Income Tax Notice
Receiving a notice from the Income Tax Department can be stressful, but it’s important to understand that it doesn’t always mean something is wrong or illegal. Notices may be issued for simple information requests, mismatched data, or assessments. Responding correctly and on time is key to resolving any issue peacefully and legally. This guide explains the types of income tax notices, their reasons, how to respond, and tips to avoid them in the future. What is an Income Tax Notice? An Income Tax Notice is a formal communication sent by the Income Tax Department of India to a taxpayer. It may be issued for multiple reasons such as: Notices are usually sent under different sections of the Income Tax Act, 1961, depending on the nature of the query or issue. Common Reasons for Receiving an Income Tax Notice Types of Income Tax Notices Let’s look at the most common types of notices and the relevant sections under which they are issued: 1. Notice under Section 143(1) – Intimation Notice This is not exactly a “notice” but an intimation about: Issued automatically after processing your return. No response is needed if everything matches. But if there is a tax demand, pay it within 30 days. 2. Notice under Section 142(1) – Inquiry Before Assessment This is sent when the Assessing Officer wants: You must respond within the time limit to avoid penalty or best judgment assessment. 3. Notice under Section 143(2) – Scrutiny Assessment This notice is issued when your return is selected for detailed scrutiny. The department suspects: You need to appear before the Assessing Officer or submit documents online. 4. Notice under Section 148 – Reassessment Issued when the department believes income has escaped assessment. Common in cases where: This can be issued up to 10 years after the relevant assessment year (in case of income above ₹50 lakh escaping assessment). 5. Notice under Section 156 – Demand Notice If tax, penalty, or interest is payable, this notice is issued. The amount must be paid within 30 days to avoid further consequences. 6. Notice under Section 139(9) – Defective Return Your return is considered “defective” if: You need to rectify and re-submit the return within 15 days. 7. Notice under Section 245 – Set Off Refund Against Tax Demand This notice is issued when you are eligible for a refund, but have past tax dues. The department seeks your approval to adjust the refund amount against pending demands. How to Respond to an Income Tax Notice Here’s a step-by-step approach if you receive a notice: Step 1: Don’t Panic Understand that not all notices are negative. Many are just intimations or requests for clarification. Step 2: Read Carefully Check the section, reason, assessment year, and deadline mentioned in the notice. Step 3: Login to Income Tax Portal Go to https://www.incometax.gov.in and log in using your PAN and password. Go to “e-Proceedings” or “View Notices”. Step 4: Collect Documents Get all relevant documents — Form 16, Form 26AS, AIS, bank statements, etc. Step 5: Draft Response or Hire a CA Depending on the complexity, prepare a response or consult a Chartered Accountant or tax expert. Step 6: Submit Online Most notices allow submission of documents and explanations through the e-Filing portal under “e-Proceedings.” Step 7: E-Verify and Follow Up Always e-verify your response and check status regularly. Sample Format: Response to Notice textCopyEditTo, The Assessing Officer, Income Tax Department Subject: Response to Notice under Section 143(2) for AY 2024-25 Dear Sir/Madam, This is with reference to the above-mentioned notice received on [Date] regarding scrutiny of Income Tax Return for AY 2024–25. I have enclosed the following documents as required: 1. Salary slips 2. Form 16 3. Investment proofs 4. Rent agreement, etc. Kindly acknowledge the submission. Please feel free to contact for any further clarification. Thank you. Yours sincerely, [Your Name] [Your PAN] [Mobile Number] How to Avoid Income Tax Notices Legal Consequences of Ignoring Notices Ignoring notices can result in: So always respond within the time frame mentioned. FAQs About Income Tax Notices Q1: Can I receive a notice even if I have filed my return correctly? Yes. Scrutiny can be random or due to third-party data mismatch, like high spending vs declared income. Q2: Is a notice the same as a demand? No. A demand notice asks you to pay outstanding tax. A regular notice may just request information. Q3: Can I respond to a notice without a CA? Yes, if the matter is simple. But for scrutiny, reassessment, or penalty-related notices, it’s better to hire a professional. Q4: What if I miss the deadline to respond? You can request an extension, but ignoring it completely may lead to legal actions or penalties. Q5: Can notices be sent by email or SMS? Yes. Notices are now sent through the e-filing portal, registered email, and SMS. Always keep your contact details updated. Conclusion Getting an Income Tax Notice doesn’t necessarily mean you are in trouble. Many notices are simply informative or routine queries. The key is to read the notice carefully, understand the reason, respond promptly, and maintain clean and accurate financial records. With digital tools, online responses, and proper documentation, most issues can be resolved easily. If you’re unsure, don’t hesitate to consult a tax advisor. Stay informed, stay compliant.










