TAX NOTICE

Income Tax Notice

For example, notices issued by the Income Tax Department for various purposes. The notice may have been made simply because income tax returns have not been filed, or while filing the returns, any defect is pending, or many such other cases where the tax department asks for additional documents or information. Nothing frightening or alarming is there in the notice that received, but taxpayer needs to understand the notice, the nature of notice, and the order of the requestor in the notice before taking the steps towards compliance.

India Filings provides a series of overall services for both families and businesses to continue being compliant. In the event of an income tax notice arriving, a call to the Tax Expert at India Filings can clarify the content of the notice and course of action.

What is an Income tax Notice?

As has been discussed above, A notice by the Income Tax Department is a formal communication issued by the Income Tax Department to a taxpayer. It could be in regard to various income tax-filing and compliance issues, including demands for more information, clarification of differences in a tax return, audit, demand for tax payments, or refund notifications. The notice from the income tax department specifies exactly what the department requires from the taxpayer, be it submitting specific documents or explaining income or deductions claimed.

Reason for Income Tax Notice

Following is some of the possible reasons for receiving an ITR notice:

• Tax Return Disputes: Your tax returns could include a dispute between income declared, deductions claimed, and data available with the Income Tax Department. In such a case, you could receive an ITR notice seeking clarification.
• Non-filing notice for income tax return: If the time limit remains, this department will issue an ITR notice reminding you to file the income tax return.
• High-value transaction notice: The department will even issue a notice explaining your high-value transactions that don’t tally with your reported income.
If there’s a discrepancy in the tax deducted at source or collected tax at source from your Form 26AS and income reported on the tax return, you will get a notice.
Investments or deposits in your name where you are holding large investments or huge deposits which don’t match with your reported income the department might ask for the source of the funds.
• Property Sales: In case the property sale is concerned, and the declared value is less than the guideline value formulated by the state, the notice is raised.
• Return Scrutiny: The department scrutinizes randomly selected returns to see if they are in good order. You would get an ITR notice for further documentation and clarifications if your return gets selected.
• Demand for Tax: When the department computes, suppose you have unpaid taxes from your return or any adjustments they have made, then you will receive a notice demanding the due tax.
• Refund Claims: If you filed a claim for refund on your tax return, you might receive a notice to verify before the processing of the refund.
• Foreign Assets or Income: Foreign assets or income may also bring forth a notice if the agency wishes to have more information on it or if there is incomplete detail in the report.

Types of Income Tax Notice

Let us understand the various types of notices or intimations issued by the Income Tax Department.

Types of Notice	Description
Notice u/s 143(1) – Intimation	It is the most frequently received income tax notice. Income tax department sends this notice asking for a response to errors/incorrect claims/consistency in an income tax return filed. If a taxpayer wants to amend the return after receiving such notice it has to be done within 15 days. Without amendment, the tax return gets processed after making the changes suggested in the 143(1)-income tax notice.
Notice u/s 142(1) – Inquiry	This ITR notice is also sent to the assessed when the return already filed requires further details and documents that would fill in any missing pieces. It can also be sent to require additional information and documents from a taxpayer.
Notice u/s 139(1) – Defective Return	In case the filed income tax return does not bear all the details or possesses the wrong one, an ITR notice under Section 139 (1) will be issued. If a notice under Section 139(1) is served, then the error in the return must be corrected within 15 days.
Notice u/s 143(2) – Scrutiny	An income tax notice under Section 143(2) is issued when the tax officer is not satisfied with the documents and information submitted by the taxpayer. Such taxpayers who have received notice under Section 142(2) have been selected for detailed scrutiny by the Income Tax department and are, therefore, required to submit additional information.
Notice u/s 156 – Demand Notice	This kind of income tax notice is issued by the Income Tax Department when the taxpayer has any amount of tax, interest, fine, or any other sum due from him. All such demand tax notices will mention the sum outstanding and payable from the taxpayer.
Notice Under Section 245	This can be achieved through a notice u/s 245, if the officer holds that tax has not been paid for previous years and wants to set off the refund of the current year against that demand. But adjustment of demand and refund could have been done only when proper notice has been given and opportunity for hearing has been given to him. The receiver is obligated to respond to the notice within 30 days of receipt date of such notice. In case the person does not respond by the end of stipulated time, the assessing officer can assume this as a consent and thus carry out the assessment. It is therefore advisable to respond to such notice at the earliest end.
Notice Under Section 148	The officer may have reason to believe that you have not disclosed your income correctly and, therefore, have paid lesser taxes. Or the individual may not have filed his return at all, even if you must have filed it as per law. This is termed as income-escaping assessment. Under these circumstances, the assessing officer can assess or reassess the income according to the case. A notice should be served to the assessee by the assessing officer, asking him to furnish his return of income, before making such an assessment or reassessment. For this purpose, a notice is issued under the provisions of Section 148.

What Are the Methods for Serving Income Tax Notices?

The Income Tax Act of 1961 outlines the procedure for issuing notice, orders, or other communications, which can be delivered in several approved ways.

