What to do if you get an income tax notice?

If you get an Income Tax notice don’t panic. Read the notice carefully. If you don’t know what to do, go through the following;

Notice Under section 143(1)

Mostly a good news! The most common form of intimation is under section 143(1). But at this stage it may be just an intimation, and you don’t need to take any action. Sometimes it states that your return has been successfully processed. The income tax department validates each tax return with its own record and this notice usually only points out apparent mistakes found out by the system. This intimation has two columns ‘As provided by taxpayer in the Return of Income’ and ‘As computed under section 143(1)’. You can run through each of these amounts and find out where the discrepancy is. It could be that a certain TDS has been disallowed or there is a mismatch in self-assessment tax payments, a rounding off error. A final tax due or refundable is computed.


Notice Under section 143(2)

A notice can also be issued if you fail to file your return within the prescribed time.

General notice for verification

A general notice for verification is issued to check transactions. For example, a taxpayer may receive a notice of cash deposit or initial public offer (IPO) subscription. Such notices typically require you to only confirm whether you have filed your return and if this transaction was included. This notice should not be construed as a scrutiny notice.

Notice is about assessment or reassessment

If the notice is about assessment or reassessment, it indicates that the taxpayer’s case has been selected for detailed scrutiny. It will generally be accompanied by a questionnaire seeking information.

Notice for limited scrutiny

If the notice is related to limited scrutiny, you have to provide details of particular aspects mentioned in the notice.

How to reply to a Notice

Go through the email and do what is needed as early as possible because most notices require time-bound response.

You can reply to almost all tax notices online, through your tax filing account on www.incometaxindiaefiling.gov.in. For each tax notice, a particular response procedure has to be followed. Once you receive such an email, access your income tax account under the head ‘My Account’. Here you can see the refund and demand status. Or, after logging in, you can click on the ‘My Pending Actions’ tab on the dashboard. You can also click on ‘Worklist’ and then ‘For your action’ to see if any demands or arrears are there for you.

To respond to any intimation, go to the ‘Response to Outstanding Tax Demand’ tab, select the correct assessment year, and click on ‘Submit’. Then select among these options (based on whether you agree or disagree with the tax authority)—demand is correct, demand is partially correct or disagree with demand.

If you think the demand raised is correct, then click on the option ‘demand is correct’. If any refund is due, outstanding demand along with interest is adjusted against it. If some tax is still due, pay immediately.

If the demand is only partially correct, enter the correct and the incorrect amounts, along with reasons.

The third choice is ‘Disagree with demand’. There are two choices for partially or fully disagree. You have to mandatorily give one or more reasons as to why the demand is incorrect.

Once you successfully submit your response, you will get a transaction ID. Click on the ‘View’ link under the response column to see what you have submitted. You can also contact your respective assessing officer for clarification.

If the content of the notice is simple and you can respond on your own, then do so. But if it is complex, take professional help. The taxpayer can appoint an authorised representative to appear on her behalf. Or, she can accompany the representative during scheduled hearings.

Things to remember

If you don’t respond to the tax notices within the time allotted, there can be various implications. Non-compliance of a tax notice would attract penalty of Rs10,000/- and may lead to judgement assessment by the tax officer. In some cases, prosecution up to one year may also apply.

Request for an adjournment

If you need more time to reply, request for an adjournment. This  is up to the discretion of the tax officer.

If you receive an email from the tax department, don’t be nervous about it but don’t ignore it either. Read through it and take corrective measures if needed. If you find the matter difficult to resolve, take an expert’s advice.




Penal aspects

143 (1)

Successful Processing of return. If TDS wasn't allowed, tax payable or refundable is recalculated

Penal interest may apply on tax dues

143 (2)

To ensure income is not under-reported too much loss is not claimed, and tax isn't underpaid

If details are not given, a best judgement assessment can be made. Penalty of Rs. 10,000 may apply

142 (1) (i)

Return not submitted within due date or before end of relevant assessment year

maximum penalty for not filing return is Rs. 5000

142 (1) (ii)

and (iii)

Documents needed to calculate taxpayer's Income. Information sought on assets and liabilities

Notices under other sections may be sent


Reassessment if some income has not been assessed

Further notices may be sent

139 (9)

Defective return:



Form not filled properly

If you don't make corrections within deadline, return will be treated as void


Taxes not paid or details of self assessment challan not mentioned

if you rectify late before assessment is completed, return may be valid


Certain annexures, statements, audit reports, not attached

you may have to pay interest and other penalties for not filing or not reporting correct income if return is treated as defective or void


Tax credit(TDS) claimed without reporting relevant income



                                                                                                                                        Source: Mint Money     

Last modified on Saturday, 11 March 2017 06:03

Prakash Praharaj

Shri Prakash Praharaj has a passion for excellence. He has been awarded two gold medals for securing top positions both in Graduation and Post Graduation in Commerce. He is an MBA with specialization in Finance and marketing. He has been awarded Diploma in Treasury, Investment and Risk Management besides CAIIB from the Indian Institute of Bankers. He is a Certified Financial Planner from the Financial Planning standards Board, India (FPSB), affiliated to FPSB, Denver, USA and Certified Personal Financial Adviser from NISM. He is also a SEBI registered Investment Adviser vide Reg. no. INA 000000045 dated 2nd August 2013.His book "Your Every day guide to Personal Finance and Insurance" has been published by CNBC TV 18 in August 2015.

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