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What happens after filing income tax return (by Sonia Gambhir)

What happens after filing the Return?

Income tax return can be either filed voluntarily under Section 139 or on demand by the income tax department under Section 142(1). It is necessary to understand what happens after the taxpayer has filed the return of income. Income tax department carries out a preliminary assessment of all the returns filed and intimate taxpayers the result of such preliminary assessment. Such intimation to the taxpayers post preliminary assessment is called intimation under Section 143(1).

Such preliminary assessment is wholly computerised and does not have any human intervention and is delegated to Centralised Processing Center (CPC).

If you thought that once you filed your tax return that was the end of it, think again. There are several important things to do and keep track of even after you successfully file and verify your tax return.

Those who have sent ITR-V physically have to ensure they get a mail from CPC (Central Processing Center) Income Tax confirming receipt

Where return is not e-verified, the individual has to verify it by sending ITR-V physically after signing with blue ink within 120 days from the date of filing of Income tax return. Upon receipt of the signed ITR-V, CPC sends the acknowledgement on the registered email ID of the tax payer within few days. It is important to correctly mention the email address in the return form as all communication between you and the tax authorities will take place at that email ID only with respect to ITR-V.

If you don't get this confirmatory mail what do you do?

Check the spam or junk mail in your email account, as many a times an email may automatically get parked in the junk folder. Even after checking the above, if you find that you have not received this confirmation email from CPC say within 2 to 3 weeks of sending the signed ITR-V , you need to check the status in your e-filing account whether ITR-V has been received by CPC or not. You will also keep getting SMS from the  authorities from time to time reminding you to submit signed ITR-V to CPC where the same has not been received by them.

Receipt of ITR-V by CPC is important because processing of your return starts only after this step is complete Where the ITR-V has not been received by the CPC, you have to send another copy of signed ITR-V to the CPC. This also needs to reach the CPC within the original stipulated time limit of 120 days from date of filing the return. Please note that your e filing of return is not complete until CPC has received this ITR-V.

Intimation under Section 143(1)

After the receipt of the ITR-V, the Income Tax Department processes the income tax return and sends an intimation under Section 143(1) of the Income tax Act, 1961after processing is complete. This intimation will be sent via email at the registered email ID mentioned in your online e-filing account. If your return was accurate and you claimed refund then that refund is issued to you.

However, where there is any discrepancy in the return, for example TDS/taxes paid are not matching with the 26AS details, then the intimation will show the taxes along with interest to be paid as a demand of tax. It may be noted that while processing the return correction can be made by the CPC only for limited reasons specified in the Act, such as any arithmetical mistakes, disallowance of loss claimed in case of belated report, tax credit mismatch with 26AS, etc.

The purpose of intimation under Section 143(1) is to promptly collect the taxes or issue refunds to the taxpayer.

When intimation under Section 143(1) shows no refund and no tax payable

In case the intimation under Section 143(1) does not reflect any tax demand or refund, then it implies that the ITR is processed without any refund or additional tax payable and no action is needed. Where there is no refund due or tax payable and one has not received any Intimation under Section 143 (1) of the Act, within 12 months, the acknowledgement to the return (ITR-V) is deemed to be the intimation under the Act.

What is there in the intimation notice under Section 143(1)

This intimation would contain the e-filing acknowledgement number, CPC reference number, etc., and also shows the details of income and taxes as filed by the taxpayer and also as computed by the tax department under Section 143(1), comparing the details line by line in two separate columns. 

When intimation shows refund due

If your return was accurate and any refund claimed by you is due to you then you should expect the refund to be credited to your bank account. You would need to keep a watch for this credit.

What happens if your notice under Section 143 (1) shows tax due from you?

However, where there is a discrepancy in the return, e.g., TDS/taxes paid are not matching with the Form 26AS details, then the intimation will show the taxes due with interest to be paid. In such a situation, you need to get the demand corrected if you think that it has been incorrectly raised.

The Income Tax Department has also provided the facility to file rectification requests online through one's e-filing account for the respective financial year. One must mention the CPC reference number while putting in the online request.

As per the instructions, the tax department should respond to the rectification application within 6 months from the date of filing the application. You should, therefore, follow up where rectification is not processed by the assessing officer within 6 months. 

 

You can get the tax demand rectified within 4 years from the end of the financial year in which the intimation is issued imposing the additional tax. This should be done promptly as where the intimation shows additional tax payable, the same is to be paid within 30 days else the taxpayer may be treated as a assessee in default and penalised accordingly.

If a tax demand is raised and is legitimately payable, then one should pay the tax demand, or else, the specific interest liability would continue to accumulate as per the income tax provisions.

No-demand notice under Section 143(1) is not the final assessment

The intimation is not the assessment order or a guarantee that return will not be scrutinised by the authorities. Where the return is selected for scrutiny by the authorities, then the relevant jurisdictional assessing officer would review in detail the return filed by the taxpayer. Taxpayer may need to provide the supporting documents such as income tax computation with respect to the income reported, bank account details and/or any other relevant details which the officer may ask.

Where return is to be scrutinised by the tax authorities, notice can be issued within 6 months of the close of the financial year in which return was filed. Where taxpayer failed to disclose any income and tax authorities detect such concealment, the authorities can issue notice under Section 148 up to 6 years from the close of financial year in return is filed depending on the amount of taxes evaded.