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Income Tax Notice under Section 143(3) - Scrutiny Assessment: What It Means and How to Respond

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Scrutiny Assessment under IT Act: Section 143(3) is the scrutiny assessment provision - a detailed examination of your ITR triggered by a prior notice under Section 143(2) of the Income Tax Act, 1961.

CASS-Based or Manual Selection: Scrutiny is initiated via Computer-Assisted Scrutiny Selection (CASS) or manual selection by CBDT - it covers limited issues, complete return, or prior years.

Non-Response Risks Are Severe: Non-response leads to Best Judgment Assessment u/s 144, penalty of INR 10,000 per failure u/s 272A, and potential high-pitched additions to your income.

End-to-End CA Defence: Patron Accounting provides complete Section 143(3) scrutiny defence - notice review, e-Proceedings response, documentation, hearing representation, and CIT(A) appeal.

Patron Accounting LLP | 1,400+ Scrutiny Cases | 71% Addition Deletion Rate at CIT(A) | 4.8/5 Rating (320+ Reviews) | Pune, Mumbai, Delhi, Bengaluru

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“
My business scrutiny under 143(3) involved multiple additions and a demand of INR 8.4 lakh. Patron's CA team filed a comprehensive response, got 3 additions deleted at assessment stage. Remaining demand reduced to INR 1.1 lakh.
RG
Rajesh G.
Business Owner, Pune
★★★★★
2 months ago
“
Faceless assessment is nerve-wracking because you can't meet the officer. Patron handled the entire e-Proceedings, submitted 200+ pages of evidence, and got a clean 143(3) order with nil additions.
SM
Swati M.
Professional, Mumbai
★★★★★
3 months ago
“
CASS limited scrutiny for my property sale capital gains. Patron's CA prepared a detailed indexed cost computation with all supporting documents. No additions made - clean order issued.
AK
Amit K.
Property Seller, Delhi
★★★★★
1 month ago
“
Received 143(2) notice for high deductions under Section 80G. Patron compiled all donation receipts and trust registration certificates. AO accepted all deductions without any disallowance.
PD
Priya D.
Salaried, Bangalore
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4 months ago
“
Section 144 Best Judgment order had INR 12 lakh in additions. Patron filed CIT(A) appeal with full documentation we had not submitted earlier. 90% of additions were deleted on appeal.
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Trader, Pune
★★★★★
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Income Tax Notice under Section 143(3) - Complete Guide 2026

📌 TL;DR - IT Notice Section 143(3) Services at a Glance

A Section 143(3) scrutiny notice means the Income Tax Department is examining your ITR in detail. You must respond via e-Proceedings within the time specified - typically 15 to 30 days. Submit all supporting documents for income, deductions, and claims. Non-response leads to Best Judgment Assessment u/s 144 with high-pitched additions. A CA-led response reduces the risk of additions. Patron Accounting starting at INR 2,999 (Exl GST and Govt. Charges).

An income tax scrutiny notice under Section 143(3) of the Income Tax Act, 1961 signals that the Income Tax Department has selected your return for a detailed examination. The scrutiny process begins with a notice under Section 143(2) and culminates in a formal assessment order under Section 143(3). Under the Faceless Assessment Scheme (Finance Act 2020), all communication happens digitally through the e-filing portal.

ParameterDetails
Governing ProvisionIncome Tax Act, 1961 - Section 143(2) (notice) + Section 143(3) (order)
Who Issues ItAssessing Officer (AO) / National Faceless Assessment Centre (NFAC)
Trigger (Notice u/s 143(2))Within 3 months from end of FY in which return was filed
Assessment Order Deadline12 months from end of Assessment Year (AY 2022-23 onwards) [Section 153]
Response Modee-Proceedings section of income tax e-filing portal (incometaxindia.gov.in)
Penalty for Non-ResponseINR 10,000 per failure under Section 272A(1)(d)
Consequence of Non-ResponseBest Judgment Assessment u/s 144 with high-pitched income addition

Scrutiny notice 143 ka reply kaise kare? Income tax portal par login karein, e-Proceedings mein jaayein, aur apne Assessment Year ka case dhoondh kar jawab upload karein. Complex cases mein CA ki madad lena bahut zaroori hai - Patron Accounting ki team se sampark karein.

Content is reviewed quarterly for accuracy.

