Getting an income tax notice can feel scary, but not every notice means you have done something wrong. A notice under Section 143(2) is simply the department’s way of saying, “We want to take a closer look at your return.” It is called a scrutiny assessment, and it happens when the Income Tax Department wants more details about what you have filed.
This notice is not a penalty or a demand for payment in itself. It only means your return has been picked for review, either because of a mismatch, large transactions, or sometimes even at random. Knowing why you got the notice, what it means, and how to respond calmly can help you deal with it without stress.
What Is A Notice Under Section 143(2)?
A notice under Section 143(2) is a message from the Income Tax Department telling you that your return has been picked for a detailed check. This check is called a scrutiny assessment. It does not mean you are guilty of hiding income or cheating on taxes. It just means the department wants more proof that the details you filed are correct.
The notice usually comes after a basic check under Section 143(1). Unlike that basic check, this one goes deeper. The aim is to make sure you have not shown less income, claimed higher losses, or paid less tax than you should. In simple terms, it is about double-checking your return before the department finalises your assessment.
Why A 143(2) Notice Is Issued?
The Income Tax Department does not send a 143(2) notice to everyone. It is sent only when something in your return raises a question or needs more checking. Here are the most common reasons why your return may be selected.
Mismatches Between ITR and Department Records
If the income you reported in your return does not match the details in Form 26AS, AIS, or TIS, the department may ask for clarification. Even small errors or missing figures can trigger a notice. These mismatches are often caught automatically through the department’s system.
High Value Transactions
Large transactions such as big property sales, heavy bank deposits, or high-value investments in cryptocurrencies can attract attention. If these amounts do not fit with the income you declared, the department may want you to explain the source of the funds and provide supporting documents.
Disproportionate Deductions Or Losses
Claiming deductions or showing losses much higher than your income can raise suspicion. For example, if you show very low income but claim heavy deductions, the assessing officer may want proof. This helps the department ensure deductions claimed are genuine.
Foreign Assets And Income
If you have overseas bank accounts, crypto investments, or income, and you do not report them properly, a notice may be sent. The law requires disclosure of such details, and missing them often leads to further checking and questioning.
Errors In ITR Filing
Using the wrong ITR form, making calculation errors, or missing important details can also lead to scrutiny. The department may send a notice asking you to correct or explain these mistakes.
Random Selection Or Manual Scrutiny
Sometimes returns are selected randomly through the Computer Assisted Scrutiny Selection (CASS) system. In other cases, scrutiny is done manually based on rules issued by the CBDT. Even if your return seems fine, it can still be chosen under this process.
Types Of Scrutiny Under Section 143(2)
Not all scrutiny notices are the same. The scope of checking depends on what the department wants to verify. Here are the main types of scrutiny that may follow a 143(2) notice.
Limited Scrutiny
In limited scrutiny, the officer checks only specific issues flagged in your return. For example, a mismatch in TDS or a claim for a particular deduction. The questions will be limited to those areas only, and you will need to provide supporting evidence for them.
Complete Scrutiny
Complete scrutiny means your entire return is under review. Every income source, deduction, investment, and transaction may be questioned. This is usually done when there are big discrepancies or complex financial activities. You must be ready with all documents that prove the details in your return.
Manual Scrutiny
Manual scrutiny happens when the department selects cases based on guidelines issued by the CBDT. These can change from year to year. Manual cases can be either limited or subject to complete scrutiny, depending on the reasons for selection.
Compulsory Scrutiny
Certain types of cases are always checked under compulsory scrutiny. These include situations like large additions in past assessments or cases flagged during surveys and searches. Such scrutiny is done to ensure that high-risk cases are closely examined.
Time Limits For Section 143(2) Notices
The law sets strict deadlines for issuing and completing scrutiny notices. Knowing these timelines helps you check whether the notice you received is valid.
Time Limit For Issuing Notice
A notice under Section 143(2) must be issued within three months from the end of the financial year in which you filed your return. For example, if you filed your ITR for FY 2024–25 on 31 July 2025, the notice must be issued before 30 June 2026.
Time Limit For Completing The Assessment
Once scrutiny begins, the assessing officer must complete the process and issue the final order within 12 months from the end of the relevant assessment year. This ensures that cases are not kept open indefinitely and taxpayers get closure in a reasonable period.
Importance Of Document Identification Number (DIN)
Every notice must carry a Document Identification Number (DIN). This number is unique and helps you verify the authenticity of the notice on the income tax portal. A notice without a valid DIN may not be considered genuine; therefore, always verify this detail before responding.
How To Respond To A 143(2) Notice?
A 143(2) notice may feel stressful, but responding systematically makes it easier. Here are the steps you should follow after receiving one.
Step 1: Read And Understand The Notice
First, carefully read the notice to know which assessment year it relates to, what issues are mentioned, and the last date for reply. Understanding this helps you focus on the exact details the officer is looking for.
Step 2: Verify The Authenticity Of The Notice
Check if the notice is genuine by using the Document Identification Number (DIN) on the income tax e-filing portal. This ensures you are dealing with an official communication from the department and not a fake message.
Step 3: Collect Required Documents
Gather all the documents that support your return. This can include salary slips, bank statements, Form 16, capital gains records, deduction proofs, and any other evidence relevant to the queries raised. Having everything ready makes your reply stronger.
Step 4: Draft A Point-Wise Reply
Prepare a clear and honest reply that addresses each query mentioned in the notice. Keep it simple, factual, and always refer to the supporting documents. Avoid unnecessary explanations or irrelevant details.