To Whom the Notice is Issued: IT Notices are usually addressed directly to the person affected. In case a notice involves a minor, it is usually addressed to his or her guardian. However, unless the mistake in the description of the addressee tends to conflict with the taxpayer’s identification, correction of such mistakes is often feasible.
• Mail Service: IT Notices can be by registered mail wherein the letter is appropriately addressed, prepaid, and posted.
• Fixation on Property: In case the person to whom notice is to be given ignores the notice or his whereabouts cannot be traced, the notice can be affixed, in a place where it is likely to come to the notice of the person or any adult member of his family, at his residence or place of business.
• Group Notices:
IT notices can be served on the karta of Hindu Undivided Families (HUFs) or all members in case the karta is dead.
For partnership firms or associations, it notices can be served on any of the existing or former partners or members.
• In the case of Closed Businesses:
It is forwarded to the person whose income is being estimated.
For companies or partnerships, to any member who was a member of the business at the time it ceased its operations.
For corporations, notices are transmitted to the principal officer or director.

Steps to Take After Receiving an Income tax department notice

When you receive an income tax notice, handling it carefully and systematically is important. Here’s what you should do:

Carefully read the Notice: Explain why it was issued. It will indicate the concern or requirement the Income Tax Department has on a particular matter.
• Checking of Details: Confirm whether the notice really belongs to you by checking your name, PAN number, address, and the assessment year shown. Hence you will be assured the notice is real and intended for your taxation matters.
• Identification of the Problem: One should identify what error or discrepancy in his income tax return was the cause of notice. It could be a mismatch in income, high-value transaction, or incomplete disclosure.
• On time filing response: He should respond to the notice and say something about it within the specified time so that he will not face liability by way of penalty or prosecution. A notice shows what is required within what period of time.
Along with providing the query response, provide all relevant documents and clarifications so that the queries put up by the department are well addressed.
• Verify Online Account: Ensure that the notice you have received is also reflected on your account of the Income Tax Department e-filing website. This ensures that it is a genuine notice and you can keep track of responses and subsequent communication from the department.
• Professional Assistance: If the notice is based on complex tax matters or the nature of notice is such that you are unsure what to do, seek professional advice from an India Filings tax expert.

Documents required to reply to an Income Tax Notice

They should vary with the kind of notice for income tax that is given to the taxpayer. For basic documents to reply to an income tax notice, it should be the following:
• A copy of Income Tax Notice.
• Proof of source of income, such as the original Part B of form 16, Salary receipts, etc.
• TDS certificates, Form 16 (Part A)
• Investment Proof if applicable.
It is always recommended to get notice checked by tax experts. Thus, after uploading the soft copy of the Income Tax notice, the experts will analyse the notice and suggest the most appropriate solution. Based on their advice, you can ask for the required documents. For this, please mail a copy of the Income Tax Notice and your questions at sales@indiafilings.com.

How Can India Filings Assist with Your Income Tax Notice?

India Filings can assist in answering Income Tax notices through the following steps:
• Expert Consultation: Personalized advice and guidance from experienced Tax Experts.
• Notice Analysis: Understand the details and requirements of your Income Tax notice
• Document Identification: Supporting identification of documents to be prepared for response.
• Response Preparation: Preparation of accurate and timely responses so that income tax concerns may be addressed. Ensure that your response is compliant with income-tax laws to avoid further queries or penalties.
Get professional help from India Filings to file your income tax notice reply now!

Income Tax Notice Response FAQ’s

What is an Income Tax Notice?

The Income Tax Notice is the notice issued by the Income Tax Department to a taxpayer regarding discrepancies, requirement of more documents, audit, or other tax-related matters.

Why did I receive an Income Tax Notice?

Notices can be issued for various reasons, including discrepancies in tax returns, non-filing of returns, high-value transactions, TDS/TCS mismatches, and more.

How should I respond to an Income Tax Notice?

Carefully read the notice to understand its specifics, verify your details, identify the issue, file a timely response, and provide all necessary information.

Can I ignore an Income Tax Notice?

Ignoring an Income Tax Notice can lead to penalties, legal actions, and further complications. It’s essential to respond within the stipulated timeframe.

What if I need more time to respond?

If you need more time, you can request an extension by contacting the Income Tax Department, explaining your situation.

How can India Filings help me with an Income Tax Notice?

India Filings offers expert consultation, notice analysis, document identification, response preparation, and compliance assurance to address the Income Tax Department’s concerns effectively.

What documents do I need to respond to an Income Tax Notice?

Required documents can vary but generally include the Income Tax Notice copy, proof of income, TDS certificates, investment proofs, and any other relevant documents.

Can India Filings represent me in dealings with the Income Tax Department?

Yes, India Filings has tax experts who can represent you and handle communications with the Income Tax Department on your behalf.

How long does it take to resolve an issue after receiving an Income Tax Notice?

Resolution time is determined by the complexity of the issue and response time of the department. India Filings ensures that it accelerates the process through timely and correct submissions.
Is it necessary to visit the Income Tax office if I receive a notice?

Not necessarily. Many issues can be resolved online or with the help of tax professionals like India Filings without needing a physical visit.