We all deserve second chances in life, as it allows us the opportunity to redeem ourselves, when some wrong has been done. A notice issued under section 143(2) of Income Tax Act is your second chance from the Tax Department, who upon receiving your tax return has found minor or major discrepancies in either under reporting of income or over reporting of losses. Recipients of this notice may find themselves having to appear for a hearing to defend themselves with supporting proof. Failure to take this notice seriously will result in hefty penalties and in severe instances imprisonment.
If you get notice under section 143(2), it means your return has been selected for scrutiny by your Assessing Officer.
Here are some important facts you should know about scrutiny notice:
[ Read: Notice under section 143(1) ]
When you receive a notice under this section, it will be one of the following three: (links with examples for each notice)
To download the copy of the criteria click here.
Last year, the procedure for issuing notices u/s 143(2) was changed to electronic mode. Whatever documents/proof are requested by your AO, you must submit them online at the e-filing portal. All scrutiny proceedings will be conducted online from now on, except in the following situations:
Click here for circular.
As per section 292BB, the scrutiny assessment notice served will be valid if no objections are raised for:
However, the objection must be raised before the start of the proceedings, then it will be held valid. Additionally, once the proceedings are complete no objections can be raised.
Consequences of not responding to notices u/s 143(2) can be very grave. In addition to a penalty of Rs. 10,000 u/s 272A for each failure to respond, the officer can complete the best judgement assessment u/s 144 based on the information with him. This may also result in increasing your taxable income which in turn can result in huge taxes and penalties payable by you. If you choose to subsequently dispute this tax demand you will be required to pay at least 20% of the taxes due before you can file an appeal with any higher authorities. And in rare circumstances it may lead to prosecution and if found guilty then imprisonment too.
Receiving a scrutiny notice is never a pleasant experience and failure to respond to it correctly can result in further proceedings or penalties. To ensure any notices you receive are handled with care and attention to detail, consult your personal tax experts at H&R Block India to get instant tax notice assistance.