Before Responding to an Adjustment or Intimation, Many Taxpayers Schedule a Call to Validate Their Next Step
- PRITI SIRDESHMUKH
- 15 hours ago
- 8 min read
Income tax intimations and adjustments are now a routine part of return processing under the faceless assessment system. Many taxpayers receive notices under Section 143(1) pointing out mismatches, disallowed claims, or tax demands that require a timely response. Acting without clarity can result in unintended tax liabilities, interest, or further scrutiny. This is why taxpayers increasingly prefer validating their next step through a professional call before responding. A short consultation helps confirm whether the adjustment is correct, what documents are required, and which response option is safest under current portal rules.
Table of Contents
What Is an Income Tax Adjustment or Intimation Under Section 143(1)?
An income tax adjustment or intimation under Section 143(1) is issued after the Centralised Processing Centre processes a filed return. This stage involves automated checks to verify arithmetical accuracy, internal consistency, and alignment with data available in Form 26AS, AIS, and TIS. The intimation may confirm the return as filed, propose a refund, or raise a tax demand due to detected discrepancies. These adjustments are system-driven and do not involve detailed scrutiny, but they are legally binding unless responded to within the prescribed time limit.
Common Reasons Taxpayers Receive Section 143(1) Notices
Most Section 143(1) notices are generated during automated processing of income tax returns and usually stem from data-level inconsistencies rather than intentional non-compliance. One of the most common reasons is a mismatch between the income reported in the return and the information available in the Annual Information Statement (AIS) or Form 26AS. This often happens when interest income from savings accounts, fixed deposits, or recurring deposits is reflected in bank reporting but omitted or underreported in the return. Even small differences can trigger an adjustment because the system relies heavily on third-party data.
Incorrect claims of TDS credit are another frequent trigger. This may occur when the taxpayer claims TDS based on Form 16 or certificates received, but the corresponding credit is not reflected in Form 26AS due to incorrect PAN quoting by the deductor or delayed TDS filings. The system disallows such credits automatically unless they are supported by matching records, resulting in additional tax demand.
Unreported or partially reported income is also a key reason for Section 143(1) notices. Apart from bank interest, this can include dividend income, capital gains reported by intermediaries, or other income reflected in AIS. Even when tax has already been paid on such income, failure to include it correctly in the return can lead to adjustments during processing.
Disallowance of deductions is another common area of adjustment. This typically happens when deductions are claimed without satisfying system validations or when mandatory details are missing. In cases where deductions or exemptions are claimed under the old tax regime but the return is filed under the new tax regime, the system automatically disallows those claims, leading to the recalculation of tax liability.
Computational errors also contribute to a significant number of errors. These include incorrect application of tax slabs, surcharge, or cess, rounding differences, or errors in calculating total income or tax payable. While these errors may be unintentional, the automated processing system corrects them, and the resulting difference is communicated through the intimation.
In some cases, inconsistencies between the selected tax regime and the deductions claimed lead to partial or full disallowance. For example, claiming certain deductions that are not permitted under the chosen regime results in system-driven adjustments. Such issues often arise when regime selection is not carefully reviewed before filing.
Overall, Section 143(1) notices are largely driven by automated cross-verification of return data with available information. Understanding these common triggers helps taxpayers identify whether an adjustment is procedural, data-related, or requires corrective action before responding.
Why Validating the Notice Before Responding Is Important
Responding to an income tax intimation without proper validation often creates avoidable financial and compliance risks. Many adjustments generated under Section 143(1) are system-driven and may not fully reflect the factual position of the taxpayer. Accepting such adjustments without verification can lead to paying tax that is not legally due, incorrect interest calculations, or loss of eligible refunds. Once an adjustment is accepted, reversing it later through rectification becomes more complex and time-consuming.
On the other hand, disputing an adjustment without sufficient supporting evidence can be equally problematic. Disagreements submitted without clear documentation, reconciliations, or explanations may not be accepted by the system and can result in the matter being flagged for further review. In some cases, this can open the door to additional notices or prolonged correspondence, increasing compliance burden and anxiety.
Validation helps establish whether the adjustment arises from a genuine error, a data mismatch with AIS or Form 26AS, an incorrect regime selection, or a reporting oversight in the original return. This clarity allows the taxpayer to choose the most appropriate response route, whether it is agreeing to the demand, filing a rectification request, submitting an explanation with documents, or revising the return altogether. Each option has different legal and procedural implications, making the validation step critical.
The importance of validation increases under the faceless assessment system, where responses are evaluated solely based on written submissions and uploaded evidence. There is no scope for verbal clarification or follow-up explanations unless specifically sought by the department. Any ambiguity, incomplete document, or incorrect response may be interpreted unfavourably, even if the underlying position is correct. A validated response ensures that explanations are precise, relevant, and aligned with the issue raised in the intimation.
Timely validation also helps manage statutory deadlines more effectively. Many taxpayers rush to respond close to the due date without fully understanding the implications of their response. Reviewing the notice early allows sufficient time to collect documents, reconcile figures, and select the safest compliance option. This reduces last-minute errors and ensures the response is both accurate and defensible if reviewed later.
Overall, validating an income tax intimation before responding acts as a safeguard against unnecessary tax outflows, procedural mistakes, and future disputes. It ensures that the response reflects the correct legal position, is supported by proper records, and aligns with the structured requirements of the digital tax system.
When Scheduling a Call With a Tax Expert Becomes Necessary
Scheduling a call with a tax expert becomes necessary when the notice involves multiple adjustments, AIS-related discrepancies, prior-year issues, or interest calculations. It is also advisable when the taxpayer is unsure whether to agree, partially agree, or contest the adjustment, or when deadlines are approaching. A professional review helps interpret system-generated remarks, confirm compliance with current rules, and avoid actions that could inadvertently trigger further scrutiny.
