What is the interlinking between Section 143(2) and Section 148 of the Income Tax Act, 1961?

Section 143(2) and Section 148 are related but apply at different stages of tax assessment. Section 148 is issued to reopen an assessment when income is suspected to have escaped taxation, whereas Section 143(2) is issued to scrutinize the income tax return filed by the taxpayer.

Whether notice issued under Section 143(1) is a scrutiny notice or an intimation?

A notice issued under Section 143(1) is an intimation and not a scrutiny notice. It is sent after the Income Tax Department processes the income tax return.

Why did I receive a notice under Section 143(2)?

A notice under Section 143(2) may be issued due to mismatches in reported income, high-value transactions, large refund claims, capital gains transactions, unusual deductions, or other discrepancies identified by the Income Tax Department.

Notice under Section 143(2) | Online Income Tax Help

Notice Under Section 143(2) of the Income Tax Act, 1961

Meaning - On the selection of taxpayer Income Tax Return for scrutiny assessment by the department a notice under Section 143(2) of the Income Tax Act, 1961 is issued. Under the scrutiny assessment Income Tax department verify the accuracy of the income declared, deductions claimed, exemptions availed, and taxes paid by the assessee. Receipt of notice under section 143(2) does not necessarily mean assessee has done tax evasion or mis-reporting of the Income Tax Return.

The processing of Income Tax Return (ITRs) filed by the taxpayer done under section 143(1) of the Income Tax Act, 1961. It is considered as first level of assessment where the Income Tax Department without detailed scrutiny verifies the return of the assessee.

ITR Filing (Salary)

Form 16 Processing

Tax Saving Advisory

Notice Handling

What is the purpose of section 143(2) of the Income Tax Act, 1961?

The objective of the Section 143(2) is to ensure that taxpayers have:

Assessee has complied with the provisions of the Income Tax Act.

All the deductions & exemption claimed by the assessee are eligible.

Tax amount paid by the assessee is correct.

Assessee has declared all taxable transactions.

Reported Income is Correct.

What is the reason of receiving notice by Taxpayer Under Scetion 143(2) of the Income Tax Act, 1961?

There are several reasons of receiving scrutiny notice under section 143(2) of the Income Tax Act, 1961, including:

When there are large number of financial transactions reported by the banks, mutual funds, stock brokers, or property registrars leads to trigger Income Tax scrutiny assessment of the assesssee.

When there are the differences in the values of the income reported under the self-computed income and information available with the department through AIS, TIS, FORM 26AS, TDS Statement, or any other source.

The deductions claimed, exemption availed or set-off of losses may lead to scrutiny of income under section 143(2).

Huge amount of refunds generally undergoes additional scrutiny.

The department uses data analysis and risk assessment parameters to identify returns requiring detailed examination.

What are the types of scrutiny under the Income Tax Act, 1961?

Scrutiny under the Income Tax Act, 1961 done in two different manners. First is “Limited scrutiny” and second is “Complete security”. Let us understand the both in detailed as under:

Limited Scrutiny

Under the Limited scrutiny, the assessing officer examines only the specific issue identified by the department. The scope of the scrutiny is only limited to the issue describe in the notice issued by the department under section 143(2) of the Income Tax Act, 1961. Some Examples of limited scrutiny are as under:

Mismatch in the reported Income

Re-computation of the Capital Gain amount

High-value financial transactions

Verification of the deduction claimed

Complete Scrunity

Under the Complete scrutiny, the assessing officer may examine the entire return of the assessee. Here the complete scrutiny means comprehensive review of the taxpayer’s financial transactions. Some Examples of complete scrutiny are as under:

What are the sources of the income?

All linking to Business transactions- financial transactions, purchase of properties, transactions related to directors/ partners/ member/ or related party transactions.

Investments made by the assessee- source of income from where investments made, in the name of, income from investment.

Books of Accounts related issues.

Proper allocation of expenses and expenses claimed under PGBP are as per the provisions.

Income Tax Act, 1961 · Section 143(2)

What is the time limit for issuance of notice under section 143(2) of the Income Tax Act, 1961?

Time Limit for Issuance of Notice Under Section 143(2)

For the enforcement of notice under section 143(2) it is important to issue the notice under the prescribed statutory time limit. If due to any reason the notice is not issued within the time limit, it will not be considered valid.

As per the provisions of the Income Tax Act, 1961 the time limit to issue a notice under section 143(2) is three months from the end of financial year in which the Income Tax Return has been filed by the assessee.

📌 For understanding purpose let us take an example:

If assessee has filed ITR for F.Y. 2025-26 on 23rd of July, 2026, then notice under section 143(2) shall be issue on or before 30th June, 2027.

What are the documents required in case of scrutiny under section 143(2)?

The requirement of documents in case of scrutiny assessment under section 143(2) is differs cases to cases.

For Individual – Salary Income

Salary Slips
Form 16
Bank statement
Investment proof
Home Loan document
Rent receipts

For Business Owners and Professionals

Books of accounts
Purchase and sales invoices
GST records
Profit and loss account
Balance sheet
Audit reports

For Capital Gains Verification

Sale deed
Purchase documents
Brokerage statements
Demat account statements
Capital gains calculations

How to respond to a notice under section 143(3) of the Income Tax Act, 1961 online in india?

