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For AY 2017-18 or FY 2016-17 many are receiving Income Tax Notice which says Communication u/s 143(1)(a) for PAN such as given below. Please do not panic. You have 30 days to responsd.

Notice under section 143(1)A

Notice u/s 143(1A) is sent If there are any mismatches, such as you have not included in your return all the income as reported in your 26AS, then these computer-assisted notices will be sent seeking necessary clarification. You will need to respond to this notice within 30 days by logging onto the income tax portal and uploading the proof needed to correct the mismatch.  Notice Variance due to Income From Other sources

In June/Jul 2017 CPC  sent such notice by mistake and they then sent revised communication soon. if notice is genuine then you have to go for eAssessment/Proceedings as explained in our article.

Our article, income tax notice for Inconsistency in Salary Income and Form 26AS explains Income Tax Notice for Inconsistency in Salary Income and Form 26AS explains 

For Income Tax Department their source of your salary income is Total amount Paid/credited in Form 26ASQuick e-File ITR option on incometaxindiaefiling.gov.in of ITR1 picks this amount in”Income under Salary” column.

  • It is not INCOME CHARGEABLE UNDER THE HEAD “SALARIES” (3-5) from Form 16 
  • It is not “Income under the Head “Salaries” of the Employee(other than from perquisites) Form 12BA

So if you look at Form 26AS and Part A which shows the TDS details your Income from Salary should match the amount mentioned in the Total amount paid/credited,

If your Income under Head Salaries in ITR does not match Total Amount Paid/Credited in Form 26AS you would get this notice. Income from Salary is filled in two places in ITR or Income Tax Return, one in Income from Salary and other TDS details. 

You have to Disagree to the notice and revise the ITR. Income from Salary is filled in two places in ITR or Income Tax Return, one in Income from Salary and TDS details.

ITR1 is simple, You need to enter the value of Total tax credited from Form 26AS in Income from Salary and fill the TDS details as per Form 26AS as shown in the image here

ITR2 needs a break up of the income in Schedule S. If you don’t have any prerequisites then just deduct the professional tax from the Income as shown in the image here.

If you have prerequisites then you need to open Form 12BA and see the value of income from Salaries other than perquisites. Add 2400 to it. You need to show your perquisites and other allowances to as shown in the image here.

Income tax notice under 143(1)(a) due to variance in income and file revised return

If you have got Income Tax Notice for Variance as per Form26AS due to Fixed Deposit Interest. Income from Fixed Deposit is the interest income and comes under  Income from other sources.

Our article How to agree to income tax notice under 143(1)(a) due to variance in income and file revised return gives the steps to revise the return. It also shows how to file Revised Return to Income Tax Notice for Variance as per Form26AS due to Fixed Deposit Interest.

  • Banks deduct TDS on interest only if the interest amount for an FD is greater than Rs.10,000 per year. The rate of TDS deducted by banks is 10% on interest income, provided your PAN number is available with the bank. If the bank doesn’t have your PAN in its records, TDS is deducted at 20% on interest income.
  • If you submit the Form 15G/Form 15H to the bank declaring that since your taxable income for the year will be below the minimum tax slab, the bank shouldn’t deduct TDS on your FD Interest.
  • The interest that is earned on fixed deposits is taxable in the hands of the depositor as per the income slab so a person who earns income between 2 lakh to 5 lakh pays only 10% tax on it while the person who earns above 10 lakh pays 30% tax.   Individuals in higher tax brackets like 20% or 30% need to pay Self-Assessment Tax over and above the TDS deducted on their interest income
  • The Form 26AS includes a record of all the interest earned on your Fixed Deposits including TDS payments and also when no TDS is deducted.

In such case Notice is genuine and you need to show the Income as income from other sources,

  • Calculate your new tax liability by adding the income which appears as variance.
  • Pay the self-assessment tax using Challan 280 online or offline. Please use the correct Assessment year. Please save the paid Challan receipt.
  • File Revised return by logging on to the income tax website. Click on My Account->eFiled Returns. You can choose Quick Efile
  • Show the
    • New income
    • TDS deducted which was not mentioned earlier
    • New tax paid
  • Everify the return or post ITR-V

143(1)a Notice in Jul -Aug 2017 due to Variance

In Jul-Aug 2017 such notices were sent when one had claimed investments under Section 80C or HRA that were not mentioned in their Form 16. Income Tax dept sent the revised communication.

