Income Tax Notice

Any notice that is received from the Income Tax Department might be alarming and frightening to the recipient. However, there is no reason to be disturbed when an income tax notice is received. 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 Income Tax Returns
• A discrepancy in the tax paid when compared with the amount mentioned in the return
• Entering into high-value transactions but not filing tax-returns
• Unexplained cash credits.
• Any other reason leading a tax officer to believe that there could be income tax evasion

Note: In case you receive an income tax notice, get in touch with a professional at IndiaFilings to better understand the income tax notice and determine the appropriate course of action. You can send a copy of the tax notice, together with your question, to [email protected].

Notice u/s 143(1) – Intimation

This notice is an indication that ITR is being processed by the Income Tax Department. It intimates the receiver of any numerical faults or modifications to be made. The notice is usually sent in the form of an e-mail from the Income Tax Department. If an intimation is received under section 143(1), it is no reason for panicking, it is not an inspection or order sent forth by the Income Tax Department.

Common reasons for receiving income tax notice under Section 143(1) are

• Incorrect tax calculation
• Levy or interest which is yet to be paid
• If you are qualified for refunds from the Income Tax Department.

Notice u/s 139(9) – Defective Income Tax Return

A return is termed defective when the IT Department identifies any contradiction or faults or any misplaced information in ITR. An assessee must rectify the flaws within 15 days and if the flaw is not rectified, it would be considered as an invalid return. Once the income-tax returns are filed, the particulars provided in the ITR are checked and processed.

Notice u/s 142(1) – Inquiry Notice before Assessment

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, as required by the tax officer.

This notice is mostly received when there are discrepancies in the taxpayer tax return and an investigation of certain documents or information is required. The taxpayer is given time for submission of documents and a judicious chance of being heard before the conclusion of the process.

Notice u/s 143(2) – Scrutiny Assessment Notice

This applies when the tax is filed by the assessee himself (Self-Assessment) or in retort to a notice u/s 142(1). This notice is attended by the Assessing Officer in order to confirm that the assessee has not minima-listed the income, computed undue damage or tax had been short-paid. It is expected of him/her to execute the following:

• Be present or signify before the Assessing Officer (AO) to provide proofs
• Make written proposals for providing details
• Produce proof to validate the income/profits/gains/losses.

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 on the part of the taxpayer. The amount mentioned in the demand notice must be deposited by the taxpayer within 30 days or any other date mentioned on the tax notice.

Notice u/s 148 – Commence Proceedings

This notice is released for the purpose of reopening a case that has already been evaluated previously by an officer. The case is re-opened if the officer trusts that any actionable income is not stated in the return. Prior to undertaking this course of action, the Assessing Officer (AO) has to deliver a notice under section 148 by creating a valuation or re-assessment. The Assessing Officer (AO) should have a binding motive to re-open the case and must record the purpose of dispensing the notice.

Notice u/s 245 – Intimation to set off Demand and Refunds

This tax notice is issued by the income tax department to an assessee for whom the Income Tax Department owes a refund from a previous assessment year, while the taxpayer is supposed to pay the tax demanded currently. At this juncture, the Assessing Officer can setoff a refund against the tax demand which is unresolved from the taxpayer. As per Section 245, the modification of reimbursement and petition could be provided after an appropriate issue of notice to the taxpayer. The taxpayer will be given the opportunity to rectify the inaccuracy identified by raising or altering the claim.