What is notice u/s 143(1)(a) of Income Tax Act?
In the AY 2017-18, several taxpayers have received this notice. The Income Tax department sends this notice seeking a response to the errors/ incorrect claims which attract adjustment(s) under Section 143(1)(a) of the I-T Act regarding mismatch between the income and deduction when compared to Form 16, Form 16A and Form 26AS.
Let us understand this with an example:
Let's say Rahul is a salaried person working with the ITC group. Due to some reasons, Rahul could not submit his rent bills and travelling expense bills to his employer and thereby did not get the benefit of HRA u/s 10(13) and conveyance allowance u/s 10(14) both, in his tax computation of TDS by his employer. So because of the non submission of these documents, his tax liability increased and as a result excess tax got deducted and paid to the government. In order to not lose out on these benefits, Rahul claimed these while filing his tax returns with the income tax department. Thereby, his taxable income got reduced. Hence this incident has created this mismatch of income between his Form 16 and the income as reported by him in his tax filing.
Why does this mismatch arise?
1)When the employee has not made any tax saving investments but has claimed the same while filing is return of income.
2) When an employee has invested in tax saving instruments like 80C and has failed to furnish these investment proofs to his employer. Also when the employee has failed to furnish rental payment proofs which can be claimed as HRA. In such cases, the employer can show lesser income
and claim a higher deduction while filing his return of income.
How to avoid receiving this notice?
We can avoid receiving this notice by taking care of the following points:
Salary income shown in Form16 should match with that shown in ITR
Declare all other incomes on which tax has been deducted by the employer.
See that after filling up all the columns, the tax demand should become nil.
Steps to be followed to deal with this mismatch:
Login to the income tax website ( www.incometaxindiaefiling.gov.in)
Under work list click on e-proceedings and beside the notice u/s 143(1)(a) click "submit"
Upon submitting you will be able to see the differences between the return filed in Form 16 and Form 26AS.
Analyse the reasons for the mismatch and select one of the three check boxes;
a) agree, b) partially agree, c) disagree.
You can select these reasons for the mismatch-
a) Deductions claimed in the return but not in form 16
b) Exemption for allowances claimed in the return but not in form 16.
NOTE: The time limit for replying to such a notice is 30 days from the date of receipt.