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Income Tax Notices in India

 An Income Tax Notice is a formal communication from the Income Tax Department of India informing you of discrepancies, required actions, or additional information related to your tax filings. It does not always mean you're in trouble—sometimes it's just a routine request.  As mentioned above, An income tax department notice is a formal communication issued by the Income Tax Department to a taxpayer. It can relate to various aspects of income tax filing and compliance, such as requests for additional information, clarification of discrepancies in a tax return, audits, tax payment demands, or refund notifications. The income tax department notice specifies the details of what the department requires from the taxpayer, ranging from submitting specific documents to explaining income or deductions claimed. 

 ETaxToday is here to help you understand, respond, and resolve it effectively. 

Reasons for Receiving a Tax Notice

  • Discrepancies in Tax Returns: If there's a mismatch between the income declared, deductions claimed, and the data available with the Income Tax Department, you might receive an ITR notice asking for clarification.
  • Non-Filing of Tax Returns: If you haven't filed your income tax return by the due date, the department may send an ITR notice reminding you to file your return.
  • High-Value Transactions: If you've made high-value transactions that don't match your reported income, the department might send a notice to explain these transactions
  • TDS/TCS Mismatch: You might receive a notice if there's a discrepancy between the tax deducted at source (TDS) or tax collected at source (TCS) as per your Form 26AS and the income declared in your tax return.
  • Investments/Deposits in Your Name: If you've made significant investments or have large deposits in your name that aren't in line with your reported income, the department may inquire about the source of funds.
  • Property Transactions: Transactions involving property, especially if the value declared is lower than the guideline value determined by the state, can trigger a notice.
  • Scrutiny of Returns: The department randomly selects returns for scrutiny to ensure compliance. You'll receive an ITR notice for detailed documentation and explanations if your return is chosen.
  • Demand for Tax: If the department calculates that you have unpaid taxes based on your return or any adjustments they've made, they'll issue a notice demanding the due tax.
  • Refund Claims: If you've claimed a refund in your tax return, you might receive a notice for verification before the refund is processed.
  • Foreign Assets or Income: Having foreign assets or income might lead to a notice if the department needs more information or if there are discrepancies in the reported details.

Types of Income Tax Notices

Section

Purpose

Action Required

Event Details

Section

Purpose

 

Action Required

139(9)

Defective Return

Rectify errors and refile

Event Details

139(9)

Defective Return

 

Rectify errors and refile

143(1)

Intimation

Refund, demand, or adjustment

Event Details

143(1)

Intimation

 

Refund, demand, or adjustment

143(2)

Scrutiny

Submit documents for verification

Event Details

143(2)

Scrutiny

 

Submit documents for verification

245

Refund Adjustment

Confirm adjustment of past dues

Event Details

245

Refund Adjustment

 

Confirm adjustment of past dues

What Are the Methods for Serving Income Tax Notices?

 The Income Tax Act of 1961 outlines the procedure for issuing notice, orders, or other communications, which can be delivered in several approved ways.

  • Who Receives the Notice: IT Notices are typically sent directly to the individual concerned. If the notice involves a minor, it goes to their guardian. Mistakes in the recipient's description can often be corrected unless the mistake affects the taxpayer's identification.
  • Postal Service: IT Notices can be sent via registered mail, ensuring the letter is properly addressed, prepaid, and posted.
  • Posting on Property: If the recipient refuses to acknowledge receipt or cannot be found, the notice can be posted visibly at their residence or business location.
  • Notices to Groups:
    • IT Notices can be sent to the manager of Hindu Undivided Families (HUFs) or, if the manager has passed away, to all adult members.
    • For partnership firms or associations, it notices can be sent to current or former partners or members.
  • In the case of Closed Businesses:
    • The IT notice is sent to the individual whose income is being assessed.
    • For firms or associations, it goes to any member who was part of the entity when it ceased operations.
    • For companies, notices are sent to the principal officer or director.

Documents required to reply to an Income Tax Notice

 The documents are required to vary according to the type of income tax notice that is served to the taxpayer. The basic documents needed to reply to an income tax notice would be:

  • The Income Tax Notice copy.
  • Proof of Income source such as (Part B ) of Form 16, Salary receipts, etc.
  • TDS certificates, Form 16 (Part A)
  • Investment Proof if they are applicable.

Need Help with a Tax Notice?

At ETaxToday, our experts will:

  • Review your notice 
  • Help draft a suitable response 
  • File revised returns, if needed 
  • Represent you before the department

Contact Us

Email: Mudrapartners@gmail.com Contact: +91-7982456377

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