Intimation under Section 143(1) Of Income Tax Act— FAQs

FAQs on Intimation under Section 143(1) of the Income-tax Act

An Intimation under Section 143(1) is one of the most commonly issued communications by the Income Tax Department, yet also one of the most misunderstood. Many taxpayers panic on receiving it, assuming it to be a scrutiny notice or a penalty order. In reality, an intimation under section 143(1) is a preliminary processing outcome of the Income Tax Return (ITR) — not an assessment.

This FAQ guide explains the legal nature, processing logic, adjustments permitted, response mechanism, and practical implications of an intimation u/s 143(1), based on the Income-tax Act, Rules, and official Income Tax Department guidance.

Income Tax Return processing outcome showing intimation under Section 143(1)
FAQs explaining Intimation under Section 143(1) issued after Income Tax Return processing

Frequently Asked Questions-Intimation under Section 143(1)

An Intimation under section 143(1) is a communication issued by the Centralised Processing Centre (CPC), Bengaluru, after the Income Tax Return filed by a taxpayer is processed electronically. It conveys the result of arithmetical and system-based checks carried out by the CPC and informs the taxpayer whether the return has been accepted as filed, a tax demand has arisen, a refund is determined, or certain adjustments have been made. Importantly, an intimation under section 143(1) is not a scrutiny assessment and does not involve examination of evidence or a personal hearing.

No. An intimation under section 143(1) is neither a notice nor a scrutiny assessment. It is merely a communication of the outcome of return processing and does not involve application of mind by an Assessing Officer. It also does not determine tax liability conclusively. Courts have consistently held that processing under section 143(1) is not an assessment, and therefore principles applicable to scrutiny assessments do not apply at this stage.

An intimation under section 143(1) is issued after the return is processed by the CPC. The Income-tax Act prescribes that such processing must be completed within the time limit specified under section 143(1), which is currently nine months from the end of the financial year in which the return is filed, subject to amendments. If no intimation is received within this period, the return is deemed to have been processed as filed.

Issuance of an intimation is mandatory only when there is a tax demand or a refund determination. Where no adjustment is made and no refund or demand arises, non-issuance of an intimation does not invalidate the return, as the acknowledgement of the return itself is deemed to be the intimation.

Section 143(1)(a) permits only limited and objective adjustments that are apparent from the return and departmental records. These include correction of arithmetical errors, disallowance of incorrect claims evident from the return data, disallowance of loss where the return is filed late, disallowance of expenditure indicated in the audit report but not added back, and addition of income appearing in Form 26AS, AIS or TIS but not reported in the return. Debatable or interpretational issues cannot be adjusted at this stage.

Yes. The CPC is empowered to make prima facie adjustments for income appearing in Form 26AS, the Annual Information Statement (AIS), or the Taxpayer Information Summary (TIS) if such income is not reported in the return. However, the proposed adjustment must be communicated to the taxpayer electronically, and the taxpayer must be given an opportunity to respond. Unexplained AIS entries are a common reason for tax demand under section 143(1).

The difference between returned income and processed income arises when the CPC makes adjustments under section 143(1)(a), disallows certain claims, or adds income due to AIS or TDS mismatches. Returned income refers to the income declared by the taxpayer in the return, whereas processed income refers to the income determined after CPC adjustments. Tax demand or refund is calculated on the processed income and not on the returned income.

On receiving a tax demand in the intimation, the taxpayer should first carefully compare the intimation with the filed return to identify the reason for the demand. It is important to verify TDS and TCS credits, advance tax and self-assessment tax payments, and reconcile entries appearing in the AIS. After this verification, the taxpayer should determine whether the demand is correct or incorrect before taking further action.

A response to an intimation under section 143(1) can be submitted online through the Income Tax e-filing portal. The taxpayer may respond by agreeing with the demand, disagreeing with the demand by providing reasons, or filing a rectification application under section 154 where the demand arises due to an apparent error such as mismatch of tax credits.

The Income-tax Act does not prescribe a specific time limit for responding to an intimation under section 143(1). However, it is advisable to respond promptly, as interest may continue to accrue on outstanding demand, refunds may be adjusted against such demand, and recovery proceedings may be initiated if the demand remains unpaid.

Yes. If the intimation contains an error apparent on record, the taxpayer may file a rectification application under section 154. Common rectifiable errors include non-grant of TDS credit, mismatch of advance tax payments, incorrect calculation of interest, and arithmetical mistakes in computation.

No. Receipt of an intimation under section 143(1) does not imply that the case has been selected for scrutiny. Scrutiny assessment is initiated independently through a separate notice under section 143(2), which must be issued within the prescribed statutory time limits.

Yes. Any refund determined at the time of processing may be adjusted against existing tax demands after due intimation to the taxpayer under section 245 of the Income-tax Act.

Although an intimation is deemed to be an order for limited purposes, the preferred remedy against an incorrect intimation is rectification under section 154. Filing an appeal is generally not preferred and is considered only in exceptional cases where rectification is not granted or where the adjustment is beyond the scope of section 143(1).

Ignoring an intimation under section 143(1) may result in recovery proceedings by the tax department, adjustment of future refunds, continued accrual of interest, and escalation to further proceedings. Therefore, every intimation should be reviewed carefully and appropriately closed, even where no action is ultimately required.

Key Takeaway

An intimation under section 143(1) is a system-driven processing outcome and not an assessment or allegation of concealment. Most issues arise due to data mismatches rather than non-compliance. Understanding its scope and limitations enables taxpayers to respond correctly and avoid unnecessary stress.

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Intimation under Section 143(1) of Income Tax Act explained through FAQs

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Disclaimer

This FAQ is for informational purposes only and does not constitute legal or professional advice. Tax positions should be evaluated based on individual facts and applicable law.