Section 143 of Income-Tax Act, 1961

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Section 143 of Income-Tax Act, 1961 deals with the concept of Assessment.

Contents

From the Act

[(1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:—

(a) the total income or loss shall be computed after making the following adjustments, namely:—

(i) any arithmetical error in the return; or

(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return;

(b) the tax and interest, if any, shall be computed on the basis of the total income computed under clause (a);

(c) the sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the tax and interest, if any, computed under clause (b) by any tax deducted at source, any tax collected at source, any advance tax paid, any relief allowable under an agreement under section 90 or section 90A, or any relief allowable under section 91, any rebate allowable under Part A of Chapter VIII, any tax paid on self-assessment and any amount paid otherwise by way of tax or interest;

(d) an intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to, the assessee under clause (c); and

(e) the amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to the assessee:

Provided that an intimation shall also be sent to the assessee in a case where the loss declared in the return by the assessee is adjusted but no tax or interest is payable by, or no refund is due to, him:

Provided further that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the return is made.

Explanation

—For the purposes of this sub-section,—

(a) “an incorrect claim apparent from any information in the return” shall mean a claim, on the basis of an entry, in the return,—

(i) of an item, which is inconsistent with another entry of the same or some other item in such return;

(ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or

(iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction;

(b) the acknowledgement of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a).

(1A) For the purposes of processing of returns under sub-section (1), the Board may make a scheme for centralised processing of returns with a view to expeditiously determining the tax payable by, or the refund due to, the assessee as required under the said sub-section.

(1B) Save as otherwise expressly provided, for the purpose of giving effect to the scheme made under sub-section (1A), the Central Government may, by notification in the Official Gazette, direct that any of the provisions of this Act relating to processing of returns shall not apply or shall apply with such exceptions, modifications and adaptations as may be specified in that notification; so, however, that no direction shall be issued after the 31st day of March, [2012].

(1C) Every notification issued under sub-section (1B), along with the scheme made under sub-section (1A), shall, as soon as may be after the notification is issued, be laid before each House of Parliament.]

[(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer shall,—

(i) where he has reason to believe that any claim of loss, exemption, deduction, allowance or relief made in the return is inadmissible, serve on the assessee a notice specifying particulars of such claim of loss, exemption, deduction, allowance or relief and require him, on a date to be specified therein to produce, or cause to be produced, any evidence or particulars specified therein or on which the assessee may rely, in support of such claim:

[Provided that no notice under this clause shall be served on the assessee on or after the 1st day of June, 2003;]

(ii) notwithstanding anything contained in clause (i), if he considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, serve on the assessee a notice requiring him, on a date to be specified therein, either to attend his office or to produce, or cause to be produced, any evidence on which the assessee may rely in support of the return:

[Provided that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.]]

[(3) On the day specified in the notice,—

(i) issued under clause (i) of sub-section (2), or as soon afterwards as may be, after hearing such evidence and after taking into account such particulars as the assessee may produce, the Assessing Officer shall, by an order in writing, allow or reject the claim or claims specified in such notice and make an assessment determining the total income or loss accordingly, and determine the sum payable by the assessee on the basis of such assessment;

(ii) issued under clause (ii) of sub-section (2), or as soon afterwards as may be, after hearing such evidence as the assessee may produce and such other evidence as the Assessing Officer may require on specified points, and after taking into account all relevant material which he has gathered, the Assessing Officer shall, by an order in writing, make an assessment of the total income or loss of the assessee, and determine the sum payable by him or refund of any amount due to him on the basis of such assessment:]

[Provided that in the case of a—

(a) [research association] referred to in clause (21) of section 10;

(b) news agency referred to in clause (22B) of section 10;

(c) association or institution referred to in clause (23A) of section 10;

(d) institution referred to in clause (23B) of section 10;

(e) fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub-clause (v) or any university or other educational institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via) of clause (23C) of section 10, which is required to furnish the return of income under sub-section (4C) of section 139, no order making an assessment of the total income or loss of such [research association], news agency, association or institution or fund or trust or university or other educational institution or any hospital or other medical institution, shall be made by the Assessing Officer, without giving effect to the provisions of section 10, unless—

(i) the Assessing Officer has intimated the Central Government or the prescribed authority the contravention of the provisions of clause (21) or clause (22B) or clause (23A) or clause (23B) or sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, as the case may be, by such [research association], news agency, association or institution or fund or trust or university or other educational institution or any hospital or other medical institution, where in his view such contravention has taken place; and

(ii) the approval granted to such research association] or other association [or fund or trust] or institution or university or other educational institution or hospital or other medical institution has been withdrawn or notification issued in respect of such news agency or fund or trust or institution has been rescinded :]

[Provided further that where the Assessing Officer is satisfied that the activities of the university, college or other institution referred to in clause (ii) and clause (iii) of sub-section (1) of section 35 are not being carried out in accordance with all or any of the conditions subject to which such university, college or other institution was approved, he may, after giving a reasonable opportunity of showing cause against the proposed withdrawal to the concerned university, college or other institution, recommend to the Central Government to withdraw the approval and that Government may by order, withdraw the approval and forward a copy of the order to the concerned university, college or other institution and the Assessing Officer.]

