Income Tax Notice
E-Filing of Income Tax Notice Online By Expert Mantra
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Worried about getting an Income Tax Notice?
If the Income Tax Department finds any mismatch or issue in your ITR filing, they send a notice to inform you. Don’t stress—just share your details with us, and we’ll handle everything for you.
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Income Tax Notice – An Overview
An Income Tax Notice is an official written communication sent by the Income Tax Department to a taxpayer when they detect an issue or need clarification regarding their tax account. It is a formal way for the department to alert individuals or businesses about discrepancies, missing information, or compliance requirements.
There are several reasons why the department may issue such a notice. It could be for conducting a tax assessment, requesting additional documents or explanations, or addressing situations where the income tax return (ITR) has not been filed or submitted on time. Sometimes, notices are also sent when there is a mismatch between the income reported and the information available with the department.
Once a taxpayer receives an income tax notice, it is mandatory to respond within the specified timeline mentioned in the notice. Ignoring it can lead to penalties, interest, or even legal action. Responding accurately and promptly ensures smooth resolution and avoids unnecessary complications. It is advisable to carefully read the notice, understand the reason behind it, and seek professional assistance if needed to handle the matter efficiently.
At Expert Mantra, we specialize in filing income tax notice for both individuals and businesses. To begin, simply share the following documents with us.
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Different Types of Income Tax Notices
No Demand, No Refund Notice
Issued when the Income Tax Department finds no errors in the filed return, indicating that the ITR is processed with no additional tax due or refund payable.
Refund Notice
Sent when a taxpayer has paid more tax than required, informing them that the excess amount will be refunded directly to their bank account.
Demand Notice
Issued if there is a shortfall in tax payment. The notice instructs the taxpayer to clear the outstanding tax amount within 30 days. (Other types of notices may also be issued depending on specific cases.)
Types of Income Tax Notices
Notice u/s 143(1) – Intimation:
One of the most common notices, issued when there are errors, incorrect claims, or mismatches in the filed return. Taxpayers can revise their return within 15 days; otherwise, the department will make necessary adjustments and process it accordingly.Notice u/s 142(1) – Inquiry:
Sent when additional details or documents are required after a return is filed. It may also be issued to request specific information needed to complete the assessment process.Notice u/s 139(1) – Defective Return:
Issued when a return is incomplete or contains incorrect information. Taxpayers must correct and refile the return within 15 days of receiving this notice.Notice u/s 143(2) – Scrutiny:
Issued if the assessing officer is not satisfied with the filed return and selects it for detailed scrutiny. Taxpayers must provide further documentation and clarifications.Notice u/s 156 – Demand Notice:
Sent when tax, interest, penalty, or any other dues are outstanding. The notice specifies the exact amount payable by the taxpayer.Notice u/s 245:
Issued when there is an unpaid tax from previous years, and the department intends to adjust it against the current year’s refund. The taxpayer must respond within 30 days; otherwise, it’s treated as consent.Notice u/s 148 – Income Escaping Assessment:
Sent if the officer believes income was underreported or not disclosed, leading to lower tax payments. The taxpayer must furnish a fresh return for reassessment before further proceedings.
Documents Needed to Respond to an Income Tax Notice
The documents you need to reply to an income tax notice vary based on the type of notice received. Generally, you may be required to provide:
A copy of the income tax notice received
Proof of income, such as Part B of Form 16, salary slips, etc.
TDS certificates and, if applicable, Part A of Form 16
Investment proofs or any other supporting documents requested by the department
Checklist for Handling an Income Tax Notice
Taxpayers have 30 days from the date of receiving an intimation notice under Section 143(1) of the Income Tax Act, 1961, to respond.
If no response is submitted within this period, the return will be processed with necessary adjustments, without giving another opportunity to object.
Always verify details in the notice, including your name, address, PAN number, assessment year, and e-filing acknowledgement number.
A revised return can be filed only if there was an error in the original ITR filing and must be submitted within 15 days of receiving the notice.
A rectification return can be filed only if you find a mistake or inaccuracy in the order issued by the Income Tax Department.
If the notice requires you to pay additional tax, it is treated as a demand notice under Section 156, and you must respond within 30 days to avoid penalties and monthly interest charges.
