how does this works?

  • Step 1 A notice u/s 143(2) is issued to you by the AO within 6 months from end of FY in which return was filed to carry out scrutiny of your income tax return u/s 143(3).

  • Step 2 You or your tax representative will appear before the AO to place your arguments and evidences as required by assessing officer.

    Alternatively, you can submit online response to notice u/s 143(2) by uploading your evidence and your arguments.

  • Step 3 After hearing all the evidence,as produced by the assessee as per notice u/s 143(2), AO will pass an assessment order determining total tax payable or refund to the assessee after taking into account produced evidence.

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What is the final order u/s 143(3)?

If notice u/s 143(2) was issued upon you by the AO for production of evidence on specified day and after taking into account such evidences and hearing the same, the AO will make an assessment of your total income or loss and also determine any sum payable by you or due to you bypassing the order u/s 143(3).


Is there any time limit for issuance of the final assessment order u/s 143(3)?

Time Limits are as below as per section 153
* For Assessment year 2017-18 or before 21 months from the end of the assessment year
* For Assessment year 2018-19 18 months from the end of the assessment year
* For Assessment year 2019-20 and onwards 12 months from the end of the assessment year

For example, Mr ABC filed his return on 25.07.2019 for the financial year 2018-19. In such a case, the notice u/s 143(2) issued to Mr ABC on 30.09.2020 being end of six months’ period from the FY 2019-20 in which the said return was filed. Now, order u/s 143 (3) can be issued upto 31.03.2021 being end of 12 months from the end of the A.Y. 2019-20.


How will I receive this notice u/s 143(2)?

Generally, you will receive this notice via email in a PDF format on your email id registered with the Income Tax Department. Although, it will also be sent to your postal address.


If I haven’t filed my return, will I get a notice u/s 143(2)?

No, since no return was furnished by you, a notice u/s 143(2) cannot be issued to you and no scrutiny of your records can be done. In such a case, section 144 shall apply to you for a best judgement assessment of your records. Also, assessment can be done as per the provisions of section 147 in this case.


What are the consequences of not complying with the notice issued u/s 143(2)?

If you receive a notice from the Income Tax Department, you should always reply it and never ignore it. But in case of any such default, you may be liable for the following:

  • Penalty u/s 271(1)(b) amounting to Rs. 10,000 and even prosecution However, for the A.Y commencing on or after the 1st day of April, 2017 the penalty shall be levied in Sec 272A(1).
  • A best judgement assessment u/s 144 can be made

A sample scrutiny notice looks like:

figures


Is the notice u/s 143(2) a consequence of notice u/s 142(1)?

A notice is issued to you u/s 142(1) for production of books of accounts, income statement and statement of assets and liabilities for preliminary investigation. In case, the AO is not satisfied with the information reproduced by you, usually a notice u/s 143(2) may be issued to you for scrutiny of accounts.
Also, practically it is seen that whenever a taxpayer receives notice u/s 143(2), then he also receives notice u/s 142(1) for submission of the necessary information / papers.

Remember, no wonder a notice sends shivers to your body but there’s no need to worry! Just read, understand and reply! And in case you need expert assistance, feel free to contact us at +91-9660996655 or [email protected].

Frequently Asked Questions

Q- What is the procedure adopted for making the assessment under section 143(3) i.e. scrutiny assessment?

Ans. Tax officer would perform tests and processes to confirm the correctness and genuineness of various claims, deductions, etc.made by the taxpayer in the income tax return and to initiate a scrutiny assessment, the Income Tax officer must first issue an income tax notice u/s 143(2) . The time limit to issue notice is six months from the end of relevant F.Y. in which return is filed.


Q- What is limited scrutiny?

Ans. Limited Scrutiny cases shall remain confined only to the specific reasons/issues for which case has been picked up for scrutiny.

CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. 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.