If you have received an income tax notice even after filing your returns on time, there is no reason to panic. But you need to read the notification thoroughly before responding. If you have any doubts about addressing the discrepancies, you should seek professional help.

The Income Tax Department sends notices if there is any discrepancy in ITR, like choosing the wrong section to claim a deduction, incomplete income information, etc. Not all notices are related to tax demand or penalty. It could be for additional details on income. Let us understand when the I-T department can send a notice and what you should do if you have received one.

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When the I-T Dept Can Send You Notice

Incorrect or Non-Disclosure of Income: For non-disclosure of income or reporting less than the actual income, a notice can be sent under section 139(9). According to the income tax website, “You can either file a fresh return in case the time provided for filing the return in a particular assessment year has not lapsed, or you can also choose to respond to Notice u/s139.”

Not Filing ITR or Missing Information: If a taxpayer did not file ITR within the stipulated period or some information is missing, a notice can be served to under section 142(1) of the Income-tax Act, 1961. The department can issue this notice even after the assessment year ends; even if such taxpayer is not required to file ITR, they must reply to the notice.

Notice for Scrutiny: Sometimes, the notice is sent for scrutiny under section 143(2) of the Act. This may happen when the department feels that the information provided by the taxpayer is incorrect and the documents do not support it. Then, it issues a notice seeking additional information to find out if there is any tax evasion in the return.

Tax Demand: The notice of demanding tax payment is the one that dreads taxpayers the most. It is issued under Section 156, asking a taxpayer to pay tax, interest, and penalty, if applicable, within the stipulated period given in the notice.

Offsetting Refund: If the notice is under Section 245, it is just an intimation to the taxpayer that a tax not paid in the previous years is being set off against that year’s (the current year) refund. A reply must come within 30 days, failing which the refund set-off is considered consented.

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What You Should Do If You Receive A Notice:

Read the notice to understand why it was sent to you and take appropriate action. It could be an intimation of refund offset, tax demand, or a request for more information.

• Check the due date, before which, you are asked to respond to the notice, and ensure that you do it within time.
• The notice should bear a Document Identification Number (DIN), a 20-digit unique number. The I-T department must use it for every communication.
• Note that the information you sent is on its official website. Don’t act on any random mail or message for taxation purposes.
• On the official income tax website, you can log in and check for any notice or pending response in the ‘pending action’ tab.
• You can check your ITR form on the income tax website and find out the discrepancy for which the notice was sent.
• Seek help from tax advisors or a chartered accountant, if needed, to send all the information requested by the department.
• Ensure that you respond within the specified time. Not responding to it would result in penalties and unnecessary hassles.