Why taxpayers are getting Notice u/s 143(1)(a)?
The Section u/s 143(1)(a) existed earlier too but has not been used extensively by the tax department. What has happened this time they are sending out notices even if there is the slightest mismatch between Form 16, Form 16A and Form 26AS versus the return filed.
Even for deductions u/s 80TTA which exempts interest income up to Rs 10,000 in savings bank account which mostly does not figure out in Form 16 are receiving notices. The problem is we still do NOT know what proof tax department would require for this exemption.
Download: Automated All in One TDS on Salary for Govt.& Non-Govt. employees for F.Y 2017-18
All pensioners who do not have to submit their investment declaration u/s 80C too are receiving this notice.
Other than that salaried employees who have not submitted their investment proofs or rent receipts to their employers and claimed such deductions at the time of filing the return are getting these notices.
How to respond to Notice u/s 143(1)(a)?
The notice mentions that you should respond to the same within 30 days of receiving it. We list down steps you should follow to respond to the notice.
Step 1: Login to the efiling portal – incometaxindiaefiling.gov.in
Step 2: Goto e- Proceeding > e-assessment menu
For some tax payers, this section may show nothing even if they have received notice. This is because it takes 2 to 3 days for the details to appear.
This is what is visible on clicking the above menu options.
Download Automated All in One TDS on Salary for Non-Govt. Employees for FY 2017-18
Step 3: Click on Prima Facie Adjustment u/s 143(1)
This will open the next screen
Step 4: Choose “Submit” to Direct to the next page
Step 5: Choose to Agree or Disagree
The details show the same details as present in the notice. Now you have to choose from “Response” – Agree or Disagree.
In case you agree which means the tax department was right in its calculation, you should submit the response and file a revised return within 15 days after paying additional taxes.
Another thing to notice is if you agree it sums up the Variance – which is a bug in the system. Both the rows question the same exemption and hence it should have shown an addition of Rs 1,59,000 only (as in the above example).
Download Automated H.R.A. Calculator U/s 10(13A)
However, in most cases Taxpayer would disagree to the addition. So if you respond by choosing Disagree, an additional response table opens up at the bottom asking for more details.
The Form for reply is shown below:
The form has the following fields. Read carefully on what needs to be filled:
TAN
§ Enter the TAN of the employer (available in Form 16 or Form 26AS) for salary income
§ If you have income from interest etc, put TAN of bank/company (available in Form 16A or Form 26AS)
Deduction made under section
§ Mention 80C (for investment in PPF, Tax Saving Fixed Deposit, etc),
§ 80CCD(1), 80CCD(2) or 80CCD(1B) for NPS as the case may be,
§ 80TTA for taking deduction of Rs 10,000 on interest from savings account
§ 10(13A) for HRA
§ 80D for medical insurance
§ 80E for education loan
§ 80G for donation made to charity/NGOs, etc
You’ll get the complete list from the ITR form you filled
Amount paid/credited by deductor
Put the amount paid – you’ll get this from Form 16 or 26AS (shown below) for salaried and Form 16A or 26AS for interest income, etc.
Nature of receipt as per the deductor
This would be any of five types of income defined by income Tax – salary (Pension is salaried income), Business, Capital Gains, Income from house and other income (includes interest income)
Download Automated Arrears Relief Calculator U/s 89(1) with Form 10E form F.Y.2000-01 to F.Y.2017-18
Income/Gross Receipts as per the return
Enter the amount after taking on account the above deduction.
So for the case above I would put Rs 4,36,160 (5,95,156 – 1,59,000) which was the income filed in actual tax return
Head of Income/Schedule under which reported in the return
This should be same as “Nature of receipt as per the Deductor” until you have put it differently in income tax return. For e.g. Pension income should be treated as salary income but someone unknowingly has put in other income. So, in this case, he has to fill “Other Income”
Reason
There are 10 reasons to choose from as shown below:
In case you claimed HRA which was not present in Form 16 then select reason as “Allowance exempt claimed in return but not in Form 16”
Download Automated All in One TDS on Salary for Assam State Employees for F.Y.2017-18
For all deductions under chapter VIA (includes 80C, 80D, 80E, NPS related etc) which you claimed but were not part of Form 16 select “Deductions claimed on the return but not in Form 16”
In case everything was present in your Form 16 but still, you got notice select “Others” and mention in Justification that the deduction already present in Form 16. Also, attach the Form 16.
Justification/Remarks
Briefly, state why your Allowance or deduction was not in Form 16. It could be “employer did not consider this deduction” or “investment was made after proof submission to employer” etc.
And most important DO NOT forget to attach relevant documents.
§ For 80C investments, you can attach the investment proof.
§ For HRA you can submit rent receipt, etc.
§ I am still not sure what proof to attach for 80TTA!
Section 143(1) Acknowledgement
After all the process is complete you get the following acknowledgment:
Also sending a notice for Section 80TTA – deduction up to Rs 10,000 for interest earned in the savings account is ridiculous because I do not understand what proof would be required for the same.
The e- Proceeding form has bugs and it adds income across rows – as shown above. The department has still not corrected these and neither sent a further communication. On one hand, they want more and more people to file returns by telling it’s simple and then bowl a googly by sending such notices. Hopefully, the tax department is working on it and would create more awareness on how to reply to these notices or at the end its tax payer would be the sufferer.