What are the types of income tax notices? Do you have insufficient knowledge about the income tax notices that your business might get? The 7 most important income tax notice types in India are explained in this guide
If we get Income Tax notices that we receive, we are often nervous, but these notices always have a purpose. Certain notices on income tax contain information, such as an announcement of a tax obligation under section 143(1) or information for an inquiry under 142(1).
In contrast, others notify that an audit is necessary, etc. This article will provide an overview of the vital Income tax notifications.
What Are the Reasons for Receiving the Income Tax Notice?
Income tax notices for income tax issues for various reasons according to different sections of the Income Tax Act. Here is a brief list of the most common reasons why you could receive an Income Tax Notice:
- No Filing of ITR
- The delay in ITR return filing
- Defective ITR filing
- Not disclosing all sources of income you earn in your ITR
- Incomplete tax penalties, interest, or other fees due to the IT Department
- If your ITR is chosen for scrutiny, it will be inspected
- The tax refund you receive is useful to offset any due tax debts
- In case of a discrepancy in the amount of loss you have claimed when you file your ITR filing
What Are the Types of Income Tax Notices in India?
1. Intimation under Section 143(1)
As per Section 143(1), Intimation means an announcement to the ITR department IRS to the taxpayer. It is a way of letting taxpayers know about mathematical mistakes or any changes that need to be made.
An email notification from the Income Tax Department may make any person anxious. However, it’s not a problem if you’ve received an email of a 143(1) order.
There’s no need to be worried because it’s simply an announcement and does not warrant any kind of order or examination issued by the Income Tax Department. The notification for ITR processed could concern:
- If you’re eligible to receive refunds from the Income Tax Department
- Any tax or interest rate that is due
A computer system creates this notice or notice under Section 143(1) in response to wrong tax claims or any mathematical error.
2. A Notice Under Section 142(1)to Inquire Before the Assessment
The assessing officer sends an order under Section 142 (1) in two instances. For starters, the officer will ask for additional documents and information that pertain to tax returns.
In addition, an officer demands that your return be filed, although it is not yet filed. If you fail to comply with the Section 142(1) notice (or don’t reply to the notice), you could be subject to a fine of ₹10,000 or one year in prison or both if you do not reply.
The objective is to find out more about the assessee before deciding on the Act. It may be connected to the preliminary investigation phase during the evaluation.
3. Section 139(9): Defective Income Tax Return
In this instance, the Assessing Officer concludes that the ITR submitted by the assessee has a defect. The most important thing is that an accurate description of the error is provided, and the AO can also offer a feasible way to fix the problem.
Also, the person will get the opportunity to respond within 15 days of the date of notification or before the assessment is made. If you do not respond within 15 days, then your return is denied in the eyes of the AO.
The reason for this is a violation of 139(9). 139(9) reflects incorrect ITR submitted, incomplete details, an incomplete return, etc. You can agree or disagree with the assessment that the Assessing officer made. In most cases, without consideration of the details, the assessee will agree or accept the error.
This is among the most frequent mistakes that the assessor makes. If you are unsatisfied with the error description, you may respond to the income tax notice and provide the reasons for the identical error. The only condition is that you must be aware of all rules.
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4. Notice under Section 143(2)
The reason for this notification is to inform the assessee that the tax return submitted was selected for examination. It is crucial to know that the area under which it will be examined differs from the section where the notice was given.
By conducting thorough scrutiny, the officer assessing you wants to ensure that you did not do one of the following actions:
- Paid lesser taxes
- Claimed excessive loss
- You have understated your earnings
By this notice, taxpayers are necessary to answer the questionnaire provided together with the documentation required by the department of income tax. The assessor needs to issue the notice within six months following the conclusion of the year of assessment that it is about.
5. Section 156: Notice of Demand
If a tax, penalty or fine, or other amount is due by an individual taxpayer’s account to the tax department, a notice of income tax u/s the 156 law is served. The notice is usually given following the ITR’s assessment.
Taxpayers can pay the tax amount within 30 days of receiving the tax notice. There is no limit on the time to issue this notice. The name of notice of demand can also refer to notice of income tax under sections 143(1) or 200A.
6. Notice Under 48 (C) Commence Proceedings
It is issued to open the case analysed through an office. You can reopen this case when the officer states that no reports were there about any chargeable income in the tax return.
Before making an assessment or Reassessment, an Assessing Officer (AO) must issue the notice required by section 148. The Assessing Officer (AO) must be able to prove a valid reason for restarting the case. They must also note the reason behind the issuance of the notice.
7. Notice Under Section 245 – Notification to Defuse Demand and Refunds
Section 245 of tax notice refers to the notification that the tax department issues to the taxpayer. It will show for whom the IT Department determines and feels that there’s an outstanding tax demand from previous years and a refund is necessary for a different assessment year.
In this case, under article 245, AO can adjust the refund against the tax claim that the taxpayer does not yet pay.
In simpler terms, an Intimation under section 245 occurs in the following circumstances:
- Tax demands are pending by the IT Department
- The taxpayer could have sought an amount of money back from the IT Department in some other Assessment Year
According to Section 245, the adjustment of the demand or refund will be made only after a formal notification is made to the taxpayer. In addition, the assessor gets an opportunity to rectify any errors that might occur during the adjustment to the request.
Conclusion
Tax notices for income sent out from the Income Tax Department are very important. When you receive any of these notices, you should read them thoroughly and then respond to their notice. In case of a delay, submitting a response to these notices may be costly to your wallet.
If you require assistance on ITR Filing, feel free to speak with tax professionals. It is possible to file your ITR on your own using certain software for ITR or seek assistance from CA on filing your income tax returns.
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