ITR filing: An official communication issued by the Income Tax Department to a taxpayer concerning various discrepancies, non-compliance, or other matters linked to their Income Tax Return (ITR) is called an income tax notice. Different types of income tax notices are issued under specific sections of the Income Tax Act and require timely action to avoid fines.
Here’s a detailed guide to the types of income tax notices and what to do if you receive one.
Types of income tax notices
Intimation notice – Section 143(1)
Section 143(1) of the Income Tax Act relates to the initial assessment of a taxpayer’s income tax return. The Income Tax Department issues an automated, detailed notice after performing basic checks to compare the information in the return with its records.
This summary assessment notice states whether the return is accepted as filed, if a refund is owed, or if there is a discrepancy leading to tax due.
It is not a punitive notice but shares the details of your reported taxable income.
Assessment inquiry notices – Section 142
An income tax notice under Section 142(1) of the Income Tax Act is issued when the Assessing Officer (AO) suspects that the taxpayer has either failed to file their income tax return or has not provided the necessary information.
These notifications can be issued even if the taxpayer has already submitted their income tax return, provided the AO suspects that the filed return is incorrect or flawed.
Notifications under Section 142(2) are issued when the AO requires the taxpayer to submit accounts or documents to verify the information declared in the income return. Such notifications may also be issued if the AO aims to confirm the taxpayer’s income from sources beyond those specified in the return.
A notice under Section 142(3) is issued when the AO requests written details regarding assessment-related issues. This may include information about the taxpayer’s assets, liabilities, business activities, and income from various sources.
Scrutiny notice – Section 143(2)
A notice under Section 143(2) is issued when the taxpayer fails to provide any information or when the AO is not satisfied with the information given by the assessee. This notice is served within a period of three months from the end of the financial year in which the return is filed.
Income escaping assessment – Section 148
A notice under Section 148 is issued to a taxpayer when income has escaped assessment for specific income reported in their returns, which might be overlooked during the normal assessment process. In such cases, the AO has the authority to reassess the taxpayer’s income for that particular financial year.
Demand notice – Section 156
Under Section 156 of the Income Tax Act, whenever any tax, interest, penalty, fine, or any other amount becomes payable due to an order, the AO shall issue a notice of demand to the assessee, specifying the amount due.
How can you respond to income tax notices?
Follow the steps below to manage income tax notices:
Step 1: Go through the notice diligently and understand the reason why the notice was issued.
Step 2: Check the authenticity of the notice in the Income Tax Portal.
Step 3: On the Income Tax Portal, go to Pending Action > e-Proceedings to read the notice.
Step 4: Prepare your response by providing a clear explanation and including all necessary evidence to support your claims.
Step 5: Submit the response in the portal and save or download the acknowledgement ID for future reference.
Step 6: Track the portal and email for any updates from the Income Tax Department.
Disclaimer: This article is for informational purposes only and does not constitute legal or tax advice. Taxpayers are advised to consult a qualified tax professional or refer to the official website of the Income Tax Department for accurate and up-to-date guidance before filing their returns.
