Are you getting Income tax notices even after filing your income tax returns? This may be because the income tax officer has found some other incomes which you haven’t declared in your return. Once he finds your nondeclared incomes, then surely you will get income-tax notices. Receiving income tax notices can be scared for some people. However, it depends on the reason for issuance. But you do not need to worry about receiving income tax notices as your assessing officer has to do his duty too after you file your return under income tax act 1961.
Income Tax Notices under Income Tax Act 1961
The assesses can get tax notices whether or not they have filed the return of income under section 139 of IT Act. If you have filed your return, you will receive an intimation from the department. This intimation is usually sent through email from centralized processing center, Bangalore. The time limit is up to one year from the end of the financial year in which return was filed. Example-Suppose you have filed your return of income on 29th July 2016, you will get intimation on or before March 2018).
However, If you haven’t received any intimation within this period, then ITR– V (acknowledgment) of the return is considered as an intimation. Some common reasons leading to tax notices from income tax department may include – escaped income, not filing returns if income exceeding the exemption limit, not declaring income from other sources, the mismatch in TDS details as per Form 26 AS and details filed in return and mismatch in income, expenses, and investment. We will cover the various income tax notices under income tax act and how to reply to every notice accordingly.
Income Tax Notice u/s 142(1) ( First Notice)
The AO’s ultimate objective is to do our assessment. But before that he has to check our total income, total tax paid. After the year-end, the assessing officer will get basic information from us through return filing that how much we earned and paid taxes. The Return of income is basically FIR (First information return) for AO.If we don’t file ROI, we may get income tax notices under various sections. Basically, when you receive tax notice under section 142(1), there could be two possibilities. First is either you didn’t file your ROI or you filed it on time but AO wants you to produce more documents.
As per this income tax notice, the assessee has to file his return of income to the income tax department. Under this section, the AO asks the assessee to file the tax return within the prescribed time limit provided by him.In cases where assess has already filed their income, the AO may issue this notice asking him to produce some documents for the purpose of assessment.
This section is also useful when AO wants to assess scrutiny assessment. This is the first notice you get. The Compliance with this notice is mandatory. Noncompliance will lead to the penalty of Rs10, 000. Moreover, if you don’t produce books of account to the AO, he will make your assessment to the best of his judgment. However, he can ask for BOA & documents only for 3 preceding years. There is no time limit to issue notice u/s 142(1)
Respond to Income Tax Notice u/s 142(1)
If the assessee receives income tax notice u/s 142(1), then he must provide all documents asked by the AO in the notice. He must submit these documents even if he believes that they aren’t relevant. Further, if the assessee gets an income tax notice under this section but do not file his return, then has to file the income tax return within the prescribed time mentioned in the notice and a proof of the same should be submitted along with the documents.
Income Tax Intimation Notice u/s 143(1)
This notice can be only sent if you have already filed your return of income. So if you haven’t filed your return, then you would not get this notice. This notice is also known as a summary assessment of your return. Moreover, this intimation u/s 143(1) is simply considered as the summary assessment of your returns since the AO has found the return filed by you to be matching with his computation under section 143(1). Further. if the officer’s computation shows amount excessively paid by the assessee, then a refund notice is issued and demand notice in case the officer’s computation shows a shortfall in your tax payment. The Time limit for issue of this notice is up to 1 year after the end of the financial year in which return was made.
Respond to Intimation u/s 143(1)
If the intimation notice shows that you will get the refund. Then you do not need to do anything. You will get the refund credit directly to your bank account. If there is no difference between your computation and AO computation, then also you do not need to do anything. In a case where the difference leads to the demand for tax. Then you have to pay to the department within 30 days. However, If you haven’t received any intimation within this period, then ITR– V (acknowledgment) of the return will work like an intimation u/s143(1). The income tax notice reply letter is here.
