Section 143(2) tax notice is the statutory notice which is issued to an assessee for a Scrutiny Assessment of his return. It is sent in a case where the return has either been filed by the assessee himself (Self Assessment) or in response to a notice u/s 142(1) and the Assessing Officer (AO) wants to ensure that the assessee has not understated the income, computed excessive loss or underpaid the tax.

Scrutiny assessment is the assessment of the return filed by the assessee by giving an opportunity to the assessee to substantiate the declared income and expenses and the claims of deductions, losses, exemptions, etc. in the return with the help of evidence.

Reason for issuance of notice

If AO is of the opinion that the person has

  • concealed/understated any income; or
  • computed excessive loss or claimed huge refund amount; or
  • underpaid tax payable by him.

Requirements under the notice

It may require him to

  • Be in physical attendance or represent before the Assessing Officer (AO) to clarify facts; or
  • Make written submissions for providing details; or
  • Produce evidence to substantiate the income/profits/gains/losses.

Time Limit for issuance

This notice can be issued by the AO within 6 months after completion of the assessment year to which the return pertains. This time limit is different from the time limit for completion of scrutiny assessment.

Specimen of Section 143(2) tax notice

section 143(2) tax notice

Steps to be taken

  • In case the notice asks you to produce documents in support of exemptions, deductions or claims of losses you have made and provide proof of all sources of income, then information like bank statements, major expenses, incomes and loan details should be provided. AO will carry out assessment after receiving detailed information.
  • After getting the notice, the assessee must get in touch with his assessing officer and submit the required evidence. Another notice may be issued by the Income Tax Department if the assessee fails to get in touch with the AO.
  • If you’re called for a hearing, you must appear in such hearing. You may also hire an attorney such as any Practicing Chartered Accountant or Legal Tax Practitioner to appear on your behalf  before the AO on the date of hearing.

Penalty

Non-compliance with any proceedings in the case of issuance of section 143(2) tax notice for scrutiny assessment may result in the following:

  • Imposition of penalty of Rs 10,000 for each failure u/s 271(1)(b); or
  • Prosecution u/s 276D which may extend up to 1 year with or without fine.

For any help on ITR Filing feel free to consult the tax experts at LegalRaasta. You can file ITR yourself via our ITR software or get CA’s help on filing income tax return. You can also use the option of Business Return, Bulk Return or Revised Return Filing.