What is an Income Tax Notice under Section 143(3)?

A Section 143(3) scrutiny assessment is the detailed examination of a taxpayer's income tax return conducted by the Assessing Officer to verify the correctness of income declared, deductions claimed, exemptions availed, and taxes paid.

The process has two stages: (1) A notice under Section 143(2) is issued to the taxpayer, selecting the return for scrutiny. (2) After considering the taxpayer's submissions, the AO passes the final assessment order under Section 143(3) - which either confirms your declared income or makes additions/disallowances that increase the tax demand.

Receiving a scrutiny notice does not mean you have done anything wrong. Many notices are routine CASS-based selections. However, every notice requires a timely, professional, and well-documented response. Under the Faceless Assessment Scheme, all communication happens digitally through the e-filing portal.

Key Terms for IT Notice Section 143(3):

Scrutiny Assessment: Detailed examination of ITR under Section 143(3) where the AO verifies income, deductions, and claims beyond the summary processing done under Section 143(1).

CASS (Computer-Assisted Scrutiny Selection): Automated system used by CBDT to select ITRs for scrutiny based on risk parameters, data mismatches, and AI-driven analysis. Most scrutiny cases originate from CASS.

Faceless Assessment Scheme: Electronic, jurisdiction-free assessment system introduced by Finance Act 2020 where assessments are conducted by NFAC without physical interaction between taxpayer and AO.

Best Judgment Assessment u/s 144: If the taxpayer fails to respond to a Section 143(2) notice, the AO makes an ex-parte assessment based on available information, often resulting in inflated income and higher tax demand.

Addition / Disallowance: A specific income item the AO adds to your declared income or a deduction/expense the AO disallows in the scrutiny order, increasing your taxable income and tax liability.

SCRUTINY ASSESSMENT e-PROCEEDINGS Income verified Deductions checked Claims verified 143 (3) Professional Defence
Section 143(3) Scrutiny Defence

Who Receives a Section 143(3) Scrutiny Notice?

A Section 143(2) notice (prerequisite for 143(3) assessment) can be issued to any taxpayer who has filed a return. Common scenarios that trigger scrutiny selection include:

  • High-Value Transactions vs Income Mismatch - Large bank deposits, property purchases, foreign remittances disproportionate to declared income
  • Significant Deductions or Exemptions - Claims under Section 80C, 80G, HRA, capital gains exemptions that are unusually high relative to income
  • Income Mismatch Across Sources - Differences between ITR, TDS returns, Form 26AS, AIS, SFT, or GST returns
  • Business Income with High Expense Claims - Gross profit ratios below industry average or large cash transactions flagged by CBDT algorithms
  • Capital Gains or Real Estate Transactions - Property/share sales with valuation disputes, stamp duty differences, or indexation benefit claims
  • Foreign Assets and Overseas Income - Returns with foreign income, DTAA claims, or foreign asset disclosures requiring treaty verification
  • Previous Year Additions - Taxpayers with significant additions in prior scrutiny are more likely to be selected again
  • Random CBDT Selection - A percentage of returns selected randomly as part of annual scrutiny criteria

Patron Accounting Services for Section 143(3) Scrutiny

ServiceWhat We Do
Notice Analysis and Risk AssessmentDetailed review of the 143(2) notice, identified issues, and preliminary assessment of risk exposure
e-Proceedings Response ManagementProfessional preparation and submission of all responses, documents, and clarifications on the income tax portal
Documentation Strategy and CompilationOrganising financial statements, Form 16, 26AS, AIS, bank statements, investment proofs into a legally sound submission
Faceless Hearing RepresentationExpert CA representation in video-based personal hearings under the Faceless Assessment Scheme when granted by NFAC
Assessment Order Review and ChallengeAnalysis of 143(3) order for erroneous additions, and rectification application u/s 154 for apparent mistakes
CIT(A) Appeal FilingPreparation and filing of appeal under Section 246A against disputed additions in the 143(3) order
Our Process

How to Respond to an Income Tax Scrutiny Notice u/s 143(2) / 143(3)

Follow these steps on the income tax e-filing portal (incometaxindia.gov.in) to respond to a scrutiny notice within the time specified.

Step 1

Log in to the e-Filing Portal

Visit incometaxindia.gov.in. Log in using your PAN, password, and captcha. Navigate to 'Pending Actions' on the dashboard.