When Might a Person Receive an Income Tax Notice?
Errors in TDS Calculation
One of the most common reasons for receiving an income tax notice is an error in Tax Deducted at Source (TDS). This typically happens when the employer or deductor delays filing TDS returns or submits incorrect details, leading to mismatches in tax records.
Discrepancies in Income Tax Returns (ITR)
Notices may be issued if there's a mismatch between the income or deductions reported in your ITR and the information available with the tax department. Common reasons include unreported income like interest from fixed deposits, incorrect claims under wrong sections, or incomplete personal details.
Request for Supporting Documents
Sometimes, the Income Tax Department requires additional documentation to verify the information provided in your return. If this happens, they may send a notice asking you to submit relevant proofs and supporting records.
Non-Filing of Income Tax Returns
If you’ve failed to file your ITR altogether, the department may send you a reminder notice. There’s also a penalty of ₹5,000 for late filing, and interest at 1% per month is levied on the unpaid tax starting from the due date.
Investments Made in Spouse’s or Relative’s Name
Some individuals invest in the name of their spouse, children, or other close relatives to reduce tax liability. However, as per Section 64 of the Income Tax Act, any income earned from such investments (e.g., mutual funds purchased in your wife’s name) is clubbed with your total income and taxed accordingly.
Undisclosed Assets
If your total assets exceed ₹30 lakhs and are not disclosed, you are liable to pay wealth tax at 1% of the asset's value. Failing to declare these assets can lead to scrutiny. Under Section 143(1), the Income Tax Department conducts a preliminary assessment of filed returns and informs taxpayers of any discrepancies or action required.
High-Value Transactions
The Income Tax Department is alerted to high-value financial activities. Entities like banks, mutual fund companies, and real estate agencies are obligated to report such transactions. These include:
1. Cash deposits exceeding ₹10 lakhs in a year:
2. Credit card payments above ₹2 lakhs :
3. Mutual fund purchases of ₹2 lakhs or more:
4. Debenture investments of ₹5 lakhs or more:
5. Sale or purchase of property valued at ₹30 lakhs or above
What to Do If You Receive an Income Tax Notice
Respond to an intimation notice under Section 143(1) of the Income Tax Act, 1961, within 30 days of receiving it. If you fail to respond, your ITR will be processed with necessary adjustments without another chance to object.
Verify details in the notice, including your name, address, PAN, assessment year, and e-filing acknowledgment number.
File a revised return only if you made an error in your original ITR. This must be done within 15 days of deciding to revise.
Submit a rectification return only if you find a mistake or inaccuracy in the order issued by the Income Tax Department.
The second page of the notice explains its purpose and shows any mismatches between Form 16/16A/26AS and the income reported in your return.
Since these notices are computer-generated, errors are possible. Stay calm and carefully review the notice before taking action.
Non-Compliance with Income Tax Notice
Ignoring notices under Section 142(1), 143(2), or directions under Section 142(2A) may result in a penalty of ₹10,000 for each default, as per Section 272A of the Income Tax Act. Timely response is crucial to avoid legal and financial consequences under income tax compliance requirements.
Penalty for Non-Compliance with Income Tax Notice
To avoid hefty penalties, it is important to respond promptly to income tax notices. If you're unfamiliar with the process, the experts at Expert Mantra can assist you at every step—from resolving your queries to submitting the required documents. Get professional help to manage your income tax notices quickly and correctly.
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Frequently Asked Questions…
Can I cancel my GST registration without filing returns?
No, you must file all pending GST returns before applying for cancellation of your registration. The tax department requires up-to-date compliance before processing the cancellation request.
Is it necessary to update manually approved LUTs in the GST portal?
Yes, even if your Letter of Undertaking (LUT) is manually approved, you are required to update it in the GST portal to maintain proper records and ensure eligibility for exporting goods or services without payment of IGST.
Who is required to sign the LUT application?
The LUT application must be signed by the authorized signatory of the business, such as the proprietor, partner, or company director, depending on the type of entity.
How will I know if my LUT filing process is completed?
Once your LUT is successfully filed and processed, an acknowledgment with an ARN (Application Reference Number) is generated on the GST portal. You can also check the status by logging into your account under the 'Services > User Services > View My Submissions' section.