[(4) Where a regular assessment under sub-section (3) of this section or section 144 is made,—

(a) any tax or interest paid by the assessee under sub-section (1) shall be deemed to have been paid towards such regular assessment ;

(b) if no refund is due on regular assessment or the amount refunded under sub-section (1) exceeds the amount refundable on regular assessment, the whole or the excess amount so refunded shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly.

(5) [Omitted by the Finance Act, 1999, w.e.f. 1-6-1999.]]

[* * *]

Recent Cases / Related Cases / Case Laws

  • February 2012: Delhi Tribunal: AO's power to rectify intimation under section 143(1)(a) in purported exercise of power under section 154 - [2012] 18 LNIN 24
  • January 2012: Proviso to section 143(2) applies to a return filed in response to notice issued under section 148 - [2012] 17 LNIN 140 (Allahabad)
  • January 2012: Challenge to notice where notice under section 143(2) was served on assessee on last day of prescribed period of limitation by affixture and, thereupon, assessee participated in assessment proceedings under section 143(3) - [2012] 17 LNIN 128 (Delhi)
  • May 2011: All.: Statutory interest is to be charged up to date of passing of order of regular assessment under section 143(1)(a) - [2011] 11-44
  • Pannalal Binjraj Vs Union of India [1957] 31 ITR 565 (SC): Provisions should be applied in a humane and considerate manner - A human and considerate administration of the relevant provisions of the Income-tax Act would go a long way in allaying the apprehensions of the assessee and if that is done in all the true spirit, no assessee will be in a position to charge the revenue with administering the provisions of the Act with ‘an evil eye and an unequal hand’
  • CIT Vs Simon Carves Ltd. [1976] 105 ITR 212 (SC): Authorities must act in a fair and not partisan manner - The taxing authorities exercise quasi-judicial powers and in doing so they must act in a fair and not a partisan manner. Although it is part of their duty to ensure that no tax which is legitimately due from the assessee should remain unrecovered, they must also at the same time not act in a manner as might indicate that scales are weighted against the assessee. It is impossible to subscribe to the view that unless those authorities exercise the power in a manner most beneficial to the revenue and consequently most adverse to the assessee, they should be deemed to have exercised it in a proper and judicious manner.
  • K. Rudra Rao Vs ITO [1958] 34 ITR 216 (AP): Officers should not do things in unreasonable manner - In administering a tax law irritation to the assessee is inevitable; an officer is bound to do his duty irrespective of the susceptibilities of the assessees or even at the risk of hurting their amour propre. But this would not justify the officers functioning under the Act doing things in an unreasonable way.
  • Bombay Hardware Syndicate Vs CIT [1973] 92 ITR 160 (Mad.): Power to reject return and evidence is inherent in powers of enquiry - In the event of an assessee failing to establish the truth and correctness of the return, it is open to the ITO to reject the return. The power to reject the return and the evidence in support thereof is inherent and implied in the ITO’s power to enquire into the total income of the assessee.
  • Isha Beevi Vs TRO [1975] 101 ITR 449 (SC): Reference to wrong provisions will not vitiate actions taken - Where the power to proceed is actually there, the mere reference to a wrong section for authority to act will not vitiate the action taken. It is not enough if a wrong section or provision of law is cited in a notice or order if the power to proceed is actually there under author provision.
  • Lalji Haridas Vs ITO/Chhotalal Haridas Vs M.D. Karnik [1961] 43 ITR 387 (SC): In cases of doubt, proceedings against more than one person is permissible - In cases where it appears to the income-tax authorities that certain income has been received during the relevant previous year but it is not clear who has received that income, and prima facie it appears that the income may have been received either by A or by B or by both together, it would be open to the relevant income-tax authorities to determine the said question by taking appropriate proceedings both against A and B.
  • Thalibai F. Jain Vs ITO [1975] 101 ITR 1 (Karnataka): Even in summary assessment, ITO must apply his mind - While making an assessment under section 143(1), it is true that the ITO need not have been satisfied that the voluntary return submitted by the assessee was correct and complete. He could accept the return of income as submitted by the assessee. But the income must be the income earned by the assessee in the relevant year. The ITO has no power to assess the income of one person in the hands of another. To that extent at least, he must apply his mind and cannot blindly make the assessment while accepting the voluntary return.

See Also

  • Section 143 of the Income-tax Act, 1961 - Assessment - General - Processing of returns of assessment year 2011-12 - Steps to clear backlog - INSTRUCTION NO. 01/2012 [F.NO.225/34/2011-ITA.II], DATED 02-02-2012
  • Notification F.No.225/26/2006-ITA.II (Pt.): Selection of cases for scrutiny on the basis of data in AIR returns and subsequent assessment proceedings-regarding.
  • Section 3 of Income-Tax Act, 1961


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