Income Tax Notice u/s 143(2) ( Scrutiny Assessment)
The assessee can receive income tax notice u/s 143(2) if his income tax return is selected for detailed assessment or scrutiny assessment u/s 143(3). In other words, Scrutiny assessment or detailed assessment u/s 143(3) means the opening of assessee ‘s case confirm the correctness and genuineness of various claims, deductions, etc. made by you in your Income Tax Return. The AO wants to ensure himself that you have filed the income tax return with the correct income and paid the tax accordingly. Also, practically whenever an assessee receives an income tax notice u/s 143(2), then he also receives notice u/s 142(1) for production of the necessary documents, information.
Respond to Income Tax Notice u/s 143(2)
When you receive the tax notice u/s 143(2), the first thing to do is to check whether the notice is valid. This notice can be issued within 6 months after the end of the financial year in which return is submitted. For example, if you had filed your return on 30th October 2016, then you may receive notice under section 143(2) by 30th September 2017 which is 6 months from the end of 31st March 2017 (end of FY 2016-17 in which you had filed your return). The taxpayer must get together all the income and expense documents and other relevant papers ready, and should not miss the hearing. The income tax notice reply letter is here
Income Tax Notice u/s 148 ( Income escaping assessment)
The assessee receives income tax notice u/s 148 only when there is income escaping assessment. This means that the AO can send you a notice u/s 148 if you haven’t declared your income in your ROI. Moreover, the notice shall be valid only if your AO has reasons to believe that it is taxable. This reasons to believe should not be a mere change of opinion but has evidence about income escaping assessment. Further, AO can send you the notice even after completing your assessment. In short, even after assessment, if the AO is of the opinion that some income of the assessee escaping assessment then income tax notice u/s 148 can be issued. As assessee may be asked to file the income tax return for the relevant assessment, reassessment or recomputation.
AO can send the notice within 4 years from the end of the relevant assessment year. However, if the income escaping assessment is exceeding Rs 1Lakh, then AO can send the notice within 6 years from the end of the relevant assessment year. For example, suppose you file your return in AY 2017-18, then AO can serve you notice on or before 31st March 2022 (for 1lakh or less than 1lakh cases). In the case of more than 1lakh cases, you can receive income tax notice u/s 148 until 31st March 2024.
Respond to Income Tax Notice u/s 148
If an assessee has received income tax notice u/s 148 & AO wants you to file ROI, then he must file and show nondeclared taxable income. After filing ROI, the assessee can ask a copy of reasons recorded for issuing the notice by AO. place on record his objections for initiating the proceeding. However, if he doesn’t have any nondeclared income, then he can reply to AO by treating his original return of income as a return filed u/s 148. The income tax notice reply letter of income tax notice u/s 148 is here.
Demand Notice u/s 156
If the Assessing officer has reasons to believe that there is interest, penalty, fine payable by you. Then he may serve you notice under section 156 ( Demand for payment of tax). The demand notice shall include pending dues you have to pay. The specimen of notice u/s156 is here as under-
Respond to Demand Notice u/s 156
If you receive an intimation u/s 143(1) regarding intimation of your return and it shows the pending dues. Then this intimation will work like a demand notice u/s 156 and you would not receive any separate notice. You have to pay the dues within 30 days from the day of receiving the notice. Visit https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp and pay your pending dues.
Income Tax Notice reply letter Format
Even a minor error in the return can invite income tax notice from the income tax department. However, you don’t need to worry about it, but just filing the rectified return. Whenever the taxpayer receives the tax notice, he often goes for searching income tax notice reply letter format. Let me tell you that there is no prescribed reply letter format. It also depends upon the notice & the details which an assessing officer requires from you. The taxpayer must make sure that he is providing enough document, proofs/evidence which the AO requires from him.
Dealing with above income tax notices
We do often worry when we receive income tax notices from the department. In India, some people feel that they did some crime when they receive tax notices. We should not be worry because the tax department is just doing their job & we have to respond them. Always check the validity of notice as receiving income tax notices after its due date is invalid notices. If you haven’t filed your income tax return on time, then you should expect a notice from the department. If AO opens your case in scrutiny, then still you don’t need to worry but you should always take advice from financial advisors, professionals such as Chartered Accountant. Their professional advice will surely help you in filing the notice on time and more accurately.