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Income Tax Notice: If any mistake is found in the Income Tax Return (ITR) filed, the Income Tax Department sends a notice to the taxpayers. Based on your action with respect to the mistake and notice, the tax department initiates proceedings against you. Therefore, it is important to understand under what circumstances you may be sent an income tax notice and it is equally important to understand the reason behind sending the notice. This will help you respond to such notice when you receive it.
Although taxpayers may receive a variety of income tax notices, not all of these notices apply to individuals. Here are some of the tax notices a salaried individual may receive if mistakes are found in their ITR:
1. Section 143(1)(a) tax notice
This tax notice is called an information notice (information under section 143(1) of the Income Tax Act) and is sent when the tax department has successfully processed the ITR filed by the taxpayer. This information notice will indicate whether the calculations submitted in the ITR have been accepted by the Income Tax Department or not. If there is any difference between the calculations filed by you in your return and the calculations done by the tax department, the reason for the same will also be stated in the information notice.
Possible reasons behind receiving 143(1) mismatched information notice: Such intimations may be issued in case of ITRs filed under section 139(1)/139(5) as well as ITRs filed in response to notices issued under section 142(1). Taxpayer may receive mismatch information notice due to various reasons such as difference between income calculated as per ITR filed by the taxpayer and income calculated as per section 143(1), arithmetical errors, any wrong claim, section 234A Incorrect calculation of interest under /B/C, mismatch of tax return details when compared with Form 26AS etc.
Time limit for replying to such notice: You need to take action only if there is a difference between your ITR calculation and the tax department's calculation. If the intimation notice is issued on account of refund or there is no difference in the calculation of your ITR and the tax department's calculation, you are not required to respond to the intimation. Taxpayers receiving notice under section 143(1)(a) are required to file their reply within 30 days from the date of issue of notice.
2. Defective notice under section 139(9)
The Income Tax Department can issue you a notice under Section 139(9) for incomplete or incorrect information given in the ITR filed by you. There are many reasons why an ITR may be considered defective. For example, using the wrong ITR form to file ITR.
Some common reasons for receiving a defective return notice include: Claiming HRA in ITR but no HRA component in salary breakup, claiming TDS on income while filing ITR but not reporting the relevant income, for example, not declaring FD interest in ITR but not declaring FD interest on such FD Claiming Deductions.
When can a defective ITR notice be issued?
This notice can be issued within nine months from the end of the financial year in which the ITR is filed. For example, for ITR filed for financial year 2023-24, the defective ITR notice may be issued on or before December 31, 2025.
Deadline to respond to defective ITR notice: “If your return is found defective, you will have time to correct the defect in your filed return within 15 days from the date of receipt of the notice or within the time limit specified in the notice. However, you can request for its extension.
3. Section 142(1) tax notice
This tax notice is also known as pre-assessment inquiry or reassessment notice. If no ITR has been filed under section 139(1), a notice under section 142(1) can be issued to the person to file ITR.
Possible reasons behind this notice: The reason behind issuing this notice is that the tax department wants clarification as to why you did not file ITR despite having proof of income exceeding the basic exemption limit. You will have to answer all the questions asked by the Income Tax Department and provide necessary details and documents to support the claims made in your filed ITR. There is no time limit for issuing such notices.
Time limit for replying to the notice: Taxpayers have to respond within the time limit given in the notice which is usually 15 days.
4. Section 143 (2): This notice is known as Scrutiny Assessment Notice. This notice is sent when the tax department wants to do a detailed assessment of the ITR filed and verify the genuineness of all the claims (income and deductions) made by you.
Possible reasons behind this notice: A notice under section 143(2) can be issued to the taxpayer for the purpose of conducting investigation assessment under section 143(3). Scrutiny assessment is a detailed assessment carried out to verify the genuineness of various claims, deductions etc. made in the ITR submitted by the taxpayer.
Response Deadline: Normally 15 days are given to respond to such notice, however, the time limit for responding to such notice is stated in the notice itself. On receiving this notice, you have to give your reply by uploading the necessary documents.
5. Section 148
Section 148: This notice is sent when there is any income which has escaped assessment. This notice is issued when the Assessing Officer (AO) has any evidence to show that the income of the taxpayer has escaped assessment in the previous year. The tax department issues notice under section 148 before issuing show cause notice under section 148A(B) asking why the case should not be selected for reassessment.
After receiving the response from the taxpayer or if no response is received from the taxpayer, the Income Tax Department passes its order under section 148A(D) stating whether it is a suitable case for reassessment or not.
When may such notice be issued: Notice under section 148 can be issued within 3 years and 3 months from the end of the relevant assessment year, if the income exempted from assessment does not exceed Rs 50 lakh. However, if the income omitted from assessment exceeds Rs 50 lakh, reassessment can be done for 5 years and 3 months for the relevant assessment year.
Response Deadline: The taxpayer has to respond within the time limit given in the notice which is usually 30 days.
6. Section 245: Under this section the Income Tax Department can adjust the income tax refund of the current year against any tax dues of the previous year. This adjustment is made only if there is income tax due or tax refund due in the current year.
Possible reasons behind this notice: If you have any tax dues from the previous year that you have not settled or paid, you may be sent this notice.
When can this notice be issued: There is no time limit for sending this notice.
Response Deadline: Information notices have a time limit, which is usually 30 days. If you have any objection to this notice, or you have already paid the tax amount due, please provide proof of tax payment in your response.
Additionally, some other notices that taxpayers may receive include…
Section 154: If any mistakes are found in the claims made in the return after the ITR has been accepted by the Income Tax Authority, the Income Tax Authority can issue a notice under Section 154 to rectify these mistakes.
Section 263: If the Commissioner of Income Tax (CIT) finds that any order passed by his subordinate officer is defective, and is prejudicial to the interest of the Government, within 12 months from the end of the year in which the defective order was passed, the CIT shall report to his subordinate officer. Can issue notice under section 263 to modify the order passed by.
Section 131(1A): If the Principal Director General, Director General, Principal Director, Director, Assistant Director, Deputy Director etc. suspects that income has been concealed, then a notice under section 131 (1A) is issued. The taxpayer has to file his reply within the time limit given in the notice, which is usually 30 days.