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Income Tax Notice – How To Check And Authenticate?

Income Tax Notice

An income tax notice is an intimation or communication made to taxpayers by the Income Tax Department in writing. Such intimation aims to alert taxpayers about certain issues with their tax accounts. These notices are caused by alteration or error in the tax account, such as non-filing ITR, non-disclosure of certain income, income tax paid less than the computed, or sometimes a random scrutiny of your filed ITR. When the Income Tax Department issues a notice to the taxpayer, the taxpayer needs to respond to the notice and get the matter resolved with the tax authorities.

Type of Income Tax Notices

The Income Tax Department can issue various notices under different sections of the Income Tax Act. Some of them are as follows:

• Notice under Section 143(1)
• Notice under Section 143(2)
• Notice under Section 148
• Notice under Section 245
• Notice under Section 142(1).

Notice under Section 143(1)        

• Once the returns are filed, they are electronically processed by the CPC (Central Processing Centre). The income is computed after the following adjustments have been made to the return filed: arithmetical error recorded in the filed return, incorrect claim, Disallowance of incorrect expenditure or claimed loss, and income not included in the return.
• If any of the three conditions are satisfied, the CPC issues an intimation under section 143(1) on the successful processing of the filed return. These are remaining tax liability, refund claimed, no refund, or demand an increase or decrease in the amount of loss.
• The intimation shall be issued within one year (from the end of the year in which the return has been filed) if a tax demand exists.

Notice under Section 143(2)

• When the assessing Officer intends to proceed with the scrutinization of a taxpayer’s ITR file, the assessing Officer needs to notify the taxpayer/assessee that his file has been chosen for scrutiny under section 143(2)
• However, it is to be noted that the section according to which the scrutinization process will take place is different than that of the section under which the assessee is notified of the scrutinization process.
• During the scrutinization of a file, the Assessing Officer shall be content that the taxpayer/assessee has not done any of these acts: Understated their income, Excessive loss claimed, or Paid lower taxes.
• In response to the notice issued, the taxpayer is required to answer the questionnaire issued along with the documents attached, which the income tax department requires. The assessing officer shall serve this notice within six months once the assessment year is completed to which it belongs.

Notice under Section 148

In various circumstances of income escaping assessment, the assessment Officer has the power to assess or reassess your income if needed. However, in order to proceed for the sane, the Assessing Officer needs to issue you a notice under section 148 asking the taxpayer to furnish his return of Income Tax. A few of such circumstances of income escaping assessment are as follows;

• If the assessing Officer believes that you have not entirely disclosed your income and have paid lower taxes.
• If the assessment officer believes you have not filed your return at all, you may have filed it as per law. The concerned notice issued is supposed to be issued under the Section 148 provisions.

In order to issue a notice under section 148, a specified timeline needs to be adhered to, which was amended by the Finance Act 2021¹ and came into effect on April 1, 2021. The timeline is as follows:

• In a normal case, within three years from the end of the relevant assessment
• In case of material evidence present with the assessing officer depicting the Income of INR 50,00,000 or more has escaped assessment for a respective financial year, time can go beyond three years but less than ten years from the end of the relevant assessment year.
• Up to 4 years from the end of the respective Assessment Year: No Assessing Officer below the Assistant Commissioner or Deputy Commissioner can issue a notice in this category. Only on the orders of the Joint Commissioner (after recording the reason to do so) can an assessing officer issue a notice under Section.
• More than 4 but less than 6 years from the end of the respective Assessment Year: In this category, the notice can only be issued by the Chief Commissioner or Commissioner, that is, when the respective officer is satisfied that the income has escaped assessment. To issue a notice under Section 148, the escaped assessment income should be higher than INR 1,00,000.
• More than 4 but less than 16 years from the end of the respective Assessment Year. In this category, if any such asset (outside India), whether financial interest in a company/entity which is eligible for taxation but has somehow escaped assessment, the Assessing Officer is permitted to send a notice under section 148 for reassessment or additional details.

