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Income Tax Notices

  • Jul 29

The Income Tax Department (ITD) sends the notices for various reasons such as not filing the income tax returns (ITR), any defect while filing the returns (ITR), or other instances where the tax department is requiring any additional documents or information.

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Let us understand the various types of notices or intimations issued by the Income Tax Department.

Notice u/s 143(1) - Intimation :- This is one of the most commonly received income tax notices. The income tax department sends this notice seeking a response to the errors/ incorrect claims/ inconsistencies in an income tax return that was filed.If an individual wants to revise the return after receiving this notice, it must be done within 15 days.Else, the tax return will be processed after making the necessary adjustments mentioned in the 143(1) tax notice.

Notice u/s 142(1) - Inquiry:-This notice is addressed to the assessee when the return is already filed and further details and documents are required from the assessee to complete the process.This notice can also be sent to necessitate a taxpayer to provide additional documents and information.

Notice u/s 139(1) - Defective Return:-An income tax notice under Section 139(1) would be issued if the income tax return filed does not contain all necessary information or incorrect information. If tax notice under Section 139(1) is issued, you should rectify the defect in the return within 15 days.

Notice u/s 143(2) - Scrutiny:-An income tax notice under Section 143(2) is issued if the tax officer was not satisfied with the documents and information that was submitted by the taxpayer.Taxpayers who receive notice under Section 142(2) have been selected for detailed scrutiny by the Income Tax department and will have to submit additional information.

Notice u/s 156 - Demand Notice:-This type of income tax notice is issued by the Income Tax Department when any tax, interest, fine, or any other sum is owed by the taxpayer.All demand tax notice will stipulate the sum which is outstanding and due from the taxpayer.

Notice Under Section 245:-If the officer has reason to believe that tax has not been paid for the previous years and he wants to set off the current year's refund against that demand, a notice u/s 245 can be issued.However, the adjustment of demand and refund could be done only if the individual has been provided proper notice and an opportunity to be heard. The recipient has to respond to the notice is 30 days from the day of receipt of the notice.If the individual does not respond within the specified timeline, the assessing officer can consider this as consent and proceed with the assessment.Therefore, it is advisable to respond to the notice at the earliest.

Notice Under Section 148:-The officer may have a reason to believe that you have not disclosed your income correctly and therefore, you have paid lower taxes.Or the individual may not have filed his return at all, even if you must have filed it as per law. This is termed as income escaping assessment. Under these circumstances, the assessing officer is entitled to assess or reassess the income, according to the case.Before making such an assessment or reassessment, the assessing officer should serve a notice to the assessee asking him to furnish his return of income.The notice issued for this purpose is issued under the provisions of Section 148.

Documents required to reply to an Income Tax Notice

  • Copy of Income Tax Notice .
  • Proofs of Income Sources
  • TDS Certificate
  • Investment Proof if they are applicable.

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Frequently Ask Questions (FAQ's)

A: Assessment under section 143(1)​ can be made within a period of 9 months from the end of the financial year in which the return of income is filed.
A: Scope of assessment under section 143(1)​ Under section 143(1) is like preliminary checking of the return of income. At this stage no detailed scrutiny of the return of income is carried out. At this stage, the total income or loss is computed after making the following adjustments (if any), namely:- (i) any arithmetical error in the return; or ​ (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; ​ (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139​ (iv) disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return;​ (v) disallowance of deduction claimed under sections 10AA​, 80-IA, 80-IB, 80-IC, 80-ID or section 80-IE, if the return is furnished beyond the due date specified under sub-section (1) of section 139​; or​ (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return. ​ However, no such adjust​ments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode. Further, the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made. For the above purpose “an incorrect claim apparent from any information in the return” means a claim on the basis of an entry in the return:- (i) of an item which is inconsistent with another entry of the same or some other item in such return; (ii) in respect of which the information is required to be furnished under the Act to substantiate such entry and has not been so furnished; or ​ (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction;
A: The purpose of this notice is to notify the assessee, that the return filed has been picked for scrutiny. It is pertinent to note that the section under which it will be scrutinized is different from the one in which the notice has been issued. Via detailed scrutiny, the assessing officer intends to be assured that you have not done any of the following: Understated your income Claimed excessive loss Paid lesser taxes Through this notice, the taxpayer is required to respond to the questionnaire issued along with the documents required by the income tax department. The assessing officer is supposed to service this notice within 6 months after the completion of the assessment year to which it pertains. For example, Anil filed his return on 20th May 2020 for the AY 2020-21. Here notice under section 143(2) can be issued to Rohit within 6 months after completion of the AY to which it pertains i.e. 30th September 2021.
A: This type of income tax notice is issued by the Income Tax Department when any tax, interest, fine, or any other sum is owed by the taxpayer. All demand tax notice will stipulate the sum which is outstanding and due from the taxpayer.
A: If the officer has reason to believe that tax has not been paid for the previous years and he wants to set off the current year's refund against that demand, a notice u/s 245 can be issued.However, the adjustment of demand and refund could be done only if the individual has been provided proper notice and an opportunity to be heard. The recipient has to respond to the notice is 30 days from the day of receipt of the notice.If the individual does not respond within the specified timeline, the assessing officer can consider this as consent and proceed with the assessment.Therefore, it is advisable to respond to the notice at the earliest.
A: The officer may have a reason to believe that you have not disclosed your income correctly and therefore, you have paid lower taxes. Or the individual may not have filed his return at all, even if you must have filed it as per law. This is termed as income escaping assessment. Under these circumstances, the assessing officer is entitled to assess or reassess the income, according to the case. Before making such an assessment or reassessment, the assessing officer should serve a notice to the assessee asking him to furnish his return of income. The notice issued for this purpose is issued under the provisions of Section 148.