Income Tax Notice


The income-tax department notifies the defaulter when they discover a discrepancy in ITR filing. Get to know what has to be done in case of an income tax notice.

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Income Tax Notice - An Overview

An income tax notification is a written communication from the department of income tax to a taxpayer alerting them regarding a problem with their tax account. This is done for several reasons, including conducting an assessment, requesting additional information, or filing or not submitting an income tax return on time. The taxpayer has a specific amount of time to respond to notices sent by the income tax department.

Different Types of Income Tax Notices Issued

No Request, No Refund Notice: When the income tax department discovers no errors on the taxpayer's filed tax return, this notice is furnished. The IT department has only informed that ITR is being handled and that there was no tax demand or refund.

Refund Notice: If the assessee has paid more tax than their obligation, they will be served with a refund notice informing them that their excess payment would be reimbursed to their bank account

Demand Notice: This demand notice will be given to demand the taxpayer to pay the tax owing within 30 days if the income-tax department discovers any gap in your tax payment after the computation procedure. Apart from this multiple notices are provided to the taxpayers.

Process to Reply for the Notice Under Section 143 (1)

It is crucial to reply to the notice within the given specific time frame. Make sure to use the instructions given below to complete the process.

  • Visit the income tax division's official website and use your login information to access your account
  • Now pick ‘e-Assessment/ Proceedings’ from the ‘e-Proceeding’ menu option at the top of the menu
  • Choose the option for ‘prima facie adjustments u/s 143(1)’ after entering the PIN and relevant assessment year (a)
  • When returns were submitted after the dates specified in Section 139, deductions claimed under Sections 10AA, 80 IB, 80IC, and other sections would be shown(1)
  • If the return for the prior year in which the loss is estimated was filed after the deadlines mentioned in paragraph 139(1) above, the loss is disallowed
  • Disallowance of expenses that are listed in the audit report but not factored into the total income when completing the income tax return
  • Including money found in forms 26AS, 16A, or 16 that wasn't reported on an income tax return when figuring total earnings
  • A new screen with information such as the reference ID, notice section, date of notice issued, etc. will show after selecting the prima facie adjustments
  • The related panel will now open after clicking on the Reference ID
  • The discrepancy between the income reported on the filed return and the income reported on form 16/16A/26AS is displayed on this screen
  • You can choose to agree or disagree with the adjustments the IT department claims need to be made in the response column in the right-hand corner of the screen
  • If you accept the adjustments, then amend the return as appropriate, pay the additional amount, and make the necessary changesIf you object to the adjustments, please provide documentation to substantiate your objection. The TAN, which is the TAN of the employer specified in forms 16/16A and 26AS, should be entered
  • Simply input the section that the deduction is made under. For example, If you have made the deduction under a salary income, enter Section 192
  • Determine the amount paid or credited by the deductor by looking at Part-A of form 16
  • After deducting any expenses, enter your income in the Income/gross receipt as per the return column
  • Add the head of income to the field labeled ‘Head of Income / Schedule under which stated in the return’
  • Then select a reason from the list by clicking the ‘Reason’ option
  • Add your remarks In this field, make any pertinent comments regarding your pay or deductions. The supporting documentation for the stated discrepancy, such as 80C and 80D proofs, rent receipts, etc., needs to be uploaded after you have supplied this information
  • Finally, you will receive an acknowledgment of your response after clicking the submit button.

When Does a Person Get an Income Tax Notice?

TDS Calculation Error

TDS mistakes are one of the most frequent issues that lead to income tax notices. An employer or deductor submits the TDS reports late or incorrectly, which may result in receiving an income tax notice.

The ITR Disparity

This notice is sent to explain the difference if the discrepancy is with the amounts reported in the returns. Differences that arise as a result of the person failing to record specific income, such as interest on FDs. The deduction was reported under the incorrect section. The information provided by the person is lacking.

Regarding Document Requests

The income-tax department may occasionally need certain supporting paperwork for the filed tax return. as soon as you get this.

When Tax Returns Are Not Filed

The assessee who forgot to file the ITR may be reminded by serving the notice. There is a ₹5000 fine for late tax submissions. The unpaid taxes will also accrue interest at the rate of 1% per month starting on the due date.

Investments in Spouse's Name

To avoid paying taxes, many people opt to purchase assets in the names of their partners, children, or other close relatives. In this context, the term ‘assets’ refers to all types of investments, including real estate, homes, fixed deposits, mutual funds, bonds, debentures, etc. Assume you purchase mutual funds in your wife's name. Any income you get from these mutual funds is also regarded as your gross income under Section 64 of the Income Tax Act.

Large Value Transactions

The corporation must notify the income tax authorities of large value transactions.

It includes,

  • Deposits of cash into a bank account totaling at least ₹10 lakhs in a calendar year transactions using the credit card totaling at least ₹2 lakh
  • Mutual fund investments of at least ₹2 lakh purchase of debentures for at least ₹5 lakhs within a year
  • Selling or acquiring an asset worth at least ₹30 lakhs

Not Disclosing The Assets

The assessee must pay wealth tax at the rate of 1% of the total asset value if the value of all assets possessed by them exceeds ₹30 lakhs. Here, the asset consists of benefits from the Section 143 income tax notification (1) The income tax division conducts an initial evaluation of all submitted returns and notifies taxpayers of the findings of such an initial assessment.

What Should You Do if You Get an Income Tax Notice

  • The taxpayer must respond to the intimation notice under Section 143(1) of the Income Tax Act of 1961 within 30 days of the day the notification was delivered
  • Your ITR will be processed with the appropriate revisions if you don't react within the allotted time without giving you the chance to object
  • The taxpayer should double-check the name, address, and PAN number listed in the notice after receiving it
  • The evaluation year mentioned and the e-filing acknowledgment number should also be double-checked
  • Only in cases where an error was made in the initial ITR filing may a revised return be filed. You have 15 days to file your revised return after choosing to do so
  • You can only file a rectification return if you discovered a flaw or inaccuracy in the order that the income tax agency sent
  • You can grasp the purpose of the notice's issuance on the second page of the document. Additionally, it displays the variance between form 16/16A/26AS and the revenue reported on the filed return
  • The intimation message was generated by a computer, thus there is a chance for error or misappropriation. So, when the notice arrives, the taxpayer need not become alarmed
  • If the intimation notice requests that the taxpayer.

Penalty for Non-compliance With Income-Tax Notice

If the taxpayer does not respond to a notification sent to him under Section 142(1), Section 143(2), or a direction given under Section 142(2A), he will be subject to a penalty of ₹10,000 under Section 272A for each infraction.

Why Vakilsearch?

To avoid penalties, you should immediately respond to income tax notices. If you are unaware of the procedure and need expert guidance then reach out to tax experts from Vakilsearch. We can always help you respond to income tax notices easily.

  • Initially, an expert will get in touch after your request
  • They will clarify all your queries
  • Subsequently they will respond to the income tax notice with appropriate documents.

Reach out to experts at Vakilsearch to solve income tax notices right now!

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