Portal accessed PAN login completed
PAN LOGIN
Logged In01
Step 2

Access e-Proceedings

Click on 'Pending Actions' and select 'e-Proceedings'. The e-Proceedings section lists all active assessment and inquiry proceedings linked to your PAN.

e-Proceedings opened Active cases visible
e-PROCEEDINGS
Accessed02
Step 3

Locate Your Scrutiny Case

Under e-Proceedings, find 'Assessment Proceeding u/s 143(3)' for the relevant Assessment Year. Click 'View Notices/Orders' to download the Section 143(2) notice PDF.

Case located 143(2) notice downloaded
143(3) - AY 2024-25DOWNLOAD
Case Found03
Step 4

Read and Understand the Notice

Carefully read the notice for: (a) specific issues identified (limited vs complete scrutiny); (b) documents and information requested; (c) response deadline (typically 15-30 days).

Issues identified Deadline noted
143(2)
Notice Read04
Step 5

Compile Your Response Documents

Gather all supporting documents: Form 16, Form 26AS, AIS, bank statements, investment certificates (80C/80D), capital gain computation, property documents, business books, GST returns, TDS certificates.

All documents gathered Organised by issue
Form 1626ASAISBankInvest
Compiled05
Step 6

Draft a Comprehensive Written Response

Prepare a point-by-point written response addressing each issue. State the factual position clearly, attach supporting documentary evidence, cite relevant provisions, CBDT circulars, or court decisions.

Response drafted Evidence attached
Drafted06
Step 7

Submit Response via e-Proceedings

Log in to the portal, go to e-Proceedings, click 'Submit Response' for your assessment case. Upload the written response as PDF and attach supporting documents. Note the Acknowledgment/Transaction ID.

Uploaded via portal Acknowledgment noted
SUBMIT
Submitted07
Step 8

Attend Hearing if Requested

Under the Faceless Assessment Scheme, hearings are video-based and granted only on specific request. If a personal hearing is allowed, attend through your CA or authorised representative.

Hearing attended via video CA represented
VIDEO HEARING
Complete08

Important: Always respond within the deadline specified in the notice. Extension requests can be made online, but they are at the AO's discretion and not always granted.

Documents Checklist for Section 143(3) Scrutiny Response

  • Copy of ITR and ITR-V / acknowledgment for the relevant Assessment Year
  • Form 16 / Form 16A / Form 16B (salary, TDS on professional fees, TDS on property)
  • Form 26AS and Annual Information Statement (AIS) for the relevant year
  • Bank statements for all accounts for the full financial year
  • Investment proofs: Section 80C (LIC, ELSS, PPF, NSC, FD), 80D (health insurance), home loan interest certificates, HRA lease agreements
  • Capital gains: Sale/purchase deeds, broker statements, Demat account statements, indexed cost computation
  • Business/professional income: Audited financial statements, P&L, balance sheet, GST returns, TDS certificates
  • Property transaction documents: Sale agreement, registration documents, stamp duty receipts, valuation reports
  • Foreign income: DTAA claim documents, overseas bank statements, tax residency certificate
  • Previous correspondence with the AO or NFAC in the same assessment proceedings

Common Challenges in Section 143(3) Scrutiny and How We Solve Them

ChallengeImpactHow Patron Accounting Solves It
Unexplained Bank Deposits Added as IncomeAO adds large deposits as unexplained incomeDetailed bank reconciliation showing source of each deposit - business receipts, loan repayments, inter-account transfers. Systematic CA-structured evidence rebuts the addition.
Deduction Disallowance (80C, 80G, Business Expenses)Claims without adequate proof disallowedOriginal certificates, receipts, proof of payment for every deduction. Cash expenses above INR 10,000 reviewed under Section 40A(3).
High-Pitched Additions in Faceless AssessmentInadequately reasoned additions under NFACDetailed evidence-backed written response at first instance. If 143(3) order still makes additions, CIT(A) appeal within 30 days with stay application.
Stamp Duty Valuation Dispute in Property SaleAO substitutes stamp duty value under Section 50CChallenge valuation by requesting reference to DVO under Section 50C(2). Registered valuation report strengthens the case.