Communication of proposed adjustment u/s 143(1)

Communication of proposed adjustment u/s 143(1)Update 23 Sep 2017: Income tax response submitted for 143(1)a are being processed. Reader Bimal informed that

My return was processed on 18/09/17. cpc has accepted my response against 143(1)a. Considering the reply positively

  • Please do not panic
  • Please verify your notice.
  • CPC has told that ignore the notice, They would be resending the notice. On 10 Aug 2017 Varun said that his return was processed. Comment from him is shown below.
  • As you have 30 days hopefully you will get another mail from CPC with revised communication.
  • If you do not reply within 30 days the link may get disabled and there is no way to reply using Eproceedings. You would get another email from Income tax asking to pay tax. Our article If you did not respond to Communication of proposed adjustment u/s 143(1)(a) discusses it in detail. Many readers have said that for them after limit of 30 days the eProceedings link got opened again.
  • For many eProceedings Link is not enabled. So please wait for 2-3 days after the notice is received. 
  • You can disagree to addition and attach proof .
  • There is bug in calculations shows in eProceedings. Variance (column 3) is sign independent. It’s i-ii and 1,50,000-0 and 0-150000 both show up as positive.
  • Head of Income/Schedule under which reported in the return is only taking numerical values.
  • Comment from Varun
Revised notice for Communications

Revised notice for Communications

Communication of proposed adjustment u/s 143(1)(a) notice from Income Tax department

Communication of proposed adjustment u/s 143(1)(a) of Income Tax Act, 1961.

Communication of proposed adjustment u/s 143(1)(a) of Income Tax Act, 1961.

Communication of proposed adjustment u/s 143(1)

Communication of proposed adjustment u/s 143(1)

Following cases have been reported

  • Those who have claimed investments under Section 80C or HRA that are not mentioned in their Form 16.
  • Those who have also had savings bank account interest or income from fixed deposits or house property that’s not included in the Form 16

Please do not panic. Many contacted CPC. One of our readers, Nirav, wrote following.

Income Tax Communication Adjustments under section 143(1)

Income Tax Communication Adjustments under section 143(1)

CPC Contact Number for Refund /Refund re-issue Rectification Notification & Processing is 1800-425- 2229 or 1800-103-4455(Toll free)

Taxpayers can contact CPC from 8:00am to 8:00pm from Monday to Friday.

How to respond to the Notice of Communication of proposed adjustment u/s 143(1)(a)?

Please verify your notice. As you have 30 days hopefully you will get another mail from CPC with revised communication.

For many eProceedings Link is not enabled. So please wait. 

If the notice is genuine then you have to e-Assessment/Proceedings

  • Gather all your supporting documents (rent receipts, life insurance statement, home loan interest certificate etc).
  •  Visit the ‘e-Filing’ Portal https://incometaxindiaefiling.gov.in/
  • Enter the valid ‘User ID*’, ‘Password*’ and ‘Date of Birth/Incorporation*’ at e-Filing portal. Click ‘Login’
  • Navigate to the ‘e-Proceeding’ tab -> Click ‘e-Assessment/Proceedings’ as shown in the image below.
E-Assessment Proceedings

E-Assessment Proceedings

  • Click on the proceeding name to view the proceeding details. By clicking the ‘Reference ID’, additional details will be displayed.
  • On clicking submit button You will see a list of all mismatches same as the ones you’ve received in the email
e-Assessment-Proceedings response

e-Assessment-Proceedings response

  • Click on the dropdown under Response
    • Agree to addition: If you have forgotten to include income from fixed deposits etc that are mentioned in your Form 26AS, select this option.
    • Disagree to addition: If you have added deductions in your tax return directly and have necessary proofs for it, then select this option.
E-Assessment proceedings select response agree or disagree

E-Assessment proceedings select response agree or disagree

Note: In many cases we have come across the calculations are faulty. An example of it is given below. Column 3, Variance, does not take – sign. Actual difference should be 1

Error in variance shown in e-Proceedings

Error in variance shown in e-Proceedings

 

640090 790091 -150001
150000 0 150000
Total -1

Or in the following case where the person has claimed less income in ITR than what is in Form 16 and Income Tax Department will still be adding the income.

  • Total salary in return is 423828.
  • While Form 16 says 425472
  • Form 16 Salary Income and Form 16 Gross Total Income is repeated. So either Form 16 Taxable Income should be taken.
  • Difference i-ii=423828-425472= 1644 and not 1644. 
So basically Govt owes person refund, by this calculation
Eproceedings 143 error

Eproceedings 143 error

In ITR you file Income as per your Form 16. Following image shows break up in ITR1. Image below shows value you add in ITR2. Our article How To Fill Salary Details in ITR2, ITR1 discusses it in detail.

