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What can a taxpayer do when returns are
processed with adjustments by CPC u/s 143(1)?
Home / What can a taxpayer do when returns are processed with adjustments by CPC u/s 143(1)?

What can a taxpayer do when returns are
processed with adjustments by CPC u/s 143(1)?

With effect from AY 2017-18 amendments have been done in the Indian Income Tax Act, 1961, with regard to processing of cases under 143(1). Provision of section 143(1D) has been amended, as per which all the returns are required to be processed. Section 241A allowing withholding of refund determined under 143(1) in cases where notice u/s 143(2) is issued is also introduced.

Further, provision of 143(1)(a) was amended w.e.f 01.04.2017, as per which certain adjustments on income of loss submitted by assessee in ITR is allowed to be done by CPC before processing of such return. As per the proviso to the section, no such adjustment is allowed unless notice for such adjustment is given to the assessee. The assessee is allowed to submit response within a period of 30 days of issue of notice. Such cases will be examined by CPC and notice to assessee for the purpose of prima facie adjustment, if any, will be given y CPC centrally in all such cases. The AO is not required issue notice of adjustment in such cases. The taxpayer will submit their reply electronically through the e-filing portal which will be considered by CPC before final processing u/s 143(1)(a).

Action to be taken by AO after response of taxpayer is received

Once the response of assessee is received, the same is to be analysed by AO and following actions can be taken.

Case (a): If taxpayer agrees or partially agrees for adjustment and submits revised return, it will be treated as a fresh ITR and AO will follow same procedure for processing u/s 143(1),

Case (b): If taxpayer disagrees for adjustment: Response will be verified by CPC and accordingly return will be processed with or without adjustment as mentioned above.

Case (c): No response received within 30 days from date of issue of notice, CPC will process return with adjustment.

Note : Return filed u/s 142(1) cannot be revised and therefore, CPC will decide based on response submitted by taxpayer.

As all the returns of AY 2017-18 were required to be processed by 31.03.2019 by CPC, adjustments have been made by CPC on the basis of notices issued and responses made by taxpayer if any.

In such a scenario, what are the options available to assessee if he/she is in disagreement with the intimation passed under section 143(1)? In such a case, the assessee can file a rectification application before the concerned AO with all supporting documents for his disagreement. Such rectification application can also be filed manually with an online response that the demand so raised is not acceptable after seeking expert advice from a tax consultant.

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