Tax notices + litigation · Income Tax Notice
Section 143(2) (now 270(8)), Scrutiny notice: the real assessment begins
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Facts
Sec 143(2) (now Sec 270(8), Income-tax Act 2025) means the IT department has selected your return for detailed scrutiny. A human AO (Assessing Officer) or faceless assessment unit will examine specific items in your return. The notice will say what is being questioned, income, deductions, transactions.
Provisions and law
- IT Act 1961, Sec 143(2) (now 270(8)) | Time limit: 3 months from end of AY | Notice must be issued within 3 months of end of AY (for AY 2024-25 → by 30 June 2025)
Analysis
Types of scrutiny: • CASS (Computer Aided Scrutiny Selection): System-selected based on risk parameters, high cash deposits, large deductions, mismatch with TDS data. • Manual scrutiny: AO specifically selected your case, usually means a tip-off or serious red flag. Sec 143(2) (now Sec 270(8)) leads to a formal assessment under Sec 143(3) (now Sec 270(10)). You must respond, ignoring it results in best judgment assessment (AO assumes the worst and raises a demand without hearing you).
Conclusion
- Check the notice date, if beyond the time limit, the notice is invalid. File a legal objection immediately.
- Read exactly what is being questioned, don't respond to what isn't asked
- Do NOT submit documents before reading the full notice, scope creep is common
- Engage a CA immediately, your response creates a paper trail that affects all future proceedings
- File initial response acknowledging receipt and requesting time extension if needed
A Savvy can do this for you
Reply to fake ITC notice when a supplier is found non-existent, Sec 16(2)(c)
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