Step 5: Submit Online Response Via E-Proceedings
Log in to the income tax e-filing portal, go to the e-proceedings section, and upload your reply with all the documents. Always save the acknowledgement after submitting, as it is proof of compliance.
Step 6: Attend Hearing If Called
Sometimes the assessing officer may call for a hearing. Under the faceless assessment scheme, these are mostly done through video calls. You or your authorised representative, such as a CA, can attend and explain the details if required.
Step 7: Maintain Complete Records
Keep copies of the notice, your reply, submitted documents, and acknowledgement safely. These records may be useful in case of appeals or future references.
Consequences Of Not Responding To A 143(2) Notice
Ignoring a 143(2) notice can create serious problems. If you do not reply on time, the assessing officer will move ahead with their own judgement, which is usually not in your favour. Here are the possible outcomes.
Best Judgement Assessment u/s 144
If you fail to respond, the officer will complete the assessment using whatever information is available. This often results in a higher income being assessed and more tax being demanded, since missing details are taken as unfavourable.
Penalties And Prosecution
Non-compliance can also attract penalties. Section 272A allows a fine of INR 10,000 for every failure to respond to the notice. In severe cases, repeated or wilful non-response can even lead to prosecution under Section 276D, which may include fines and imprisonment.
Higher Tax Demands And Appeal Difficulties
When an order is passed without your input, it may result in inflated tax liability. Appealing such orders later can be more difficult and may require you to pay part of the disputed tax upfront. This increases the financial and legal burden.
Key Differences Between Section 143(1), 143(2), And 142(1)
Taxpayers often get confused between the different types of income tax notices. Each section has a unique purpose and requires a different response. Understanding the differences helps you act quickly and correctly when you receive a notice.
|
Section |
Purpose |
Taxpayer Action |
|
A preliminary check of your return for basic errors, mismatches, or calculation issues. |
Review the intimation. If a demand is raised, pay it. If you disagree, file a rectification request. |
|
|
143(2) |
A scrutiny notice to examine your return in detail for underreporting, excessive deductions, or mismatches. |
Submit supporting documents, reply to queries, and cooperate in the scrutiny process. |
|
A general inquiry notice asking you to file your return if not done, or to provide specific documents and details. |
File the return if pending, or submit the requested information/documents within the deadline. |
Can You Revise An ITR After Receiving A 143(2) Notice?
Once a 143(2) notice is issued, you generally cannot revise the same return to fix the points under scrutiny. The return becomes locked for review, and you must address the queries directly in your reply.
However, if the deadline for revising under Section 139(5) is still open, and the mistake is unrelated to the scrutiny issues, you may file a revised return. It is always better to take professional advice before making this move.
How KoinX Helps With 143(2) Notice Responses?
Responding to a 143(2) notice can feel stressful, especially when it involves cryptocurrency transactions. KoinX makes the process easier by giving you accurate records, ready-to-use reports, and expert support. This ensures that your reply is complete and backed with strong evidence.
Complete Crypto Transaction Tracking
KoinX syncs with 800+ exchanges and wallets to capture every trade. This means you have a full record of your crypto activity, which helps in preparing accurate submissions to the tax department.
Tax-Ready Evidence Reports
With KoinX, you can generate detailed reports that match Indian tax laws. These reports act as solid evidence when you need to justify your income, deductions, or crypto gains during scrutiny.
Simplified Response Preparation
Instead of manually collecting data from multiple platforms, KoinX brings everything into one place. This makes it much easier to prepare your response and attach supporting documents within the deadline.
Expert Support For Scrutiny Cases
KoinX also offers expert guidance to help you respond correctly to notices. With professional assistance, your replies are accurate, clear, and more likely to be accepted by the assessing officer.
If you have received a 143(2) notice involving crypto, let KoinX simplify the process. Join KoinX today and handle scrutiny with confidence.
Conclusion
A notice under Section 143(2) is not something to panic about, but it does need careful attention. It means the Income Tax Department wants to check your return more closely, and you must provide the right documents and explanations on time.
By understanding the reasons behind the notice, following the response process, and keeping proper records, you can handle scrutiny smoothly. With tools like KoinX, you can save time, avoid errors, and present strong evidence when replying to such notices. So why wait? Sign-up on KoinX today and staying prepared is always the safest approach.
Frequently Asked Questions
Does Every 143(2) Notice Lead To Extra Tax Demand?
No, receiving a 143(2) notice does not always mean you will owe more tax. It simply means your return has been picked for a detailed check. If your documents and explanations support your return, the assessment may close without any additional demand.
How Can I Check If My 143(2) Notice Is Genuine?
You can confirm the authenticity of your notice by verifying the Document Identification Number (DIN) on the income tax e-filing portal. Every valid notice carries a DIN, and checking it ensures you are responding to an official communication and not a fraudulent one.
Can I Request Extra Time To Respond To A 143(2) Notice?
Yes, you can request an extension if you are unable to gather documents within the given deadline. The assessing officer may grant extra time if your reason is genuine. However, it is best to submit the available documents first and then request additional time.
Is Professional Help Necessary To Handle 143(2) Notices?
While it is not compulsory, professional help is highly recommended. A tax expert can prepare proper submissions, avoid mistakes, and ensure your response is complete. This is especially useful if your case involves complex income, large transactions, or cryptocurrency reporting.
