Income Tax Notice

Have you received Income Tax Notice from Income Tax Department recently?

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Income Tax Notice is a kind of notice sent by the Income Tax Department for various reasons like not filing your income tax return, errors in an income tax return, high-value transactions, deficiency in returns.

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Types of Income Tax Notice

• Notice u/s 143(1)-  Intimation Notice -  This notice comes regarding errors/incorrect claims/inconsistencies in income tax returns filed. The reply to this notice must be submitted within 15 days.

• Notice u/s 142(1)- Inquiry Notice- This notice serves regarding necessary additional documents required by the income tax department for processing filed an income tax return.

• Notice u/s 143(2)- Scrutiny Notice-  This notice is sent after notice u/s 142(1)  when Tax officers were not satisfied with the received documents or have not received yet.                      

• Notice u/s 148- Income escaping assessment Notice- If the assessing officer has reason to believe that you have not disclosed your income correctly. Then, The assessing officer serve a notice to the assessee asking him to furnish his return of income

• Notice u/s 156- Demand Notice-  This demand notice serves when any tax, interest, penalty or any other sum is payable in the consequences of any order passed.

• Notice u/s 139(9)- Defective Return Notice-  if the Income-tax return filed by you is defective, confirmed by AO then, The AO serves a notice to rectify his return within 15 days from the date of such intimation.

• Notice u/s 245- Set off refunds against tax remaining payable- this notice served by AO intimating the effects of the adjustments made with the amount due to the assessee.

What to do when you receive an Income Tax Notice?

An encounter with the Income Tax Department is usually dealt with stress because most of the people are unable to understand what it actually entails. It is always advisable to keep calm and read the communication with due diligence. It is important to respond to an Income Tax notice as is done with any legal notice.

The following are the points to be kept in mind in case of receipt of an Income Tax notice. 

Don’t panic, don’t be carefree: In case an assessee encounters a notice, he/she should not panic and calmly try to understand what it entails and what is it asking for. Also, it is equally important to not be carefree and ignorant as it may lead to heavy fines and penalties.

Check the basics: It is important to verify the essentials mentioned in the notice as sometimes it may not be in your name and you may not be the right person to receive it. The basics to be checked are:

• Is it really in your name?

• Is the PAN number correctly mentioned?

• Which assessment year is it meant for?

• Details of the AO (Assessing Officer)?

• Document Identification Number?

• Date of issue of the notice?

• Date of receipt of notice?

Figure out the discrepancy: It is important to patiently read and understand the problem and figure out the reason for the issuance of such notice. It may be sometimes difficult to understand a notice. In that case, the individual is required to consult an expert.

Verify the validity: In order to make sure that the notice issued stands valid, it is necessary to examine the validity of the notice, time of its issuance, relevant assessment year and the section under which it is issued. Any notice which is issued after the time limit specified for assessment stands invalid, but it should be noted that any case can be re-investigated u/s 147 up to 4-6 years after the relevant assessment year has ended.

Preparing for reply: The assesses shall gather all the documents asked to be furnished.

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