Section 143(2) of ITAct 1961
Querist :
Anonymous
(Querist) 27 October 2009
This query is : Resolved
Sir,
I have filed my IT return for AY 2008-2009 (FY 2007-2008) on 31/07/08.The IT return is assessed and refund order is issued by respective ITO on 29/05/09 and cheque on 30/06/09.Due to my personal reason I could not deposit the same with my bankers, and requires revalidation.
(1) Recently I received a notice dated 24/08/09 from ITO under section 143(2) asking me to be present in his office along with documents, accounts and other evidence in support of my return. I am of the view that notice is “TIME BARRED” as it is not issued within time limit of 1 year from the date of filing the return as per section 143(2)
(2) Once the return is assessed, and refund order issued, is it right on the part of ITO to issue such notice? Is it legally right?
(3) ITO in his letter has mentioned that “This case is selected through CASS”. What is CASS? And if selected through CASS can it overcome all legality of following prescribed procedure of 12 months time limit?
(4) Can challenging the notice come in a way of revalidating my cheque as stated above?
I hope to receive valuable guidance from you all.
Meanwhile thanking you in anticipation.I feel The query is open and not resolved as indicated at the top right hand corner.
Sincerely yours,
ABC
adv. rajeev ( rajoo )
(Expert) 28 October 2009
Time limit for issue of Notice: No notice u/s 143(2)(ii) can be served on the assessee after the expiry of 12 months from the end of the month in which the return is furnished. If the notice is not served within the prescribedtime period, the assessment is deemed to be completed on summary basis, i.e., u/s 143(1).
Ur assessment is over you have got refund order, so it has attained finality. It is very important that whether notice is issued after the expiry of 12 months from the end of the month in which the return is filed, if itz beyond this period notice is illegal, u can challenge it.
Frankly tell you I am unaware of the CASS.
any way if the ITO violated the section then it can be challenged.
Querist :
Anonymous
(Querist) 28 October 2009
Sir,
Thank you for your guidance.Since notice is time barred Would it be neccessary to reply to notice or keep mum.However is there any ammendment to section143(2).
I have no idea if ITO can issue the notice as the case is selected through CASS.If any one can enlighten me on above,I shall be obliged.
While trying to study the case, I came across the following article in the site “Scrutiny Assessment under the income-tax Act with special reference to AIR
(1) Section 143: Assessment
(b) Sub-section (2)
Clause (ii) of sub section (2) provides that AO shall serve notice on assessee 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, if he considers it necessary or expedient to ensure that assessee has not understated the income or has not computed excessive loss or has not underpaid the taxes in any manner.
The proviso to clause (ii) further provides that no notice shall be served after expiry of six months from the end of financial year in which the return has been furnished. It may be noted that impetus of this limitation provision is on ‘service’ of notice and issue of notice has no reference.
Since I filed my return on 31/07/08, the financial year ends on 31/03/09 and six months thereafter ends on 30/09/09. So is ITO right in issuing the notice on 24/08/09? And I have to act according to notice? Kindly guide me in context of this proviso.
I happen to read Forum Home>Taxation>section143(2) of IT ACT 1961,where in Mr.Mitesh Shah has posted a question on 14/10/2008. There in it is stated that Finance Act 2008 allows ITO to serve notice within 6 months of the end of FY in which return is filed.So return is filed on 31/07/08, FY ends on 31/03/09 and further 6 months ends on 30/09/09. So ITO/AO appears to be within his right. Please guide me if my interpretation is correct.
ABC
Vineet
(Expert) 01 November 2009
If you received notice u/s 143(2) on or before 30th September, 2009 it is very much valid in view of amended provisions of the Act as rightly pointed out above.
An order u/s 143(1) can never be treated as final as it is mere processing of return filed by you without any verification or adjustments. The Act provides authority u/s 143(2), 147 and 154 to scrutinise, reopen or rectify the earlier orders.
CASS is Computer Aided Scrutiny Selection. The Income Tax Department has developed this program which selects cases for scrutiny u/s 143(2) depending upon certain parameters decided by CBDT, discrepancies between information provided by assessee in return and those reported by various intermediaries such as Banks, Property Registrars, Credit Card Companies, Car Dealers etc.
You are legally bound to comply with all requirements of ITO before he finalises your assessment and passes an order u/s 143(3). The reasons for which your case was selected by CASS will be known to you during the scrutiny process.
The initiation of scrutiny does not come in any way of revalidation of your refund. Earlier there was a provision to temporarily hold back the refund with approval of CIT in case scrutiny proceeding are pending, which has been done away with few years back. However if the ITO has some really good reasons for making additions in your income, don't expect a fresh revalidated refund for the time being.
