Communication of proposed adjustment u/s 143(1)(a) of Income Tax

Section 143(1)(a) of income tax is amended to expand the scope of adjustment which can be made while processing income tax return filed for the Asst Year 2017-18 and thereafter.

Income tax department is empowered to make following adjustments before processing income tax return.

• Any arithmetical error in the return
• Incorrect claim which is evident from information provided in the return
• Brought forward loss of earlier years claimed, but the return of those years was filed after the due date.
• Disallowance of expenditure mentioned in the Audit report but not taken into account in computing the total income in the return
• Disallowance of claims under section 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID and 80-IE, if return furnished after the due date.
• The addition of income appearing in form 26AS or form 16A or form 16 which has not been included in computing the total income in the return.

However, before making any such adjustments, an intimation of proposed adjustment u/s 143(1)(a) of Income Tax Act, 1961 shall be given to the assessee either in writing or through electronic mode requiring him to respond to such adjustments.

The response received, if any, will be duly considered before making any adjustment. However, if no response is received within thirty days of issue of such intimation, the processing shall be carried out incorporating the adjustments.

Central Processing Centre (CPC) has started processing income tax return filed for the Asst Year 2017-18 and communication of proposed adjustment u/s 143(1)(a) of Income Tax Act, 1961 is sent to assessee giving an opportunity to respond to the adjustment proposed within 30 days of receipt of communication.

Assessee is require to file revised return after considering proposed adjustment if income was not considered or incorrect deduction claimed in the original return.

If proposed adjustment is incorrect, assessee has option to submit required information by way of online response by log in to www.incometaxindiaefiling.gove.in with used id and password and choose “e-Assessment/Proceeding” under the “e-proceeding” section. Necessary documents in support of claim can be uploaded along with the response.

The response received will be considered before making any adjustment. In case, no response is received within 30 days communication, the return of income will be processed after making necessary adjustments u/s 143(1)(a) of Income Tax Act, 1961 without providing any further opportunities in this matter.

Once proposed adjustment is done and processed return, intimation u/s 143(1)(a) of income tax Act will be served. Assessee has option to file online rectification application. However such online rectification will not be allowed to change in taxable income.

Hence it is important to address the issues raised in the communication of proposed adjustment u/s 143(1)(a) of Income Tax Act, 1961. Though the option of filing appeal is available under the income tax act against the adjustment made it is a very cumbersome process and it is advisable to file online response within 30 days of receiving communication without ignoring it.

Step by step procedure to responding communication received for proposed adjustment u/s 143(1)(a) of income Tax

Whenever notice is issued u/s 143(1)(a) of Income Tax Act, Department will give an opportunity to the taxpayers before making any adjustment to the returned income filed by him. The taxpayer will be given an opportunity through the “e-proceeding” to respond to the findings made by the department during the course of processing of the returns submitted. Taxpayer should respond to the each of the queries raised therein.

Step 1 : Visit the ‘e-Filing’ Portal http://incometaxindiaefiling.gov.in/

Step 2: Enter the valid ‘User ID’, ‘Password’ and ‘Date of Birth/Incorporation’ at e-Filing portal. Click ‘Login’

Step 3: Navigate to the ‘e-Proceeding’ tab -> Click ‘e-Assessment/Proceedings’

Step 4: Click on the proceeding name to view the proceeding details. By clicking the ‘Reference ID’, additional details will be displayed.

Step 5: Click ‘Submit’ button

Step 6: On clicking submit button, the following details of proposed additions wherever applicable in your case will be displayed.

1. Arithmetical error in the return – u/s 143(1)(a)(i)
2. Incorrect claim – u/s 143(1)(a)(ii)
3. Disallowance of loss claimed of earlier years, but return of those years was filed after due date – u/s 143(1)(a)(iii)
4. Disallowance of expenditure mentioned in the Audit report but not taken into account in computing the total income in the return – u/s 143(1)(a)(iv)
5. Disallowance of claims under section 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID and 80-IE, if return furnished after due date – u/s 143(1)(a)(v)
6. Addition of income appearing in Form 26AS or Form 16A, or Form 16 has not been included account in computing the total income in the return – u/s 143(1)(a)(v)

Step 7: following options are available in dropdown menu under response column

• Agree for addition
• Disagree to the addition

If you select “Agree for addition”, you will have to file revised return within 15 days of submission of response

If you select option “Disagree to the addition” you should provide justification for the disagreement after choosing any one of the following appropriate item in the dropdown menu available in the Reason column. You can also upload documentary evidence in support of your claim

• Income is not chargeable to tax or exempt
• DTAA income not taxable in India
• The TDS has been claimed on advance received. No income in the financial year
• Income/receipts offered in the previous years and TDS is claimed in financial year
• Construction business – Work-in-progress
• Interest income/net income is capitalised
• Income of the Trust/AOPis taxed in the hands of beneficiary/member. However, TDS is deducted on PAN of the Trust/AOP
• Allowance exempt claimed in return but not in form 16
• Deductions claimed in the return but not in Form 16
• Receipts considered under a different head in the return as against the section under which it is deducted
• other

Step 8: After successful submission, success message along with the Transaction ID will be displayed on the screen

We would be glad to know your doubts or queries.  please feel free to post your queries and comment below

In case you need our assistance in analysing and submitting the response in relation to notice received for “Communication of proposed adjustment u/s 143(1)(a) of Income Tax Act, 1961″, you may please email following details to team@simplifiedlaws.com. Our professional charges would be in the range of Rs. 3000/- to Rs. 5000/- plus tax,

• Communication received u/s 143(1)(a)
• Copy of income tax return filed
• Form 16/16A
• proof of additional deduction claimed in the return

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