With advent of online filing users have come hear about sections and notices and other things which was not so prevalent during manual filing era. Although manual filing still exist and online filing is in transitional phase but still it has led to a lot of information being circulated among the tax payers.
With more information comes more confusion and hence educating the users about the provisions becomes another responsibility of the Income Tax Department but that is not been done so far. It is left on the shoulders of professionals and middlemen who assist taxpayers in preparing and filing return.
Now those users who file their return on their own without using help of professionals get bothered sometimes when they start to get mails from the department. In manual process it was simple deposit at counter and receipt of acknowledgement after stamping.
New process goes through the following process:
On part of taxpayer
1. Choose appropriate form fill it up and file it online
2. After filing it, take printout of the acknowledgement generated. Now this acknowledgment is not complete until and unless it is signed and sent to the central Processing Unit(CPC), Bengaluru. It is going to be decentralized soon.
On part of department
3. After the acknowledgement is received in Bengaluru, there is another mail sent to the assessee who filed his return that his acknowledgment is received. This receipt contains a number which shall validate this fact that the return was filed and acknowledgement sent to CPC.
4. Now final step is processing of the return by the Income Tax Department.
5. Once the return is processed about its accuracy another mail is sent to the assessee, which is called Intimation u/s 143(1)
Now this is just an intimation as the name itself suggests. But its feature changes with its content. Such as:
If you look at the notice you will see that there are two columns:
a) As provided by taxpayer in return of Income and
b) As computed under section 143(1).
First Case: No difference
If there is no difference in both columns or say in details provided by the taxpayer and as verified by the Income Tax department, then this notice will serve as final assessment of the return with nothing to be done on part of the taxpayer and the department. Just a printout of the same shall be taken and kept along with the acknowledgment as originally sent to the department.
Second case: Positive Difference (Tax Demand)
If there is a difference in the details as provided by you and the details as assessed by the department then the nature of this notice changes. This intimation becomes 'Notice of Demand u/s 156'. In case you have received the notice then you will see that after all the details end there is note mentioning that
"In case of Demand, this intimation may be treated as Notice of demand u/s 156 of the Income Tax Act, 1961. Accordingly, you are requested to pay the entire Demand within 30 days of receipt of this intimation".
For example, if Income as disclosed by taxpayer is Rs.5,00,000 and tax duly deposited on same but the department computes his income as Rs.5,50,000, then there will be shortfall of tax paid and balance tax of say Rs.10,300 will become payable along with interest.
Now this 'Intimation' will take the form of 'Notice', or in other words 'Notice of Demand'.
The taxpayer will have to pay such tax or if he thinks that the demand is wrong then he must prove his case with necessary procedures. I am not going to discuss them here.
Third case: Negative difference (Tax Refund)
If the intimation shows that the tax paid by taxpayer is more than the income computed by the department then such intimation will have a refund and such refund will be granted to the taxpayer. He will first receive this intimation on mail then a manual intimation along with the refund cheque will reach his address.
Here the taxpayer need do nothing but to get the cheque deposited in his account.
This intimation will also be received if the return filed has refund claim and the intimation will confirm whether all of the refund claim is accepted or there is any change.
So the only time this intimation shall be really noticed is when it has a tax demand asking taxpayer to take further action or else in first and third case it shall be just kept as final communication from the Income Tax Department about final processing of return.
Hope the explanation was satisfactory.