Section 143 of ITA, 1961 : Section 143: Assessment

Explanation using Example

Imagine Mr. Sharma, a salaried employee, files his income tax return for the financial year 2021-22. He includes his salary income, interest from savings, and claims a deduction for his investment in a tax-saving fixed deposit under Section 80C of the Income-tax Act, 1961.

After filing the return, the Income Tax Department processes his return under Section 143(1) of the Act. They notice an arithmetical error in his return where he has accidentally added an extra zero to his interest income, inflating the amount. Additionally, they observe that the deduction claimed under Section 80C exceeds the statutory limit because Mr. Sharma misunderstood the provisions.

The Department sends Mr. Sharma an intimation in electronic mode, informing him of the adjustments due to the arithmetical error and the incorrect claim of deduction. Mr. Sharma is given thirty days to respond to this intimation. He realizes his mistake and agrees with the adjustments. The Department then recalculates his tax liability, adjusts the tax already deducted at source, and sends him an updated intimation showing the final tax payable or refundable.

In this scenario, Mr. Sharma's case is handled under the processing of returns as per Section 143(1) without the need for a detailed scrutiny assessment under Section 143(3).