The Income-Tax department can send notices either before or after you file returns in cases it deems necessary — such as a mismatch or discrepancies in your I-T returns (ITR) filing. Notably, receiving an I-T notice does not automatically mean a taxpayer is in trouble as the communication could be aimed at alerting you about mistakes in the documentation.
Generally, an I-T notice is official communication from the tax department regarding unreported income, mismatch or discrepancies in your filing, non-filing of returns, verification of claims, missing information or overdue filing, and demand for outstanding income tax among other reasons.
Below are the various types of I-T notices that may be sent:
- Section 245: Demand notice for taxpayer
- Section 148: Notice for escaping assessment
- Section 143(2): Notice for scrutiny of assessment
- Section 143(1): Intimation letter
- Section 142(1): Inquiry before assessment
- Section 133(6): Inquiry for no ITR despite AIS showing taxable income, capital gains
What is mismatch in ITR filing?
Form 26AS (Form 168 under the new ITA 2025) or Annual Information Statement (AIS), is a comprehensive display of your financial statement for the year. It has information including details of advance tax / self-assessment tax / regular assessment tax deposited, any specified financial transactions (SFT), information relating to demand and refund and information relating to pending and completed proceedings, refund received during a financial year (if any), Tax Collected at Source (TCS), Tax Deducted at Source (TDS), TDS defaults (if any), and tax deducted on sale of immovable property under section 194 IA (in case of seller of such property), among other information.
It also shows both reported value and modified value (i.e. value after considering taxpayer feedback) under each section (i.e. TDS, SFT, Other information).
Notably, since the AIS contains information on high-value transactions done via credit card and all PAN-affiliated financial transactions, anything you forget or fail to report in your returns will show on the document regardless. It is this mismatch that the tax department can ask you to correct. To this end, the department encourages taxpayers to access their AIS to identify any discrepancies and file updated ITRs (ITR-U) if necessary.
According to Clear Tax, tax notices can also arise from arithmetic errors, unreported high-value transactions, non-disclosures, or inconsistent information across years. The Department is now comparing current ITRs with previous filings as well.
Step 1: Verify if the tax notice is genuine
It is advisable to first verify the authenticity of a notice before you respond. This can be easily done through the authentication feature on the official income-tax e-filing portal here (https://www.incometax.gov.in/iec/foportal/).
You will need to keep you PAN Card, tax documents, Document Identification Number (DIN), and phone ready for the process.
Step 2: Assess the notice and respond promptly
Once you have verified that the notice is legitimate. Read the notice carefully to understand what documentation you need to provide, respond promptly and avoid penalties. Documents and related records that may be required include your bank statements, Form 16, investment proof, ID proof, transaction details, etc.
You will have to login to your account on the I-T portal and click on Pending Action, followed by e-Proceedings to check the notice and provide an explanation with the required supporting proof documents.
Once you submit your reply, the acknowledgement can be download to your device for future reference and proof.
How to correct mismatch in ITR?
- Register on the official I-T e-filing portal here https://eportal.incometax.gov.in/iec/foservices/#/login
- Registered users can log into their account and Click on the “e-Verification” tab.
- You can reconcile mismatches directly on the portal without the need for additional documents.
- Taxpayers who are unable to explain mismatches may choose to submit an Updated Income Tax Return if eligible.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
