Written notification of a problem with a taxpayer's tax account is an income tax notice sent by the Income Tax Department. The notification may be sent for various reasons, including failure to file an income tax return, establishing an assessment, requesting specific information, etc.
The process of filing an income tax return (ITR) does not finish at the verification stage. After an individual has submitted and verified his return, the income tax department starts processing the ITR. After processing, if the income tax department finds any discrepancies in the return, he can send an intimation notice under Section 143(1) of the Income-tax Act, 1961. The notice is sent to the taxpayer's registered email address.
Following are some common reasons taxpayers can get a notice from Income Tax Department:
1. For delay filing IT Return
If you have yet to file your return by the specified time limit, the Income Tax department may send a reminder notice to you on your registered email address. One will get this notice before the end of the assessment year for which the return is due.
The notice for non-filing of returns by the due date are commonly automated reminders that remind the taxpayers to file their returns on time to avoid penalties
2. Misreporting LTCG from equity
When filing the return, one needs to report the realized long-term capital gains (LTCG) on listed equity and equity-related mutual funds. While reviewing the high-value transactions during tax scrutiny enables tax officers to identify unreported capital gains. Therefore, one should ensure they have done the right computation and mentioned the information correctly.
3. TDS claimed not matching with Form 26AS
Ideally, TDS should have to be the same in Form 26AS and in Form 16 or 16a. However, there can be several reasons why the details mismatch.
4. For non-disclosure of income
Revenue authorities can obtain information about taxpayers' income from different sources like banks, employers, mutual exchanges of information between countries, etc. If one has yet to show some part of the income, they may get a notice from the income tax department.
5. Not declaring investments made in the name of the spouse
According to the income tax law, if any investment or any asset is acquired in the spouse's name through the taxpayer's income, the income arising from such investment/ asset, if any, needs to be clubbed in the hand of the taxpayer. The taxpayer has to show such income in his returns.
6. For filing the defective return
If the income tax return is not filed correctly, the assessee will receive a defective return notice from the income tax department. In these cases, one needs to file a revised ITR.
7. If one has done High-value transactions
The income tax department can identify taxpayers who have made high-value transactions in a financial year but have yet to file an income tax return. The department can ask to mention the source of funds for making such high-value transactions.
8. For tax evasion in earlier years
The Income tax department has the power to reassess previously filed IT returns. The Income Tax Department can pick any tax returns for reassessment based on certain pre-defined criteria. Notice for reassessment is only sent when the tax office believes that income that was chargeable to tax has escaped assessment.
| Notice under Section | Description | Consequences / Time-limit |
|---|---|---|
| 142(1) | This notice is issued for two reasons:
i) If the return is filed, nut assessing officer requires additional information and documents ii) If the return is not filed, assessing officer requires you to file it |
A penalty of Rs. 10,000 can be levied for each such failure, or Prosecution which may extend up to 1 year Or Both |
| 139(9) | If the Defective return is filed | If not responded to notice within 15 days of receiving it, ITR will be rejected |
| 148 | If an assessing officer believes that taxpayer has not disclosed his/her income correctly or he have paid lower taxes. He can assess or reassess the return but prior to that assessing officer should serve a notice to the assessee | Time-limit up to which assessing officer can reopen the assessment are: Up to 3 years from the end of the relevant assessment year Beyond 3 years but not more than 10 years from the end of the relevant assessment year, if income of Rs. 50 lakhs or more for a fiscal year has escaped assessment. |
| 143(1) | There is a tax liability to be paid A refund has been determined There is an increase or reduction in the amount to loss | Intimation must be issued within one year from the end of the year in which the return has been filed. |
| 139(1) | If income tax return does not contain all necessary information or incorrect information | Defect should be rectified within 15 days from the date of receiving the notice. |
| 143(2) | To notify the assessee that the return has been picked for scrutiny. Understated your income Claimed excessive loss Paid lesser taxes | Assessing officer is supposed is to service this notice within 6 months after the completion of the assessment year to which it pertains. |
| 156 | Demand Notice – when tax, interest, fine or penalty is owed by the taxpayer | All demand notice will stipulate the sum which is outstanding and due from the assessee. |
| 245 | If the tax has not been paid for the previous years and the taxpayer want to set off the current year refund against the demand | The timeline to respond to the notice is 30 days from the date of receipt of the notice. |
1. Log in to the e-filing website
2. Open ‘My Account and choose ‘View e-filed Return.’
3. Click on the ‘Ack no.’
4. If there is any notice issued to you, it will be shown in this section, and you need to edit your return notice
1. Go through the notice thoroughly
2. Verify the basic information available on the notice
3. Look out for the discrepancies in your income tax return that caused the notice to be served in the first place
4. Respond to notice within the stipulated time
5. Take the help of ONLINEXBRL.com, an expert in professional services
Suppose any mistake, inconsistency, or inaccuracy is discovered in the income tax return filed by the assessee. In that case, the assessee is notified of the same through an income tax notice. Department issues various types of income tax notices.
Yes, the Income tax department can also issue notices for current account transactions.
There are different consequences for an assessee who does not respond to the income tax notice. Such consequences include a fine of up to Rs. 10,000 and imprisonment of up to 1 year.