Vivek (Accountant) 22 July 2010

Dealing with Intimation u/s 143(1)

I'm a CA student working in a firm of accountants.. Yesterday one of our clients received an intimation u/s 143(1) for AY '09-10, from the CPC..

The above client is running a small textile shop in our town and his disclosed net profit was a little more than Rs.1,60,000/- for the said AY. No TDS has been claimed by the assessee for the said AY.

However, in the intimation, the AO has determined his income to be Rs. 2,65,000/-. However, the basis of which such determination was done can't be identified from the intimation.

My questions are:

1. Whether such intimation without showing sufficient grounds for determining the income u/s 143(1), valid?

2. What follow-up measures should we adopt to identify the method adopted by AO?

3. If a rectification u/s 154 is possible, what procedures should we adopt for seeking such rectification?

Kindly reply ASAP, ‘coz its very urgent…

Thanks…..

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4 Replies

A V Vishal (Advocate) 22 July 2010

APPLY FOR RECTIFICATION U/S.154 ALONG WITH SUPPORTING TO ITDCPC@INCOMETAXINDIA.GOV.IN AND FOWARD A HARD COPY TO THE JURISDICTIONAL A.O

Vineet (Director) 23 July 2010

The AO cannot alter income u/s 143(1) as returned except adjustment for arithmetical errors or any incorrect claim which is apparent from any information in report.

As the return is not processed manually, please check at your end whether any arithmatical error crept in or any any claim for deduction, set off of b/f losses was claimed which was not prima facie permissible. If everything is correct apply for rectification of order.

Vivek (Accountant) 23 July 2010

Thank you to Vishal and Vineet for your valuable replies....

Shayan Khan (B.com) 25 July 2010

its a mistake apparent from the records and can be rectified by a rectification order passed by A.O within a period of 4 years from the date on which the order sought to be amended is passed. rectification can be made either suo moto by the A.O. or by an application made by the assessee. Sec 154 of the I.T. Act,