section 143(2) of Income Tax Act: All you Need to Know

A Section 143(2) notice is issued when the internal revenue service discovers inconsistencies in your tax filings. Both under and overstatement of revenue or losses may contribute to disparities. 

The assessing officer can’t serve a notice under Section 143(2) of Income Tax Act if you haven’t sent in your tax returns for the fiscal year. He has to send you a notice under section 143(1) first, requesting that you submit your returns. In response to a letter sent under Section 143(2), taxpayers are expected to provide evidence for any claims they made in their tax returns, including exemptions, allowances, reliefs, and tax credits. All of your revenue must be verified using documentation. The assessor will investigate thoroughly.

see also about: Section 80CCC of Income Tax Act

Section 143(2) of Income Tax Act: How does it work?

Upon submitting your ITR, the evaluation process will begin with a preliminary review. A notification under Section 143(2) of the Income Tax Act will be issued in such a scenario. The difference between the assessed tax and the tax paid might arise from either an overstatement of losses or an understatement of revenue. If the income tax department discovers any inaccuracies, whether big or small, a warning will be sent to verify that your tax payments are in line with the IT Department’s assessment, and you may respond accordingly if you disagree.

After an income tax return has been submitted, but within six months of the end of the fiscal year for which the return was filed, a notification may be issued under Section 143(2).

A notification issued under subsection 143(2) of the Income Tax Act requires the following response:

• Your ITR may be filed by you or a tax preparer on your behalf.
• An AO or Assessing Officer gives a notice under Section 143(2).
• You or your tax professional will meet with the Assessing Officer and present your case, including declarations and supporting documents, in support of your claim and the information in your ITR.
• After reviewing your submissions and supporting evidence, the tax authority will issue a final assessment order under the Income Tax Act, section 143(3). This order will specify whether you owe tax or are eligible for a refund.

All about: Section 35AD

Section 143(2) of Income Tax Act: Scope of function

Within three months following the end of the Financial Year for which the assessee submitted his return, the assessing officer may issue a notice to survey the assessee’s income tax return by Section 143(2). Assessee or his tax agent must appear before the AO together to offer arguments and pieces of confirmation as the AO may need. If the assessee prefers, he or she may submit an online response to the notice under section 143(2), together with supporting documents and arguments, instead. After reviewing the evidence, the AO will issue an assessment order that includes a calculation of the assessee’s final tax liability or refund.

Section 143(2) of Income Tax Act: Repercussions

The assessee may be held responsible for the following in the event of regard from the Income Tax Department:

• Possible criminal prosecution and a fine of up to Rs. 10,000 under Section 271.1(b) if proven guilty. The penalty is outlined in Section 272A and is levied beginning with the fiscal year that begins on or after April 1.
• By section 144, the AO is authorised to do a best-guess assessment on behalf of the taxpayer.

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