Steps: What to do when you receive order under section 154 of Income Tax Act, 1961
Notice u/s 154 under the Income Tax Act is nothing but the rectification order issued by the tax department either in response to a rectification request filed by you or Suo-moto by the tax department when they notice any discrepancy in the Income Tax Return processed by them.
It has been noticed that currently in many cases the ITD has been issuing suo-moto or self generated rectification orders, which has left many of the assesses stumped and groping for answers on next steps to be taken to close this action initiated by the ITD.
In this direction, we have listed the actions that need to be undertaken by the concerned individuals.
Step 1– Check if you have received the intimation of processing under section 143(1) of the Income Tax Act in your email (also check your spam/junk folders). This intimation or popularly known as 143(1) intimation is the document that states in columnar manner the amounts as filed in the tax return vis-à-vis that processed by the ITD.
Step 2 – In case you have not received the 143(1) intimation then you would first need to submit a request for resending the 143(1) intimation.
In case you have already received the 143(1) intimation then you can check the reason for difference between what you have claimed and what the ITD has considered by going through the 143(1) intimation. Generally the issue is due to mismatch of tax credit i.e. the deductor of your tax may not have filed their TDS return correctly resulting in such mismatch.
Step 3 – Check your Form 26AS (Tax Credit Statement) available on the ITD portal w.r.t. the tax credits actually available to you. In case certain tax credits are not available in this statement then you may first be needed to get the same corrected by asking the deductor to update their TDS return. However, if the tax credit is available in Form 26AS and has the status marked as “F” then it means that the correct credit is indeed available to you but ITD has erroneously not given you the credit for the same.
Step 4– Once you have completed all the above necessary steps then you would need to provide your acceptance or otherwise in the Response page of the section 154 notice. If you are agreeing to the rectification proposed by the ITD then you would need to place a “Tick” against the box “Rectification Proposal Agreed” and if you do not agree to the rectification proposed by the ITD then you would need to place a “Tick” against the box “Rectification Proposal not Agreed”. However, in this case you would need to mention the reason for not accepting in the box below “Reason for not agreeing to rectification proposal”.
Step 5 – You would then need to sign and send it to the address stated at the top of the 154 notice on page 1 by ordinary or speed post only.
It is very essential that you respond to this notice as generally this suo-moto rectification orders are generally issued that result in reduction of refund or enhancement of your tax liability. If no response is given then it would be deemed that you have accepted the rectification proposal from the ITD.
Note:- If you think that this is a complicated process then you may very well use the services of professional consultants to get the issue addressed without any second thought