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Reply to Income Tax Notice

Income Tax Notice

The government’s laws are very strict in terms of Income Tax Return (ITR), so the assesses /person may get a notice even for a minor mistake in the filing of Income Tax Return (ITR). Even now a days the govt has start crating database for PAN base transaction in 26AS and for that it has instructed Bank, Financial institution, SEBI, State Revenue Department for high value transaction of property, and many other govt Department to report the PAN base transaction to Central Board of Direct Taxes.

These days people are getting different types of notices/intimations from the Income Tax department by different modes such as delivery by post or by an e-mail. Here are some reason for which you may get the Income Tax Notice.

Notice under Section 156
Reason: It is issued by the Assessing Officer (AO) against the outstanding amount, interest, penalty, etc. The assessee has to deposit the amount within 30 days after receiving the notice. However, in special cases, the time limit can be reduced to less than 30 days.

Notice under Section 143(1)
Notice under this section is a traditional practice by the IT department, it states that ITR has been successfully processed. This can be sent by the IT department from the end of the financial year to the end of the year in which return has been filed.

Notice under Section 142(1) & 143(2)
Notice u/s 142(1) issued by the IT department only when AO needs some kind of verification, clarification and reassessment. Notice u/s 143(2) issued when AO is not satisfied with assessee response for notice u/s 142(1).

Notice under Section 148 – show cause notice
When AO feels that assessee has not disclosed all sources of income with the intention to evade taxes.

If amount withheld is less than Rs 1 lakh, notice issued within four years from the end of the assessment year. If amount withheld is greater than Rs 1 lakh or related to property situated outside India, notice under Section 148 can be issued within six years.

Notice under Section 245
Primarily an intimation that department is adjusting assessee’s previous year tax payables with the current year’s refund. No time limit for issuance of notice under this section.

Notice for Non-Filing of Income Tax Return

If you have filed ITR for one year and not filed in the following year, or you have performed high-value transactions and not filed an ITR, then you could get a notice from the I-T Department for non-filing of ITR. If you are a salaried individual with tax being deducted by the company, and you have failed to file the ITR, then you could get a notice from the I-T Department. If you have received a mail from the Income Tax Department by post, then you need to reply to the authority that sent the notice, giving detailed reasons for not filing the ITR.

Notice for Delayed ITR Filing

If you have not filed the Income Tax Return by July 31, you will get a notice on non-filing of ITR. You could get this notice within a year of the end of the assessment year for which return has not been filed. File your ITR as soon as possible and attach the ITR-V, or reply with ‘Return under preparation’.

Notice for Non-Disclosure of Income

You can get a notice from the I-T Department for non-disclosure of income if you have not shown any income in your ITR. If TDS has been deducted and you have no income to show for it, or if the I-T Department has received information about income such as bank interest or income from shares and securities through the AIR, they will suspect you of hiding income sources and send you a notice.

Notice for Tax Credit Mismatch

If the tax credit in the ITR and Form 26AS do not match, you are likely to receive a notice for tax credit mismatch. In this case, cross-check the tax credit details in your TDS and ITR with that in Form 26AS. Revise your ITR accordingly and file a revised version or a rectification. If there is any error in Form 26AS, you need to rectify it in the form first.

Notice for Non-Payment of Self Assessment Tax

If you have filed a return even when tax is due from you to the government, then the ITR you filed will be considered a defective return. In this case, make the tax payment as required and file a revised return.

Notice Under Section 142(1)

This is a notice sent before the I-T Department begins scrutiny of your tax payment. As a preliminary investigation, the department asks the taxpayer to produce details on income, investments, tax paid, assets and liabilities. You may be asked to produce tax and income details of yourself and anyone you are liable to pay tax for – for example a ward or a deceased person of who you are the legal heir. If the Assessing Officer is satisfied with the documents and information furnished, then he might decide to not scrutinise your case. Even if you think the details sought are not relevant to you, you need to respond to the notice under Section 142(1), or face penalties and even prosecution.

Notice Under Section 143(2)

This is a scrutiny notice that is usually served after a notice under Section 142(1) is sent out. You could receive this notice up to 6 months after the end of the assessment year. Receipt of this notice means that your case has been chosen for detailed investigation, and you need to furnish all relevant financial documents – income, investments, exemptions and deductions availed, losses, etc. To avoid penalties and prosecution, you need to reply to this notice as soon as possible. It may be better to consult a tax expert before replying to this notice.

Notice Under Section 245

You are served a notice under Section 245 if you have claimed refund on the tax paid, but there are previous dues n your name. Through this notice, the department lets you know the refund you have claimed, the pending demands from the previous years. If you do not respond to this notice, the dues and refunds will be adjusted against each other. If there is any discrepancy, you may need to file rectification or revision of return. If you have any rectification on the previous demands, you need to respond with the steps taken to correct the errors in the previous ITRs, and the reason why you should be paid the refund.

Notice Under Section 139(9)

If there is an error in the ITR filed by you or any relevant income/investment proof has not been attached, the department will send you a notice under Section 139(9). You need to reply to this notice within 15 days or the return will be considered as not filed. If any rectification needs to be done, file a rectification request for the return or a revised return within the deadline. If the rectification or revision is done within the stipulated period, then the return will be considered as filed, but if you have missed the deadline for filing ITR for the given year then the return will be considered as not filed.

So you need not to became tense after receipt of notice from Income Tax Department, But contact your consultant to reply the notice in time to resolve the issue.

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