Amendment of section 143.
66. In section 143 of the Income-tax Act,-
(a) with effect from the 1st day of April, 2017,-
(I) in sub-section (1), in clause (a),-
(A) in sub-clause (i), the word “or” appearing at the end shall be omitted;
(B) after sub-clause (ii), the following sub-clauses shall be inserted, namely:-
“(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:
Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode:
Provided further that 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;”;
(II) in sub-section (1D), the following proviso shall be inserted, namely:-
“Provided that such return shall be processed before the issuance of an order under sub-section (3).”;
(b) for sub-section (2), the following sub-section shall be substituted with effect from the 1st day of June, 2016, namely:-
“(2) Where a return has been furnished under section 139, or in response to a notice under sub-section (1) of section 142, the Assessing Officer or the prescribed income-tax authority, as the case may be, if, considers it necessary or expedient to ensure that the assessee has not understated the income or has not computed excessive loss or has not under-paid the tax in any manner, shall serve on the assessee a notice requiring him, on a date to be specified therein, either to attend the office of the Assessing Officer or to produce, or cause to be produced before the Assessing Officer any evidence on which the assessee may rely in support of the return:
Provided that no notice under this sub-section shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished.”.
Notes on Clauses:
Clause 66 of the Bill seeks to amend section 143 of the Income tax Act relating to assessment.
Sub-clause (a) of the said clause seeks to amend clause (a) of sub-section (1) of said section.
Clause (a) of sub-section (1) of the aforesaid section provides that a return filed is to be processed and total income or loss is computed after making the adjustments on account of any arithmetical error in the return or on account of an incorrect claim, if such incorrect claim is apparent from any information in the return.
It is proposed to expand the scope of adjustments that can be made at the time of processing under sub-section (1) of the said section to further include adjustments as under:–
(i) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed is furnished beyond the due date specified under sub-section (1) of section 139;
(ii) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return;
(iii) 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
(iv) addition of income appearing in Form 26AS or Form 16A or Form 16 but not included in computing the total income in the return.
It is further proposed to provide an opportunity to the assessee, before making any adjustment under clause (a) of sub-section (1) of section 143 to explain and rectify the same within thirty days of issuance of such intimation and the response so received be considered before making such adjustments. In case no response is received within such time, the adjustment of the amount indicated in the intimation be made.
Under the existing provision of sub-section (1D) of the said section 143, processing of a return is not necessary where a notice has been issued to the assessee under sub-section (2) of that section.
It is proposed to amend sub-section (1D) of the said section so as to provide that before making an assessment under sub-section (3) of that section, a return shall be processed under sub-section (1) of section 143.
These amendments will take effect from the 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017- 2018 and subsequent years.
Sub-clause (b) of the said clause seeks to substitute sub-section (2) of the said section. The existing provisions of sub-section (2) of the aforesaid section provide that, if the Assessing Officer under the circumstances specified therein shall serve on the assessee a notice requiring him to produce, or cause to be produced on a specified date, any evidence on which the assessee may rely in support of the return.
It is proposed to substitute the said sub-section (2) so as to provide that notice under the said sub-section may be served on the assessee by the Assessing Officer or, as the case may be, the prescribed income-tax authority under the circumstances specified therein requiring him to produce or caused to be produced on a specified date before the Assessing Officer any evidence on which the assessee may rely in support of the return.
This amendment will take effect from 1st June, 2016.
