How to deal with income tax notice?

Let us look at some regular income tax notices that you could receive from the IT department and how to deal with income tax notice?

November 07, 2019 10:07 IST | India Infoline News Service
Income Tax
Getting an income tax notice is nothing new and there is hardly any reason to panic for the same. Most income tax notifications are routine in nature and in many cases, the notices pertain to small errors while filing. You can just log in to the Income Tax website and rectify the error. The most important thing is that you don’t ignore the income tax notice or put it off to a future date. Take up any income tax notification served on you with utmost urgency. The department is more inclined to consider your reasons if you reply to income tax notice immediately. Let us look at some regular income tax notices that you could receive from the IT department and how to deal with income tax notice?

Types of income tax notices and how to respond to them

1. Notice 131(1A)

Notice when the AO believes you have concealed income

This notice is issued by the IT department under Section 131(1A). When the assessing officer (AO) has reasonable grounds to believe that you have not shown certain incomes in your returns, such notice may be issued to you. This notice is served electronically and through physical mail. The AO will issue such a notice based on your expenditure / investments being out of sync with your known sources of income or other incomes they have been able to track through your PAN / Aadhar link.

How to respond to 131 (1A)?

Your first task is to reply to the income tax notice within the stipulated deadline and set up a suitable date for personal hearing. You need to carry physical documents to justify your explanation to the AO. The AO may either dismiss the notice or ask you to pay additional tax with interest and penalty.

2. Notice 139(9)

Notice when returns are defective due to technical reasons

This notice is issued under Section 139(9) and is normally for technical errors. These include usage of wrong form, TDS details wrongly uploaded, TIN number mismatch, variance with Section 26AS, etc.

How to respond to 139 (9)?

Most of these can be resolved online and personal hearing is not called for. You just need to log into your Income Tax login using PAN and password and make the changes and re-file the returns. Once the error is rectified, the IT department accepts it and processes the same. Here again, it is important to meet the deadlines mentioned.

3. Notice 143(1) 

Demand notice for additional tax or incorrect information

This is issued under Section 143(1) of the Income Tax Act. It needs to be remembered that this notice is sent to every tax assessee. Hence, you need to check at the end of the notice. If the notice says that no amount is claimed, it would be just an intimation of refund or processing of returns.

How to respond to 143 (1)?

You can just file the notice away and no action is required. However, Section 143(1) notices are also issued if some income head is missed out or if the information is not matching with the master record of the IT department. Even if you have forgotten to mention tax-free incomes like dividends or agricultural income, such notice can be issued as the onus is on you to disclose all incomes, whether taxable or not. This notice can again be rectified online and even the penalty / interest if any can be paid online itself. You must respond to such notices within 30 days of the date of the notice.

4. Notice 148

Reassessment pertaining to returns of last six years

The IT department can reopen any of your past cases up to 6 years old for reassessment where it has grounds to believe that some income head was left out.

How to deal with income tax notice under Section 148?

There are a few basic things to remember. You will have to re-file you returns and also you can decide whether you want to dispute the notice or not. You are entitled to receive a copy of the reasons for the reassessment before responding. Ensure that you make a clean admission here since misrepresentation in such cases is a serious and punishable offence.

5. Notice 156

Notice for outstanding tax, penalty, and interest

This notice is normally issued under Section 156 of the Income Tax Act and pertains to any outstanding tax on account of under-investment, outstanding interest for late tax payment or any penalty dues.

How to respond to 156?

Any notice under Section 156 calls for immediate action on your part and you can log into the Income Tax website and pay the dues. Once the same is done, the notice automatically stands closed.
The moral of the story is that majority of the income tax notices you receive are routine in nature. Responding to them quickly with adequate data is important; of course in an honest and transparent manner.

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