a scrutiny notice under Section 143(2) from the Assistant Commissioner of Income Tax
Jr. Toprani 7 Dec 2017

a scrutiny notice under Section 143(2) from the Assistant Commissioner of Income Tax

What is a Notice under Section 143 (2) of the Income Tax Act?

This is a notice sent on behalf of the Income Tax Department, once the AO (Assessing Officer) has assessed the Income tax return filed by the assessee and is not satisfied with the produced documents, details or when the assessee fails to have filed documents for assessment. Through this Notice of the IT Department - the Income Tax Return Filed by the entity/individual comes under scrutiny!

Is your start-up secured?

The investigative arm of the IT Department has recently issued such notice (under Section 143(2) to over 200 start ups for a scrutiny. It is imperative for all start ups to ensure that their company is legally sound and compliant, for which you will be required to connect to a lawyer and a CA.

One of the major issues owing to which the IT Department sends such a notice might be owing to “whether funds received in the form of share premium are from disclosed sources and have been correctly offered for tax”

You can connect to MyAdvo and we shall assist you with engaging the right combination of a lawyer and a CA for the required services!

Some important facts you should know about scrutiny notice:

We want to make the process as simple for you, as possible. Please find a list of documents you will need to take an action -

  1. The scrutiny notice shall be served up to the expiry of 6 months (six months) from the conclusion of the Financial Year in which the return is filed.
  2. If the assessee (you) has not filed their income tax return, then a notice u/s 143(2) cannot be issued to you and also scrutiny assessment cannot be done. 
    In such a case, direct ‘Best Judgment Assessment’ under Section 144 will directly be done by the AO.
  3. The scrutiny notice might ask you to produce documents in support of deductions, exemptions, allowances, reliefs other claim of loss you have made and provide proof of all sources of income.
  4. Section 143(2) enables the Assessing Officer to make a regular assessment after the notice has been sent, responded to and a detailed inquiry is carried out.
What happens if you fail to comply with this notice -

  1. It may result in ‘Best Judgment Assessment’ of your case u/s 144 or;
  2. There might be an imposition of penalty u/s 271(1)(b) i.e. Rs10,000 for each failure or;
  3. There might be a prosecution u/s 276D which may extend up to 1 year with or without fine.

Please don’t wait - Secure your start-up right now!

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