What To Do When You Get An Income Tax Notice — A Guideline

More often than not, the I-T department notices can be just a routine communication or related to pointing out some error in your tax return

It is very important to understand the notice and reply promptly

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A notice from the Income Tax (I-T) department can sound scary and complicated. But, it doesn’t have to be like that always. More often than not, the I-T department notices can be just a routine communication or related to pointing out some error in your tax return. This can be easily resolved. 

While a professional can always file your taxes and take care of your tax related communication, it is important to educate yourself to ensure that no one is taking benefit of your trust. The first step in dealing with notices from the tax department is to try to understand them.

Types of Income Tax Notices

To understand a notice, you must familiarise yourself with the kinds of notices issued by the tax department. Here is a list of them.  

• Notice Sent Under Section 142 (1) - This is an inquiry notice sent before assessment of tax. This notice is sent to either understand why an individual has not filed their returns, or to request for additional information and documents in case the returns have been filed. 
• Notice Sent Under Section 139 (9) - This is a notice sent by the assessing officer if he/she believe that a defective income tax return has been filed by an individual. A defective tax return can have any errors like missing information, selection of the wrong form, etc.
• Notice Sent Under Section 148 - This notice is sent when the assessing officer has a reason to believe that the individual has filed his return on a lower income or any income chargeable to tax has escaped assessment. 
• Notice Sent Under Section 156 - This notice is issued when an individual is liable to pay any pending tax dues, interest or penalty to the tax department. 
• Notice Sent Under Section 143 (1) - This is a computer generated summary of an individual’s tax return and contains all the information like his contact details, filing details, refund sequence number, tax calculations and more. 
• Notice Sent Under Section 143 (2) for Scrutiny Assessment Under Section 143 (3) - A notice under section 143 (2) is sent to an individual if the tax department chooses to scrutinize their income tax returns to assess the genuineness of the return. The assessment under section 143 (3) is a scrutiny assessment and a detailed assessment is carried out by the tax department to ensure the individual has not understated their income, underpaid their tax or compute any excessive loss. 
• Notice Sent Under Section 131 - This notice is sent if the assessing officer believes the individual has concealed their income or a part of it from the tax department. 
• Notice Sent Under Section 245 - This notice is issued if the assessing officer believes that an individual has tax dues from the previous financial year pending. 

Responding to the Notice

Now that you are aware of the section related details of your notice, it is time to calmly go through the notice details. Firstly, you need to check all your personal information on the notice to ensure that the notice is meant for you. 

The next step is to respond to the notice. This needs to be done within the stipulated time mentioned in the notice. Time is of essence when it comes to the tax department. Always keep a record of not just all the documentation but also the correspondence shared with the tax department. Ensure that the notice you have received is available on your income tax account online. 

Once you have identified the issue with your tax return, consult a professional to file an official reply from your end. If the assessment year is open, you might have a chance to file a revised return. Else, you will have to file an appeal with the Income Tax Appellate Tribunal. 

As a practice, always try to file your tax return well in advance to allow yourself some room to correct any mistakes from your end. Finally, always remember not to give in to panic and act on a prompt basis.