Even after filing your Income Tax Return (ITR) on time, you may still receive notices from the Income Tax Department (ITD).
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Even after filing your Income Tax Return (ITR) on time, you may still receive notices from the Income Tax Department (ITD). While this can be concerning, it is often a routine part of the tax process. Some notices request additional information or clarifications that require timely responses, while others are simply for your information. It is important to carefully verify the authenticity of any notice before taking further action to ensure proper compliance and avoid unnecessary penalties.
LegallensIndia helps you handle income tax notices quickly and easily. We assist in verifying notices and preparing the right responses. Get expert support to stay compliant and avoid penalties.
An income tax notice is an official letter sent by the Income Tax Department to a taxpayer. It informs the taxpayer about an issue or query related to their tax return or tax payments. The notice could be about missing information, discrepancies in the filed return, tax assessments, or a request for additional documents. When a taxpayer receives such a notice, they are required to respond within the given time to resolve the matter with the tax authorities.
The Income Tax Department issues various types of notices depending on the reason for communication. Some common types include:
Each notice serves a specific purpose and requires a timely response to avoid penalties.
Under the E-Verification Scheme 2021, the Income Tax Department may issue a notice under Section 133(6) if discrepancies are found between the data reported in your Income Tax Return (ITR) and the information available in the Annual Information Statement (AIS).
Common Reasons for Receiving Notice u/s 133(6):
Steps to Respond to Notice u/s 133(6):
Review the notice carefully and compare the AIS data with your ITR to identify if the mismatch is due to an error on your part or by the department.
If the Mistake Is Yours
A notice under Section 142(1) of the Income Tax Act is issued by the Assessing Officer (AO) in the following two situations:
This notice is aimed at gathering the necessary details to ensure a fair and complete assessment of your income.
Consequences of Not Responding to Notice u/s 142(1):
Once you file your Income Tax Return (ITR), it is electronically processed by the Central Processing Centre (CPC). During processing, the income is recalculated after making certain automatic adjustments, such as:
After processing, the CPC issues an Intimation under Section 143(1) in any of the following three cases:
The intimation must be sent within 9 months from the end of the financial year in which the return was filed.
Example: If your return for AY 2024–25 was filed on 27 July 2024, the intimation can be issued up to 31 December 2025.
Note: Processing under Section 143(1) has been mandatory since Assessment Year 2017–18.
How to Analyse an Intimation u/s 143(1)?
Review the comparison between the figures filed in your ITR and the ones recalculated by the CPC.
Identify any mismatches in:
If the mismatch or demand is due to an error, you can file a rectification request under Section 154 within 4 years from the end of the relevant assessment year.
If the tax demand is correct, pay the amount using the payment link provided in the intimation.
A notice under Section 143(2) is issued when your income tax return is selected for scrutiny. This means the Assessing Officer (AO) wants to examine your return in detail to ensure that:
This notice is usually followed by a questionnaire and a request for supporting documents. The AO must issue this notice within 3 months after the end of the relevant assessment year.
Example: If Mohan filed his return on 19 June 2024 for AY 2024–25, then the last date for issuing notice under Section 143(2) would be 31 August 2025.
How to Respond to Notice u/s 143(2):
A notice under Section 245 is issued when the Assessing Officer (AO) finds that you have an outstanding tax demand from previous years, and they intend to adjust it against your current year's refund.
However, such an adjustment can only be made after:
Response Timeline: You must respond within 30 days from the date you receive the notice. If you do not respond within this period, the AO may assume that you agree to the adjustment and go ahead with the process.
Important Tip: It’s highly recommended to respond promptly and verify the accuracy of the tax demand before the refund is adjusted.
A notice under Section 245 is issued when the Assessing Officer (AO) finds that you have an outstanding tax demand from previous years, and they intend to adjust it against your current year's refund.
However, such an adjustment can only be made after:
Response Timeline: You must respond within 30 days of the date you receive the notice. If you do not respond within this period, the AO may assume that you agree to the adjustment and go ahead with the process.
Important Tip: It’s highly recommended to respond promptly and verify the accuracy of the tax demand before the refund is adjusted.
You may receive a notice from the Income Tax Department for several reasons. Some of the most common causes include:
Filing your return using the wrong ITR form based on your income type or source.
Large cash deposits, property purchases/sales, or credit card payments that are not reflected or properly reported in your ITR.
Making investments in your spouse’s name but failing to disclose them as required under the clubbing of income provisions.
Failing to report or misreporting long-term capital gains, especially from equity shares or mutual funds.
Not submitting required supporting documents when requested or filing incomplete information.
Your return is picked up for random scrutiny by the Assessing Officer for further verification.
Not disclosing income from other sources such as interest, freelance work, foreign income, or rental income.
If you have a pending tax liability from earlier years and a refund is due, the department may adjust your refund against that liability and issue a notice under Section 245.
Submitting your return without paying the self-assessment tax due, which results in an incomplete filing.
If the department believes that you have deliberately evaded tax in past financial years.
If you receive a notice from the Income Tax Department under any of the applicable sections, it’s important to act promptly and correctly. Here are the steps you should follow:
Understand the purpose of the notice—whether it’s for a mismatch, non-filing, scrutiny, demand, or any other reason. This will help you determine the right course of action.
Ensure the notice is actually meant for you by checking the following:
These details must match your records to confirm the notice is genuine.
Try to find out what triggered the notice. This could be:
Unreported high-value transactions, etc.
Log in to your Income Tax e-filing account and:
It is critical to respond to the notice within the specified time frame mentioned. Delays may lead to penalties, interest, or even prosecution, depending on the nature of the notice.
When replying:
Ignoring an income tax notice can lead to serious consequences. You may face penalties, interest on unpaid taxes, or your return may be treated as invalid. This can result in loss of exemptions, disallowance of losses, and additional tax liability. In some cases, legal action or prosecution may also follow. Ignoring such notices can damage your financial credibility, so it’s important to respond promptly and correctly.
Here is a list of commonly required documents when replying to an income tax notice:
Copy of the Income Tax Notice: The original notice received from the Income Tax Department.
Income from business or profession statements (if applicable)
Investment Proofs (if deductions or exemptions are claimed)
To verify transactions or income entries
ITR Acknowledgement / Computation Sheet
Documents specific to the issue raised in the notice (e.g., capital gains reports, rent agreements, loan statements)
Before responding to any communication received in the name of the Income Tax Department, it’s essential to ensure the notice or order is genuine and officially issued by the ITD.
You can verify the authenticity of any notice, order, or letter through the income tax e-filing portal. Here’s how:
Step 1: Go to the Income Tax e-Filing Portal. On the homepage, find ‘Quick Links’ and click on ‘Authenticate Notice/Order Issued by ITD’.
Step 2: You can verify the document using one of the following two methods:
Step 3 (Method 1): If you choose to authenticate using PAN and other details: Select this option. Enter your PAN, select the document type, input the assessment year, date of issue, and your mobile number.
Step 4: Once you enter the details, an OTP will be sent to your mobile number. Enter the OTP to proceed. If the notice is valid, the system will show the Document Identification Number (DIN) along with the date it was issued. If the document is not found in the system, it will display the message: "No record found for the given criteria."
Step 5 (Method 2): Alternatively, you can verify using only the DIN and mobile number.
Step 6: After OTP validation:
LegallensIndia can assist in responding to Income Tax notices through:
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