Sec 143(1)(a) is about making adjustment for certain amounts in the Income declared by an assessee while filing its return of income .Following adjustments are to be made
(i) any arithmetical error in the return
(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return
(iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139
(iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return
(v) disallowance of deduction claimed under sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID or section 80-IE, if the return is furnished beyond the due date specified under sub-section (1) of section 139 or
(vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return
On a plain reading the clauses described above at (i) and (ii) are abundantly clear.Regarding (iii) it should be understood that any loss cannot be claimed if the return is filed beyond due date and the same is applicable for deductions claimed as given in (v) above.
Regarding the disallowances mentioned in Audit Report these adjustments are now inbuilt in the processing stage itself since the amounts that are disallowed in Audit Report should be added back while filing of return.
Regarding amount reported in 26AS but not taken in Income filed shall be added back as given in (vi) above.
- First intimation is given to the assessee of such adjustments either in writing or in electronic mode
- the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made
- no adjustment shall be made under sub-clause (vi) in relation to a return furnished for the assessment year commencing on or after the 1st day of April, 2018
For the purposes of this sub-section,—
(a) “an incorrect claim apparent from any information in the return” shall mean a claim, on the basis of an entry, in the return,—
(i) of an item, which is inconsistent with another entry of the same or some other item in such return;
(ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or
(iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction
What to do when an intimation is received for an intent of adjustment:
- Login to the efiling account
- under the e-proceedings section go to “view” tab
- Now you will find the details of proposed addition
- here you will find options such as “agree, disagree with adjustment”
- depending upon the option selected further options are available as follows:
Agree with adjustment:
a)This may be the case where you must have some income from interest that you must have omitted to declare in Income Tax return but since it must have been reported in 26AS hence now it should be added in your return.If this is the case then you must agree to the addition.
b)You must have claimed a loss set off but the return has been filed beyond date so the loss cannot be allowed
c)similarly there must have been any inter head adjustment which is not being matched with the head in which the income is declared for eg
The profit and loss contains some income from house property which should be reduced from profit and added to income from house property section in ITR but by mistake there is a mismatch in the income reduced from the profit and that added to the House property income
Disagree with Adjustment:
a)there may be the case that the deduction must have been filed directly in the return but not appearing in 26AS by fault of the deductor
b)there may be time when wrong income has been reported by some deductor due to wrong quoting of PAN.In this case you have to submit proof of payments etc whatever is available with you to substantiate your claim
Please remember that only 30 days are provided for filing a reply failing which the proposed additions will be made and tax recalculated.