Respond to Income Tax Notice

Rs.999/-* onwards



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Income Tax Returns once filed is checked by income tax department regarding the information related to income declarations and tax paid. If all these details match without any hitch, then the IT Department will accept your tax return as per Section 143(1). If department finds that you have paid improper tax than you ought to have, you will receive a demand notice. On receiving an income tax notice, the taxpayer must understand the nature of notice, the request or order in the notice and take steps to comply. Some of the common reasons for receiving an income tax notice is as follows:

  • Not Filing of Income Tax Returns
  • A discrepancy in tax paid
  • Entering into high-value transactions and not filing tax return
  • Unexplained cash credits.
  • Any other reason leading a tax officer to believe that there could be income tax evasion.

We need to understand the notice issued by Income tax department.

In this case, Assessing Officer is of the opinion that ITR filed by the assessee has certain defects. The best part is that a proper error description is shared and the AO also suggest a probable solution to rectify the same. The assessee is given an opportunity to respond within 15 days from the date of intimation or before it is assessed. If you don’t respond within 15 days then your return will be rejected by the AO. The defect u/s 139(9) can be the wrong ITR filed, missing information, incomplete return etc.

If Assessing Officer is of the opinion that you are concealing the income or likely to conceal income then you will receive income tax notice u/s 131(1A). This notice indicates that AO is initiating an enquiry or investigate into the matter. The assessing officer can impound the books of account or other documents by providing reasons for the same. There is NO specific time limit to serve this notice.

This is the notice of preliminary enquiry in case the return is not filed on time. Alternatively, if the AO goes through the documentary proof to verify your claim in Income Tax Return then he may ask to furnish the documents for assessment purpose. The time limit to serve the notice u/s 142(1) is before the end of the relevant assessment year. For example, the income tax return filed for AY 2016-17, you can receive notice u/s 142(1) on or before 31st March 2017. This timeline is not valid in case the return is not filed by the assessee.

If the AO is not satisfied with the response of the assessee or assessee fails to provide the documents against income tax notice u/s 142(1) as explained in the previous point then you will receive notice u/s 143(2). In this scenario, the case is called for detailed scrutiny. The AO may ask the assessee to either attend his office in person or produce supporting, particulars and evidence in support of his claim. The timeline to serve notice u/s 143(2) is before the expiry of six months from the end of FY in which the return is furnished. For example, return for FY 2015-16 was filed in FY 2016-17 on or before 5th Aug 2016. End of FY 2016-17 is 31st Mar 2017. Six months from the end of FY 2016-17 is 30th Sep 2017. Therefore, notice can be served till 30th Sep 2017.

To make errors is human behaviour and same holds true for Assessing Officer or if your new AO does not agree with the assessment of previous AO then notice u/s 148 is expected to be issued. In short, even after assessment, if the AO is of the opinion that some income of the assessee escaped assessment then income tax notice u/s 148 can be issued. As assessee may be asked to file the income tax return for the relevant assessment, reassessment or recomputation.

The notice can be served within a period of 4 years from the end of the relevant assessment year if the income escaped assessment is Rs 1L or less than that. Otherwise, the notice can be served within a period of 6 years from the end of the relevant assessment year. For example, for a return filed in AY 2016-17, an income tax notice can be served on or before 31st March 2021 (for 1L or less than 1L cases). In the case of more than 1L cases, the income tax notice can be served till 31st March 2023.

If any previous penalty, tax, fine or any other amount is due or pending from the taxpayer to the income tax department then income tax notice u/s 156 is served. Normally this notice is served after the assessment of ITR. The taxpayer can deposit the amount payable within a time period of 30 days from the date of the income tax notice. There is no time limit to serve this notice. Income tax notice under section 143(1) and 200A are also referred as Notice of Demand.

It is basically intimation from Income Tax department and this notice is issued when the tax refund (full/partial) for an assessment year is adjusted against the tax demand due from the taxpayer. In this type of notice the assessment year of refund and tax demand can be different. There is no time limit to serve or send income tax notice/intimation u/s 245.

FAQs

A tax notice is issued by the income tax department when the Assessing Officer finds any default/error in the Original/Revised Income Tax Return. A tax payer can get notice from Income Tax Department for many reasons under various sections.

No, every tax notice does not demand for additional tax. Notices are issued under different sections and every section has some different demand.

Yes, responding to tax notice is necessary in every case otherwise there can be consequences as stated afterwards.

If no action taken by you within 30 days of receipt of the notice u/s 245, the outstanding demand as on that date will be considered for adjustment against your refund.

Non-payment of tax demand attracts penalty and prosecution under various provisions of the Income Tax Act, 1961 and interest @ 1% p.m. or part of the month on the amount of default.