Many taxpayers receive an Income Tax CPC adjustment notice even after filing their return properly. In most cases, this happens because of a mismatch between the Audit Report vs ITR.
This blog explains all reasons for such notices and also how to reply to the notice step by step. Why Does CPC Issue This Notice?
While processing the return, CPC automatically compares:
- Details reported in the Tax Audit Report
- Details filled in the ITR schedules
If any disallowance or amount mentioned in the audit report is not reflected correctly in the ITR, CPC proposes an adjustment under Section 143(1)(a).
Common Reasons for Audit Report vs ITR Mismatch
- TDS disallowance under Section 40(a)(i) / 40(a)(ia) not added back
- TDS non-compliance reported in audit but not shown in Schedule OI
- Penalties, fines or late fees claimed as expenses
- Schedule OI not filled or incorrectly filled
- Wrong amount entered in the return
- Disallowable or personal expenses claimed
- Difference in Profit & Loss figures
- Section 43B unpaid statutory dues not added back
- Clerical or technical filing errors
What Does the CPC Notice Ask You to Do?
The notice shows:
- Amount as per Audit Report
- Amount as per ITR
- Difference proposed for adjustment
The notice gives you two options:
- Agree with the adjustment
- Disagree with the adjustment
How to Reply to the CPC Adjustment Notice (Step-by-Step)
Step 1: Login to Income Tax Portal
Login to the Income Tax e-Filing portal using:
- PAN
- Password
Step 2: Go to Pending Actions
Navigate to:
Pending Actions → e-Proceedings / Response to 143(1)(a) Notice
Select the relevant assessment year.
Step 3: View the Proposed Adjustment
Click on View Notice and carefully read:
- Reason for adjustment
- Amount proposed to be added
Step 4: Choose Your Response
Option 1: Agree with the Adjustment
Choose this option if:
- The disallowance was genuinely missed
- The audit report amount is correct
Submit the response. CPC will process the return after making the adjustment.
Option 2: Disagree with the Adjustment
Choose this option if:
- The amount was already considered in ITR
- The audit report figure is incorrect
The adjustment is not applicable
You must:
- Select Disagree
- Provide a proper reason/explanation in the text box
- Upload supporting documents if required
Step 5: Submit the Response
After selecting the option and entering the explanation, submit the response and keep the acknowledgment for records.
Can You File a Revised Return Instead?
Yes.
If:
- The revision time limit is still open, and
- The error is clear
It is often better to file a revised return and then respond to the notice accordingly.
Important Points to Remember
- Do not ignore the notice
- Reply within the given deadline
- Non-response may result in final tax demand
- Always cross-verify Audit Report and ITR before filing
Conclusion.
An Audit Report vs ITR mismatch CPC notice is common and usually due to reporting or filing mistakes. With timely review and a proper reply as asked in the notice, these issues can be resolved smoothly without further complications. If you are unsure at any stage, it is advisable to consult a tax professional.
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This article is only a knowledge-sharing initiative and is based on the Relevant Provisions as applicable and as per the information existing at the time of the preparation. In no event, RMPS & Co. or the Author or any other persons be liable for any direct and indirect result from this Article or any inadvertent omission of the provisions, update, etc if any.
Published on: December 20, 2025