All the income tax returns filed by the taxpayers are first processed online at the Centralised Processing Centre (CPC). After processing the return, the income tax department then issues intimation under section 143(1) to the taxpayers informing them about the results.
CPC assess return and issue Intimation with :
Intimation with No Demand No refund
This generally happens if the department has accepted the return as filed without carrying out any adjustments to it.
Intimation with Demand
Its happens when there is error during filing of return like :
1. Mismatch Between TDS , Advance Tax or Self Assessment Tax
2.Mismatch in form 16 and Return Filed
3.Any Income which is reflected in Form 26 AS but not declare in ITR.
4.Any arrear tax demand of preceding years.
Intimation With Refund
Issued where any interest or tax is found to be refundable either where no discrepancy is found in the return already filed or after making adjustments as referred to in Section 143(1) and after giving credit to the taxes and interest paid by the taxpayer.
It often happens that while filing income tax returns we omit things or commit some mistakes. These mistake(s) make your return “defective” and you’re issued a notice of defective return u/s 139(9). Section 139(9) of the Income Tax Act, 1961 states that when a return is found defective, the A.O. gives you a period of 15 days to correct the mistake. The return can be considered defective for one or many reasons as stated below.
Reasons for Defective Return
*Not filling the annexure, statements and columns in the income tax return that must be duly filled wherever required. For example, while claiming deduction u/s 80G, the details in its schedule is not filled or wrongly filled.
*Tax together with interest, if any is paid before filing the return and all the details relating to it is not filled. For example, BSR code, Date of challan should be correctly filled.
*Tax actually paid does not match with the tax payable in the income tax return or taxes are not paid in full.
*While filing ITR 4, total presumptive income is shown less than 8% or 6 %of gross turnover or receipts as the case may be then in that case ITR 3 should have been filed.
*The Gross receipts is not mentioned in the Profit & Loss A/c Or the Gross receipt or income u/s 44AD is shown more than Rs. 2 Crore in ITR 4.
*If you have filed your return u/s 44ADA with the gross receipt more than 50 Lakhs without Balance sheet and Profit & Loss, then notice will be received for filing ITR-3 with audited B/s and P&L Statement.
*Where you’re required to maintain regular books of account such as Balance Sheet and Profit and Loss statement, but they have not been filled in the return while filing it.
*Tax deducted has been claimed as a refund, but no income details are provided in the return.
*No income details has been provided in ITR but details regarding taxes paid have been provided.
*Gross income as referred to in 26AS has not been considered in the respective heads of ITR.
*When the books of accounts have been audited but a copy of audit report and audited financial statements have not been filled in the return while filing it.
*Name mismatch between PAN and Income Tax Return.
Taxpayers should remain alert about six categories of high value transactions, especially those done in cash, as the Income Tax Department has become highly vigilant.Banks, intermediaries and other establishments will report high value transactions of all customers to the Income Tax Department.
Six categories of high value transactions will come under scrutiny of the Income Tax Department.
1)Deposit of aggregating to ₹10 lakhs or more during the year, which would be reported by commercial and Co-operative banks.
2)Credit card cash repayments aggregating to ₹1 lakh or more and if the total payments aggregate ₹10 lakhs or more through any mode (cash/transfer/cheque) during the year will also get reported.
3)Purchase of foreign exchange of currency transactions as well as purchase of shares/mutual funds/debentures of ₹10 lakhs or more through any mode will get reported to the department.
4)The sub-register has to report purchase or sale of any immovable property of ₹30 lakh or more. Time deposit of ₹10 lakh or more made during the year will also be reported.
5.)Several Taxpayers had very often not disclosed certain information to the Income Tax while filing the Return of Income. This often slipped under the radar of the Income Tax because the information was hard to compile on such a large scale of tax-payers.
6. Taxpayers should ensure all their transactions are disclosed properly in the return of income filed. The Taxpayer should be able to justify the expenses outflow of money is justified by “Taxable or Taxed Source of Income”. Details of these expenses/outflows were previously not available with the Income Tax.
On non-compliance or non-disclosure, the Income Tax will initiate penal action and will issue notices for further action against the defaulting taxpayer.