Income Tax Notice - What steps to be taken ?

After receiving the tax returns, the tax authorities examines the returns filed and if due to any reason they believe that information submitted by an assesee is wrong or incomplete then the assesee is served with a notice demanding justifications/ penalty or any action as stated by the department in the notice so served.

There are can be some common mistakes which  can be done by the assesees  which attract the notice from the department and which should be avoided.

1. Incomplete & Inappropriate Disclosure of other Incomes in the return

2. Incorrect deduction of Tax as per TDS norms

3. High Value Transactions not disclosed with proper evidence and in line with the disclosures made by the third parties from where such income has arised

4. Mismatch in the TDS figure shown in the return vis-à-vis mentioned in the TRACES

The commonly committed mistakes related to TDS are-

– TDS on property deals not made

– Not deducting TDS on rent

5. Defective Return filed by an assesee

6. Income Tax Return not filed

7. Untimely payment of Advance Tax

8. Wrong reporting of LTCG on equity

 Responding to the Notices received from the Income Tax Department

If any of the above mistake is committed by the assesee while furnishing his income tax return for an assessment year, he may be served a notice and he has to respond to it as per the directions of the authorities in terms of the appliances; statutory norms.

Depending upon the type of error done/ mistake committed by an assessee, the notice is served to the assesee and each notice is to be responded accordingly. The notices issued by the Income Tax Authorities can be responded by the assesses by logging in to www.incometaxindiaefiling.gov.in.

We have compiled the details for the reference of the dealers as mentioned below-

Section under Income Tax Act	Reason for receiving Notice	What to do?
Sec 131(1A)	For concealment of income	1. Send all the required documents within the timeline given by the Assessing Officer 2. If all documents are not available, send all the available documents and seek more time through an application
Sec 139(9)	For Defective Return filed by the assesse – If wrong form is filled – Income details of a refund claim are missing – Multiple mistakes in filing	1. Respond within 15 days from the date of issue of notice 2. Under e-file, select e file in response to Notice u/s 139(9) to proceed.
Sec 142(1)	If you have filed your return, but the assessing officer requires additional information and documents; or If you have not filed your return, but the assessing officer wants you to.	Send all the required documents within the timeline given by the Assessing Officer
Sec 143(1)	Demand Notice for additional Tax – Due to calculation error – Due to any changes required in the return filed – Incorrect information being mentioned in the return	1. Respond within 30 date from the date of issue of notice 2. Find the notice under e-proceeding option on the portal.
Sec 143(2)	Notifying the assesse that the return has been picked up for scrutiny	Respond to the questions of the officer and send all the required documents within the timeline given by the Assessing Officer
Sec 148	For Re-assessment – If there is case of escape assessment – A case upto 6 years can be opened under this assessment	1. File a return of the income being asked 2. Ask for the copy of the notice and reasons for issuing the notice if the assesse wants to challenge the issue of notice.
Sec 156	Demand Notice for due tax, fine, interest, penalty to be paid by an assesee	1. Pay dues within 30 days 2. Go to e file option on the portal and then click on the option stating the respond to outstanding demand to pay.
Sec 245	If the assessing officer has reasons to believe, that there is tax demand which has not been paid for the previous years and he wants to set off the current year refund against that demand, notice under section 245 is issued.	1. Respond within 30 date from the date of issue of notice