Professional Fees for Section 143(3) Scrutiny Defence

Fee ComponentAmount
Patron Accounting Professional Fees - Basic Scrutiny Notice Review + Portal ResponseStarting from INR 2,999 (Exl GST and Govt. Charges)
Complete Scrutiny Defence (Limited Scrutiny)Starting at INR 4,999
Complete Scrutiny Defence (Complete/Manual Scrutiny)Starting at INR 7,999
143(3) Order Review + Rectification u/s 154Starting at INR 2,999
Appeal before CIT(A) against 143(3) OrderStarting at INR 8,999
Comprehensive Package (Scrutiny + Appeal)Starting at INR 12,999

All fees and charges listed are indicative only and do not constitute a binding offer. Final amounts may vary depending on the volume of work and the complexity involved.

Professional service charges for drafting, filing, and representation are separate from the statutory fees. The exact fee depends on the complexity of the case, disputed amount, and number of hearings required. Contact us for a detailed quote.

Get a free IT Notice Section 143(3) consultation - Call +91 945 945 6700 or WhatsApp us. No-obligation assessment.

Timeline for Section 143(3) Scrutiny Resolution

StageEstimated Timeline
Notice review and initial consultationSame day (24 hours)
Document compilation and first e-Proceedings response3-7 working days after document collection
Assessment unit follow-up queriesOngoing - 30-90 days depending on complexity
Faceless hearing (if granted by NFAC)Scheduled within the assessment period
Final assessment order u/s 143(3)Within 12 months from end of AY [Section 153]
Rectification u/s 154 (if applicable)2-3 working days to file; CPC processes in 30-60 days
CIT(A) appeal (if order has additions)30 days to file; hearing within 2-6 months

Critical: Section 143(2) notices specify a response deadline - typically 15 to 30 days. Missing this deadline without extension means the AO proceeds to pass the 143(3) order based on available information, which almost invariably includes additions. Contact us immediately on receipt.

Key Benefits

Why Professional CA Assistance Matters for Section 143(3) Scrutiny

Risk Assessment Before Response

A CA identifies specific risks in your return before the first response, allowing a strategic rather than reactive approach to each scrutiny issue.

Document Organisation

Proper, systematic presentation of evidence significantly reduces additions. Disorganised or incomplete responses invite adverse inferences from the AO.

Legal and Precedent Knowledge

CA teams track CBDT circulars, ITAT precedents, and High Court decisions relevant to your specific scrutiny issues. Citing case law pre-empts additions.

Faceless Assessment Expertise

Faceless proceedings require precise written communication. An experienced CA drafts responses that anticipate the AO's concerns and proactively address them.

Appeal Readiness

A CA builds the appeal record from the first response, ensuring no concession that would prejudice a future CIT(A) appeal if the 143(3) order is adverse.

Cost-Benefit Protection

Professional fees are almost always less than the additional tax, interest, and penalty from a high-pitched 143(3) order after an inadequate self-response.

1,400+ Scrutiny Assessments Handled - 71% Addition Deletion Rate

Patron Accounting LLP | 1,400+ Scrutiny Cases | 71% Addition Deletion at CIT(A) | 4.8/5 Rating (320+ Reviews) | 14 Qualified CA/CS Professionals | Pune, Mumbai, Delhi, Bengaluru

"My business scrutiny under 143(3) involved multiple additions and a demand of INR 8.4 lakh. Patron's CA team filed a comprehensive response, got 3 additions deleted at the assessment stage itself. Remaining demand reduced to INR 1.1 lakh." - Rajesh G., Business Owner, Pune

"Faceless assessment is nerve-wracking because you can't meet the officer. Patron Accounting handled the entire e-Proceedings, submitted 200+ pages of evidence, and got a clean 143(3) order with nil additions." - Swati M., Professional, Mumbai

DIY vs Professional CA - Section 143(3) Scrutiny Response

ParameterSelf-Response (DIY)Patron Accounting CA
Issue IdentificationMay miss subtle additions riskComprehensive pre-response risk mapping
Document CompilationOften incomplete or disorganisedSystematic, legally structured submission
Response DraftingGeneric, lacks legal citationsPoint-by-point with precedents and circulars
Faceless ProceedingsUnfamiliar with e-Proceedings formatExperienced in NFAC submission protocols
Addition RateHigh - inadequate responses invite additions71% of additions deleted or reduced on appeal
CostTime + risk of large addition and demandStarting INR 2,999 - fraction of potential demand

