How to deal with income tax department notice?

Author
By Hiral Vakil on March 7, 2019

It is very common to receive a notice from the Income Tax Department. These notices create a sense of panic amongst assessees. But to say the least, a lot of such notices are sent in the normal course of processing tax returns. It might be for routine enquiry or a request for clarification. So there is absolutely no need to panic in the first place.

Steps to deal with income tax notice

  1. Don’t ignore the notice: A lot of these notices can be attended by sincere communication. If you ignore it, you might end up paying penalty along with your income tax payments.
  2. Check the notice for your basic details: Check PAN name, assessment year, assessing officer and income tax ward details. Make sure that the notice is intended for you only.
  3. Preserve the notice: Whether received physically or via email preserve it. Because the notice contains the date of order and/or communication for further communication with the IT Department.
  4. Identify the reason for the notice: In most of the cases, you would be able to identify the reason just by casually reading it. These reasons could be a mismatch in TDS or defect in return etc.
  5. Check the validity of the notice: There are certain time limits prescribed by the IT department, subject to which any notice can be issued by the department. Check a section mentioned in the notice in pursuance of which the notice has been issued. For example, a notice under section 143(3) for scrutiny assessment has to be served within six months of the end of the financial year in which the return was filed. So, if the notice is served later than this period, it will be considered invalid.
  6. Provide Supporting: The department would ask you to provide the supporting to support your defence. So the best way to respond to notice is with the help of supporting documents.
  7. In time response: Even if you are unable to gather all the supporting documents, you should write the same to the office.
  8. Take professional help: In case of serious matters involving scrutiny assessment, income concealment, etc take professional help from a Chartered Accountant.

Common reasons for Notice and their resolution

 

Section Reason for Notice Probable resolution
139(9)

For filing a defective return

Identify the defect mentioned in “Annexure A” and submit a return in response to the notice of defective return u/s 139(9)

142

For not filing the income tax return or for the scrutiny of a documents & accounts in support of the return filed.

File the return within the time limit mentioned in the notice.

Submit a proper response if you are not required to file a return.

Present before assessing officer with books of accounts and supporting documents if demanded by Assessing Officer.

143(1)

For adjustment or additional tax demand if an error or incorrect information is detected in the return. 

Pay outstanding tax dues if any.

Correct the errors and file rectification return u/s 154 if required.

143(2)

For scrutiny assessment after a detailed inquiry by assessing officer.

Your case has been selected for scrutiny and you should provide all the relevant information, pieces of evidence as demanded by IT authorities.

148

For reassessment, if the officer believes some income has escaped assessment.

Provide all the relevant information, evidence as demanded by IT authorities.

156

For dues (tax, interest, penalty, fine or any other sum) payable by the assessee)

 

 

Submit a response to a notice from e-filing account.

Pay tax if you agree.

Provide a reason if you don’t agree with the demand.

245

For adjustment of a refund with any demand due

Your refund has already been adjusted against outstanding tax demand so no further action required.