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Income Tax Notice

Income Tax Notice is issued to tax payer for seeking certain documents from the tax payer. When an Assessing Officer has a valid proof to believe that the income of the taxpayer has escaped assessment.

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Income Tax Notice

When a tax payer files the income tax return to the department, then after the submission of the return, then the department process the return and at that time department may issues various type of notice to the tax payer, which may be sometimes in the form of Intimation or may be some time in the form of scrutiny.

Tax-Payer may always get worried of Income tax notice when they heard of it, but there is nothing to be worry about it. There is always a reason for the notices.

We need to understand the notice issued by Income tax department.

1. Notice u/s 143(1): Intimation of the return

When we file the Income tax return, the same is electronically processed by the Income tax department, After processing the department sends the intimation to the assesses  in three instances:

  • tax liability to be paid
  • refund to be determined
  • no refund or demand, but there is an increase or reduction in the amount of loss

Intimation from the department shall be received within one year from the end of the year in which the return has been filed.

2. Notice u/s 139 (9): Defective Income tax return

At the time of  processing the return, if the department  finds any defect, mistake or missing information in the return filed, then the department issue the notice u/s 139 (9)  to ratify the error. Department cross verify the return from the information they already have.

Defective return shall be file within 15 days, if the response is not filed within 15 days the return shall be treated as invalid.

3. Notice u/s 142(1) – Inquiry Notice before Assessment

When a return is filed and during the assessment period, assessing officer is of the opinion to demand for the further details and documents. Then, the assessing officer may do so and it is obligatory on the part of assesse to furnish it.

4. Notice Under section 143(2): scrutiny Notice

After receiving the document in pursuant to the notice send u/s 142 (1), if the AO is still of the opinion that there is a need to do scrutiny, and then the AO may issue the notice u/s 143(2). The AO wants to satisfy, that the assesses has not done any of the following fault s:

  • understated your income;
  • claimed excessive loss; or
  • paid lesser taxes

It is to noted that the section under which it will be scrutinized is different from the one in which the notice has been issued.

Scrutiny notice can be issued upto 6 months after completion of relevant assessment year.

No scrutiny assessment can be done of the assesses who has not furnished his return of Income. In such a case, Best Judgment is to be done by the AO and can assess the tax liability under it.

When a person has not filed the return of Income,

Section 143(2) enables the Assessing Officer to make inquiry and do the regular assessment.

If assesses do not comply with the provisions of this section:

– It may result in Best Judgment Assessment u/s 144, or

– Penalized under Sec 271(1) (b) i.e. Rs10, 000 for each failure, or

– Prosecution under Sec 276D which may extend up to 1 year with or without fine.

Type of scrutiny notice which can be issue:

Limited Scrutiny– These are the Cases in which the Income Tax Department has restricted the scope of the scrutiny to the particular area .Example: Claim of foreign tax credit, sale of property)

Complete Scrutiny – In complete scrutiny, there is a complete scrutiny of all the relevant documents.

Manual Scrutiny – In some cases, scrutiny are done in detail as per criteria set by CBDT.

Section-148 Notice under Income Escaping Assessment

Notice of Income escaping assessment by the income tax department is given, if AO is of the opinion that certain incomes has escaped assessed or income has been assessed at a lower rate as prescribed by the authorities or if excessive loss of allowances has been allowed. In such a situation, AO is entitled to reassess the assessment of the relevant assessment year.

It is the duty of the AO to rely on substantial evidence before initiating procedures

It is necessary that the assessing officer conducts his operations in good faith.

5. Notice under Section156- Notice of Demand

When any interest, tax, penalty, fine or any other sum is to be payable in respect to any order passed, then the AO shall serve upon the assesses a notice of demand, specifying the sum do payable.

6. Notice under Set off of refunds against tax remaining payable-section 245

When an amount is payable by the assesses and refund has to be claim by the assesses, then such transactions are ‘inter-adjusted’.

It is kind of an intimation to the assesses not the notice issued.

 

 

 

Frequently Asked Questions

If you get Income tax notice, do not panic respond to the notice and provide the documents and information sought by the department. File a rectified return and pay the tax due, if any, within the specified period. It is better to authorise a tax expert to respond to the notice.

To check if there is any tax notice you have to follow the given steps:

• First Login to the income tax portal http://www.incometaxindiaefiling.gov.in/home using user Id (PAN Card), Date of Birth and entering your password and captcha code.

• From the top menu, select WORKLIST.

• Select the option “For Your Action”.

•If there are pending notices against you, it shall be listed there.

Under s. 142(3) of the Income Tax Act, 1961 scrutiny assessment is discussed which is also known as detailed assessment. In this assessment the taxpayer receives the notice only if there is some doubt about the authentication of income or has information regarding income concealment. This scrutiny is made to confirm the accuracy of various claims or deductions etc. made by the taxpayer while filing income tax returns.

You can check the tax order online by the following ways:

• Login to the 'e-Filing Portal http://www.incometaxindiaefiling.gov.in/home.

• The Move to the menu ‘My Account’ and select ‘Service Request”.

• Then select ‘New Request’ and select the Request category as ‘Intimation under section 143(1), 14/16(1)/35

• Then click on “Submit”.

In case, you did not respond to the notice within 30 days of receiving the intimation then the return of income will be processed automatically after making necessary adjustments as per section 143(1)(a) of Income Tax Act, 1961.No further opportunities would be provided to make adjustments after 30 days.

Visit the income tax filing site and then download the right Income tax return form under the given assessment year. And then from the given options listed select in response to a notice under section 139(9) where the original return filed was a defective return. Fill the reference and acknowledgement number and fill the form with rectifications

It is mandatory to file Income tax return for a company and firm. However, individuals, HUF, association of persons are mandatorily required to file return of income if the income exceeds the basic exemption limit of Rs 5 lakhs. This income limit is different for senior citizens and super senior citizens.

The outstanding tax demand can be paid online as below:

• Tax payments can be made through the online tax payment site under e-taxes.

• Make the payment quoting head ‘400’.

• Challan Status: You can ascertain the status of your payment Challan through the website https://tin.tin.nsdl.com/oltas/index.html These payment will also be reflected in Form 26 AS statement.

You can check the tax demand status by following steps:

• Login to 'e-Filing' Portal www.incometaxindiaefiling.gov.in.

• Go to the'e-File' menu and Click on 'Response to Outstanding Demand'.

• All outstanding demandswill be displayed here. Click on 'View' hyperlink under 'Response' column.

Income tax return can be filled after paying all taxes and dues like interest, ITR filled without payment of taxes is termed as defective return under section 139(9) in that case the assessment officer will give you the chance to remove your defect within 15 days from receipt of notice u/s 139(9) which means you can pay taxes and file return in response to section 139(9).

The tax amount which is yet to be paid or skipped while paying of tax is the outstanding demand amount in income tax.

• Login to the income tax filing portal.
• Go to the ‘e-File’ menu and Click ‘Response to Outstanding Demand’
• Click the hyperlink’ submit’ under the Response column.
• Choose any one of the listed responses like:

• Demand is correct

• Demand is partially correct

• Disagree with demand

• Demands are not correct but agree for adjustment.

• On choosing Demand is correct, click on the submit button to confirm and complete the response to submit.

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