Related Income Tax Services from Patron Accounting

Legal Framework - Key Provisions for Section 143(3) Scrutiny

SectionProvisionRelevance
Section 143(2)Scrutiny notice issued within 3 months from end of FY in which return filedMandatory prerequisite for 143(3) assessment - notice outside time limit is void
Section 143(3)Scrutiny assessment order after examining return, documents, submissionsThe final order that determines tax liability post-scrutiny. Source: incometaxindia.gov.in
Section 153Order must be passed within 12 months from end of AY (AY 2022-23 onwards)Limitation period - order passed later is barred by limitation. Source: India Code
Section 144Best Judgment Assessment - AO assesses based on available material if taxpayer fails to respondConsequence of non-response - typically results in high-pitched addition
Section 272A(1)(d)Penalty of INR 10,000 for each failure to comply with notice u/s 143(2)Direct financial penalty for non-response per failure instance
Section 246AAppeal to CIT(A) against 143(3) assessment orderPrimary appellate remedy - appeal within 30 days of order
Faceless Assessment Scheme, 2020Electronic, jurisdiction-free assessment - all proceedings via e-filing portalGoverning framework for how scrutiny is currently conducted
Section 154Rectification of mistake apparent from record in 143(3) orderRemedy for arithmetical/obvious errors without filing appeal

Frequently Asked Questions - Section 143(3) Scrutiny Assessment

Get answers to common questions about income tax scrutiny notice, the difference between 143(2) and 143(3), CASS selection, penalties, and how to respond.

Quick Answers

What is scrutiny assessment under income tax? Detailed examination of an ITR by the AO under Section 143(3) to verify correctness of income, deductions, and claims. Begins with a 143(2) notice and ends with a formal assessment order.

What is the time limit for Section 143(3) assessment? For AY 2022-23 onwards, the order must be passed within 12 months from end of the Assessment Year [Section 153]. For AY 2025-26, this means by 31 March 2027.

What penalty applies for not responding? INR 10,000 per failure under Section 272A(1)(d). Plus Best Judgment Assessment u/s 144 with high-pitched additions.

How does Faceless Assessment work? Under the Faceless Assessment Scheme 2020, all proceedings are electronic through the NFAC. Notices issued and responses submitted digitally via e-Proceedings. Physical hearings replaced by video-based hearings on request.

Your Scrutiny Notice Has a Deadline - Respond Before It Expires

Section 143(2) notices specify a response deadline - typically 15 to 30 days. Missing this deadline does not stop the assessment. The AO proceeds based on available information.

  • For every addition in the 143(3) order: Tax at applicable slab rate (up to 30% + surcharge + cess) + interest u/s 234B/234C + penalty u/s 270A at 50%-200%
  • An INR 5 lakh addition can become an INR 3-4 lakh demand with interest and penalty
  • Best Judgment Assessment u/s 144 if you fail to respond - high-pitched additions with limited remedy
  • Penalty of INR 10,000 per failure to comply under Section 272A(1)(d)

Get Expert CA Representation for Your Scrutiny Notice - Starting at INR 2,999

An income tax scrutiny notice under Section 143(3) requires a timely, evidence-based, and professionally crafted response. Whether your return was selected by CASS for a limited issue or a complete scrutiny, the quality of your response determines whether the 143(3) order is clean or laden with additions.

With Patron Accounting's experienced CA team, you get comprehensive scrutiny defence - from the first e-Proceedings submission to hearing representation and CIT(A) appeal if needed. Our 71% addition deletion rate demonstrates the value of professional representation.

Starting at INR 2,999 (Exl GST and Govt. Charges) | 1,400+ Scrutiny Cases | 71% Additions Deleted | Free 30-Min Review

Book a Free Consultation - No Obligation.

Section 143(3) Scrutiny Defence - Available in Your City

Patron Accounting provides expert CA representation for income tax scrutiny assessments across major cities in India.

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Content Created: March 2026  |  Last Updated:  |  Next Review: March 2027  |  Reviewed By: CA & CS Team, Patron Accounting LLP

This page covers Income Tax Notice under Section 143(3) (Scrutiny Assessment). Content is reviewed annually. CBDT scrutiny selection criteria change each year. All statutory references verified against Income Tax Act, 1961 and Faceless Assessment Scheme 2020 as of March 2026.

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