Notice under Section 245

• If, in case, the assessing officer has doubts that you have not paid taxes in previous years and intends to set off the unpaid taxes with the current year’s refund against the demand, the Assessing Officer issues a notice to the taxpayer under Section 245.
• However, this process only takes place if the taxpayer has been provided with a proper notice for the same under Section 245 and has been given a fair opportunity to be heard.
• The notice must be relied on with a response within 30 days from the date of issuance of the notice. If the taxpayer files no response, the Assessing Officer can presume that the taxpayer has given consent to proceed with the assessment. Therefore, it is recommended to always adhere to a timeline in responding to the notice.

Notice under Section 142(1)

Notice specified under section 142(1) are issued under the following conditions:

• If the return has been filed, but the assessing Officer has a requirement for additional information or documents;
• If the return has not been filed and the assessing offer wants you to file it.

In order to enable fair assessment, the details are called by the Assessment Officer. No response to such notices or intimation is subject to consequences such as

• For each such failure. The penalty of INR 10,000 can be levied.
• Prosecution is subject to an extension of up to one year.
• Both of the above

Causes of Income Tax Notice

Income tax notices are sometimes autogenerated by the Central Processing Centre and sometimes sent by the Assessing Officer for either one more of the following reasons:

1. Inconsistency with TDS reported amount

2. Inaccuracy in filed Income Tax Return

3. Lack of submission of all documents

4. Missing Income Tax Return (return not filed)

5. Investment made under spouse’s name but not ben mentioned in the ITR

6. Non-disclosure of High-value transactions processed in a fiscal year

7. If the filed ITR is randomly chosen for scrutiny by the Assessing Officer,

8. Non-disclosure of long-term capital gains from stock investments

9. Any income missed upon from being recorded by the taxpayer

10. Selection of the wrong form for filing an ITR

Why to authenticate?

Receiving an Income Tax Notice creates a huss for the taxpayer, even for a minor concern. Therefore, these notices are a popular form of conducting fraud, which can eventually cause damage to a taxpayer if one falls for the trap. To avoid such circumstances, one can ensure whether the notice is genuine or an act of hoax.

To ease up this process, each communication or notice by the Income Tax department issued after 1st October 2019 bears a unique Document Identification Number(DIN). For your satisfaction that the notice/order/communication received is genuine and issued by the Income Tax Authority, any notice/order or any communication can be authenticated using this service.

How do you check & authenticate Income tax notices?

An individual who has received a notice can authenticate the notice on his own using the relevant website by following the given steps.

Step 1: Visit the e-filing portal at www.incometax.gov.in. > On the “home” page, click on “Quick Links”> further select “Authenticate notice/order issued by ITD”.

Step 2: A fresh page appears, showing the first step of 3, the process to authenticate the notice by using either PAN details or the Document Identification Number (each notice is labelled with a document identification number, which is used to verify the identity of the notice)

Step 3: If you have selected the first option [PAN, Document type, assessment year, Date of Issue, and Mobile number], then fill in the detail column that appeared after the selection of the option first.

Step 4: Once all the details are filled, an OTP will be received on the registered mobile Number > Enter the OTP you have received. Once OTP is validated, the Document Identification Number (DIN) and the date of issue of the notice will be visible on the screen.

Step 5: If the Income Tax Department has issued no notice, the screen will show “no record found,” as shown in the image below.

Step 6: You may also authenticate the notice issued using the DIN (document Identification Number) and Mobile Number.

Step 7: Enter the mobile number and DIN, then select “Continue”.

Step 8: You will receive an OPT on the registered mobile number. Enter the OTP to validate. On validation, the screen will show a “success message” as shown below:

If no notice has been issued, it will again be visible as “No record found”.

Conclusion

There are numerous circumstances that lead to the issuance of a notice by the Income tax department. Receiving a notice is not a matter of concern if it is responded to well. However, not every notice deserves a response by the receiver, especially when it can be a hoax. Before responding, it is suggested to the receiver to authenticate the notice using the website to avoid being a bait for a trap. Once verified, the receiver may respond to the notice in the required manner.

FAQs

1. https://apct.gov.in/gstportal/GST_Portal/pdf/Acts_Rules/Finance_act_13_2021.pdf