The Income Tax Department has largely digitalized the scrutiny process in India. Following are the steps:

First read the notice carefully, all the details written in notice such as – assessment year, PAN details, issue selected for the notice, timeline to respond within.

Gather all the relevant information, related documents & evidences, supporting details.

Upload the required documents and explanations through the designated compliance section.

You may need to attend the hearing as the Assessing Officer (AO) may seek additional clarification through online proceedings or video conferencing.

Now monitor the status of the proceedings for updates, notices, and hearing schedules.

What are the penalties for non-compliance with section 143(3) of the Income Tax Act, 1961?

On receipt of notice under section 143(2), the assessee must respond immediately to avoid any penalties or consequences. Below are the related penalties or consequences of non-compliance with section 143(2):

Best Judgment Assessment under Section 144

In case the taxpayer fails to respond to the notice or does not comply with the requirements of the proceedings, the Assessing Officer (AO) may complete the assessment under Section 144 i.e., Best Judgment Assessment.

Penalty for Failure to Comply with Notices

Under Section 272A(1)(d), a penalty of ₹10,000 may be imposed for each failure to comply with a notice issued under Section 143(2), Section 142(1).

Additional Tax Demand

If during the scrutiny assessment there is any underreported income, incorrect deductions, or unsupported claims, the AO may raise an additional tax demand along with applicable interest.

Interest Liability

The taxpayers may be required to pay interest on the unpaid tax amount under the relevant provisions of the Income Tax Act and the interest liability continues until the outstanding tax demand is fully paid.

Penalty for Under-Reporting or Misreporting of Income

Where scrutiny results in the detection of under-reported or misreported income, penalties may be levied under the applicable provisions of the Income Tax Act and the amount of penalty depends on the nature and extent of the default.

Increased Scrutiny in Future Years

If there is repeated non-compliance or significant discrepancies identified during assessment may lead to increase the likelihood of future returns being selected for scrutiny.

Difference Between Section 143(2) of Income Tax Act, 1961 & Section 270(8) of Income Tax Act, 2025

The comparison of notice under section 143(2) of the Income Tax Act, 1961 & section 270(8) of Income Tax Act, 2025 is as under:

Particular	Section 143(2) of the Income Tax Act, 1961	Section 270(8) of the Income Tax Act, 2025
Purpose	To scrutinize the Income Tax Return (ITR) filed by the taxpayer.	To verify the correctness of the return filed under the new Act.
Objective	Ensure that income is correctly reported and tax is properly paid.	Ensure that income is not understated, losses are not overstated, and tax is not underpaid.
What Happens?	Return selected for scrutiny by the Income Tax Department.	Return selected for assessment verification by the Assessing Officer or prescribed authority.
Notice Issued By	Assessing Officer	Assessing Officer or prescribed income-tax authority
Scope of Verification	Income, deductions, exemptions, losses, and tax liability.	Income, losses, tax liability, and supporting evidence for the return.
Requirement from Taxpayer	Furnish information, explanations, and supporting documents.	Attend proceedings or produce evidence supporting the return filed.
Nature of Proceedings	Scrutiny Assessment.	Assessment Proceedings under the new code structure.
Time Limit for Notice	To issue within three months from the end of F.Y. in which return has been filed.	Notice cannot generally be served after three months from the end of the financial year in which the return is furnished.
Assessment Outcome	Assessment order under Section 143(3).	Assessment order under Section 270(10).
Non-Compliance Consequence	Best Judgment Assessment under Section 144 and possible penalties.	Best Judgment Assessment under Section 271 and other applicable consequences.

Frequently Asked Questions

Interlinking between of Section 143(2) & Section 148 of the Income Tax Act, 1961

The Section 143(2) & Section 148 are related, but they apply in different stages of the tax assessment. Section 148 is used to reopen an assessment where income is suspected to have escaped taxation, while Section 143(2) is used to scrutinize the return filed by the taxpayer.

Whether notice issued under Section 143(1) is scrutiny notice or intimation?

No, It is an intimation issued after processing the return.

Is it possible to receive a notice under Section 143(2) after receiving an intimation under Section 143(1)?

Yes, Processing under Section 143(1) and scrutiny under Section 143(2) are separate proceedings.

Is it mandatory to respond to an intimation under Section 143(1)?

Not really, only if adjustments have been made or a tax demand has been raised that requires a response.

Why did I receive notice under section 143(2)?

Generally due to mis-match in the incomes, high transaction value, large amounts of refund, capital transactions etc. could be reason of notice under section 143(2).

Notice Under Section 143(2) of the Income Tax Act, 1961

What is the purpose of section 143(2) of the Income Tax Act, 1961?

What is the reason of receiving notice by Taxpayer Under Scetion 143(2) of the Income Tax Act, 1961?

What are the types of scrutiny under the Income Tax Act, 1961?