Processing of Return (Intimation) - Section 143(1) - Income Tax - Ready Reckoner - Income Tax

Processing of return [ Section 143(1) ] Where return has been filed u/s 139 or in response of notice 142(1) , such return shall be processed u/s 143(1) in the following manner, namely:- (a) the total income or loss shall be computed after making the following adjustments, to the returned income:- (i) any arithmetical error in the return; or (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; or (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified u/s 139(1) ; or (iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return ; or (v) disallowance of deduction claimed under sections 10AA , 80-IA , 80-IAB , 80-IB , 80-IC , 80-ID or section 80-IE , if the return is furnished beyond the due date specified u/s 139(1) ; or (vi) 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 Such adjustment not required in relation to a return furnished for the assessment year commencing on or after the 1st day of April, 2018. Notes: Intimation before making adjustment - Before making any such adjustment, an intimation has to be given to assessee be duly considered before effecting any adjustment. However, If no response is received within 30 days of issue of such intimation, the processing shall be carried out incorporating the adjustments. After processing, intimation shall be sent if there is refund/demand/adjustment in losses. Time Limit for issuing Intimation - Intimation shall be issued within 9 months from the end of FY in which return was filed. [Amendment by Finance Act, 2021 ] Meaning of Specified term - an incorrect claim apparent from any information in the return shall mean a claim, on the basis of an entry, in the return,- (i) of an item, which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction. Mandatory processing of return of income before issuance of assessment order Section 143(1D) In respect of return furnished for AY 17-18 or thereafter processing of return u/s 143(1) is necessary issue intimation even if AO already issued Scrutiny Notices u/s 143(2) . Set off and withholding of refunds in certain cases However, to address the concern of recovery of revenue in doubtful cases, section 241A provides that, for the returns furnished for AY 2017-18 or thereafter, where refund of any amount becomes due to the assessee u/s 143(1) and the AO is of the opinion that grant of refund may adversely affect the recovery of revenue, he may, for the reasons recorded in writing and with the previous approval of the PCIT/CIT, with hold the refund upto the date on which the assessment is made. [ Section 241A ] The Assessing Officer or Commissioner or Principal Commissioner or Chief Commissioner or Principal Chief Commissioner, as the case may be, may, in lieu of payment of the refund, set off the amount to be refunded or any part of that amount, against the sum, if any, remaining payable under this Act by the person to whom the refund is due, after giving an intimation in writing to such person of the action proposed to be taken under this sub-section. [ Section 245(1) ] Where under any of the provisions of this Act, a refund becomes due or is found to be due to any person. Where a part of the refund is set off under the provisions of u/s 245(1), or where no such amount is set off, and refund becomes due to a person, and the Assessing Officer, having regard to the fact that proceedings for assessment or reassessment are pending in the case of such person, is of the opinion that the grant of refund is likely to adversely affect the revenue, he may, for reasons to be recorded in writing and with the previous approval of the Principal Commissioner or the Commissioner, as the case may be, withhold the refund up to the date on which such assessment or reassessment is made. [ Section 245(2) ]