Step-by-Step Process to Respond After Validation
After validating the intimation, the response process typically begins by logging into the income tax e-filing portal and accessing the notice details. The taxpayer must review the proposed adjustment and choose whether to agree or disagree. If disagreeing, relevant supporting documents such as bank statements, TDS certificates, or computation workings must be uploaded. In some cases, filing a revised return or rectification request may be required. The response must be submitted and e-verified within the specified deadline to be considered valid.
Risks of Responding Incorrectly or Without Professional Review
Incorrect responses can result in deemed acceptance of tax demands, additional interest under Sections 234A, 234B, or 234C, or initiation of further assessment proceedings. Inaccurate submissions may also complicate future rectifications, as system records get locked based on the response. For taxpayers with complex income profiles, even a small mistake at this stage can have cascading effects in subsequent years.
How Digital Platforms Simplify Notice Review and Responses
Digital tax platforms simplify notice handling by consolidating notices, AIS data, return filings, and response workflows in one place. They reduce manual errors by guiding users through structured steps, highlighting mismatches, and ensuring documents are correctly mapped to the response. Many platforms also enable expert consultations, allowing taxpayers to validate decisions before submission without navigating the portal independently.
How TaxBuddy Helps Taxpayers Handle Adjustments Confidently
TaxBuddy supports taxpayers by combining expert-assisted validation with a streamlined digital interface. Adjustments and intimations are reviewed by professionals who assess the accuracy of system-generated demands and guide the appropriate response. The platform simplifies document uploads, response filing, and e-verification while ensuring compliance with timelines. This structured approach reduces uncertainty and helps taxpayers respond with confidence rather than haste.
Conclusion
Income tax adjustments and intimations are increasingly data-driven and time-sensitive, making careful validation essential before responding. A structured review prevents unnecessary tax outflows and minimises the risk of escalation under the faceless assessment framework. For anyone looking for assistance in tax filing or notice responses, it is recommended to download the TaxBuddy mobile app for a simplified, secure, and hassle-free experience.
FAQs
Q1. What exactly triggers an income tax adjustment under Section 143(1)?
An adjustment under Section 143(1) is triggered when the system detects mismatches or errors during preliminary processing of the return. This includes arithmetical mistakes, incorrect tax calculations, discrepancies with Form 26AS or AIS, disallowed deductions based on the selected tax regime, or excess TDS claims. These are system-based validations and not manual scrutiny.
Q2. Is a Section 143(1) intimation the same as a tax notice?
A Section 143(1) intimation is not a scrutiny notice. It is a communication that informs the taxpayer about the outcome of return processing, including refunds, no-demand status, or proposed tax adjustments. However, it is legally enforceable if no response is submitted within the prescribed time.
Q3. How much time is available to respond to a Section 143(1) adjustment?
Generally, taxpayers are given 30 days from the date of issue of the intimation to respond. If no response is filed within this period, the adjustment is deemed to be accepted, and the tax demand becomes payable along with applicable interest.
Q4. What happens if an incorrect adjustment is accepted by mistake?
Accepting an incorrect adjustment can result in excess tax payment and interest. While rectification under Section 154 or filing a revised return may still be possible, correcting an accepted adjustment is often more time-consuming and may delay refunds or close future options.
Q5. Should a revised return always be filed after receiving an intimation?
A revised return is not always required. If the issue relates to missing clarification or document mismatch, responding to the intimation itself may be sufficient. A revised return is typically needed only when income details or deductions were incorrectly reported in the original filing.
Q6. Can interest under Sections 234A, 234B, or 234C arise from adjustments?
Yes. If an adjustment results in additional tax payable, interest under the relevant sections may be automatically calculated by the system. This is common when advance tax or self-assessment tax is found to be insufficient after adjustments.
Q7. Does the selected tax regime affect Section 143(1) adjustments?
Yes. Many adjustments arise when deductions or exemptions are claimed under the new tax regime, where such benefits are not allowed. The system cross-verifies regime selection and automatically disallows ineligible claims, leading to tax demands.
Q8. Is it risky to respond to an intimation without professional validation?
Responding without validation increases the risk of incorrect acceptance, incomplete documentation, or inappropriate disagreement. Under the faceless system, responses must be precise, as there is no opportunity for verbal clarification later. Errors at this stage can lead to escalation or prolonged resolution.
Q9. Can a taxpayer partially agree and partially disagree with an adjustment?
Yes. The portal allows taxpayers to partially agree with an adjustment while contesting specific components. Supporting documents must be uploaded for the disputed portion to ensure the response is considered valid.
Q10. Does responding to a Section 143(1) intimation lead to scrutiny assessment?
A proper and accurate response does not automatically result in scrutiny. Most Section 143(1) matters are resolved at the processing stage itself. Scrutiny under Section 143(3) is initiated separately based on risk parameters and not merely due to a response.
Q11. How do digital platforms help in handling tax intimations?
Digital platforms consolidate notices, return data, AIS details, and response workflows in one interface. They reduce manual errors, guide document uploads, and ensure responses are submitted within deadlines. Expert-assisted platforms also help validate whether the demand is correct before action is taken.
Q12. Does TaxBuddy offer support for handling income tax adjustments and intimations?
Yes. TaxBuddy provides both self-filing and expert-assisted support for handling income tax adjustments. Experts review the intimation, validate the correctness of the demand, guide the appropriate response, and assist with document submission and e-verification, ensuring compliance without unnecessary risk.
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