Fill Income from Salary in ITR1 based on Form 16

Fill Income from Salary in ITR1 based on Form 16

Income from Salary in ITR2 based on Form 16

Income from Salary in ITR2 based on Form 16

How to disagree to Addition in eProceedings

When you disagree, you’ll see a section open up where you have to fill in details and select from a list of reasons. You’ll also need to attach supporting documents before you submit your response. Once you disagree your original ITR is considered as good. These rows of information are asked just in case the officer wants to verify if the reason to disagree was sufficient.

Disclaimer: I am not a tax expert. This is to best to my understanding after talking to few tax experts.  You might want to consult a qualified tax consultant or CA for your specific case!

 eProceedings Disagree to Addition

Sample of Disagree to addition filled is shown below. Click on image to enlarge. Each field is explained below

Filling disagree to addition in eProceedings

Filling disagree to addition in eProceedings

TAN : Enter Details as per Form 16/Form 16A/Form 26AS based on the request. Enter the TAN of the employer (available in the Form 16 or Form 26AS) for salary income

If you have income from interest etc, put TAN of bank/company (available in Form 16A or Form 26AS)

Form 26AS Income and employer details

Deduction made under section

  • for investment in PPF, Tax Saving Fixed Deposit, etc : Mention 80C
  • For NPS : Based on your Investment, 80CCD(1), 80CCD(2) or 80CCD(1B)
  • For taking deduction upto Rs 10,000 on interest from savings account :80TTA
  • For HRA 10(13A)
  • For medical insurance 80D

Amount paid/credited by deductor:

Put Total amount paid/credited – you’ll get this from Form 26AS (shown above) for salaried interest income, etc.  For salaried it should match the amount Gross Salary (1d) in Form 16.

Nature of receipt as per the deductor

Enter Type of Income any of five types of income defined by income Tax – Salary (For Pension also put salary income), Business, Capital Gains, income from house and other income which is income from Other sources and includes interest income.

Income/Gross Receipts as per the return

Enter the amount you have entered in your return.

Head of Income/Schedule under which reported in the return

 Note : Head of Income/Schedule under which reported in the return IS ACCEPTING ONLY NUMERIC VALUE and you cannot leave this field blank!

A reader said that Now it is not compulsory to enter numeric only in Head of income field.

If it accepts numeric values a CA has suggested following. There are sections of Income Tax which correspond to the Types of Income. With no clarification from Income Tax Department.

  • Salary/Pension: 17 
  • Capital Gains: 54 
  • House Property: 24 
  • Business/Profession: 28 
  • Other Income (includes interest): 56

Reason

There are 10 reasons to choose from as shown below:

  • For HRA, select the reason Allowance exempt claimed in return but not in Form 16
  • For all Section 80 deductions, select Deductions claimed in the return but not in Form 16
e-assessment proceedings disagree to addition

e-assessment proceedings disagree to the addition

Once you’ve submitted, you will see an acknowledgement screen.

Justification/Remarks

Say why your Allowance or deduction was not in Form 16. It could be “employer did not consider this deduction” or “investment was made after proof submission to employer” etc.

Please do not use special characters in Justification/Remarks as shown in image below. Do not use special characters (Example :~,@,#,$,%,^,&,*.(,),”) and Double Spaces. You would get Invalid characters in input message.

Invalid characters in input in eProceedings

Invalid characters in input in eProceedings

For all deductions under chapter VIA (includes 80C, 80D, 80E, NPS related etc) which you claimed but were not part of Form 16 select “Deductions claimed in the return but not in Form 16”

In case everything was present in your Form 16 but still you got notice select “Others” and mention that the deduction already present in Form 16. Also attach the Form 16.

Savings Bank Interest does fall under TDS.  For claiming 80TTA benefit in responding 143(1)a please use your employer TAN.

Same for PPF interest. One does not have TAN of Post office or saving bank account. So use TAN of uour employer

Attach relevant documents.

  • For 80C investments you can attach the investment proof ex enteries in ppf passbook
  • For HRA you can submit rent receipt, etc.
  • For 80TTA which shows the interest from bank. (If you have many banks, add it in one document)
  • For PPF attach the passbook enteries

Section 143(1) Acknowledgement

After all the process is complete you get an acknowledgement

Video on eProceedings

As usual Amlan has been quick to come up with Video on HOW TO REPLY TO COMMUNICATION OF PROPOSED ADJUSTMENT u/s 143(1)a and E ASSESSMENT PROCEEDING?

Disclaimer: I am not a tax expert. This is to best to my understanding after talking to few tax experts.  You might want to consult a qualified tax consultant or CA for your specific case!

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