INTIMATION U/S 143(1) OF THE INCOME TAX ACT

Finance act 2008, had introduced section 143(1) of the Indian Income tax. This is the new scheme of processing of returns. Suppose if the return is filed within the due date or if the return is not filed and the assessing officer issues notice to the assessee requiring him to file the return of income, then such return of income gets processed under section 143(1).

While processing such returns , following adjustments are made to the total income:
a. Total income is adjusted for any arithmetical mistake in the return or
b. An incorrect claim which they observe from the information given in the return.

Meaning of incorrect claim I am giving as follows:
a. Conflicting data at different places in the return
b. Difference in data specified in the return and the actual documents(evidence)
c. If the deduction claimed by the assessee exceeds the limit specified in the act/rules either in value or in percentage.

After adjusting the income for the above two adjustments( i.e arithmetical mistake and incorrect claim), the adjusted total income is arrived at.
On this adjusted total income, income tax authority calculates the tax which is further adjusted for tax reliefs and taxes already paid. Then the final output is either the tax payable or tax refundable.

We have to interpret the Intimation u/s 143(1) as follows:-

a. If “NET AMOUNT REFUNDABLE” mentioned in Intimation u/s 143(1) letter more than Rs 100, there is a tax refund due from income tax department to tax payer. Refunds amounting less than Rs 100 won’t be refunded. 

b. If “NET AMOUNT DEMAND” mentioned in Intimation u/s 143(1) letter more than Rs 100, there is tax amount due from tax payer. This will be treated as demand notice for the payment of income tax due. This Intimation letter encloses challan form to pay income tax if the due is more than Rs 100.

If “NET AMOUNT REFUNDABLE /NET AMOUNT DEMAND”  is less than Rs 100, you can treat this Intimation u/s 143(1) as completion of income tax returns assessment under Income Tax Act. It can be useful for the proof of Income/ Completion of income tax returns assessment.