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Did you get an Income Tax notice? Here's how to deal with it !

Updated on: 23 Nov, 2023 01:22 AM

Off lately, the Income Tax Department has been issuing a huge number of Income Tax Notices to the taxpayers owing to the digitalization of the process of income tax return filing and payment of tax. The data processing has become easy and fast, and even a slight mistake in your return can fetch you an Income Tax Notice. But, don't freak out, everything has a solution!

When you receive an Income Tax Notice, the first thing to be taken care of is that the notice is in your name and PAN. When you are satisfied that the notice is issued to you only then the next step would be finding the reason behind its issuance, now this can vary from very simple issues to really complex ones. Some of the reasons for issuance of notices are as follows:

  • Non-filing of return;
  • Mismatch of TDS / other information in the return filed;
  • Scrutiny of accounts;
  • Not reporting interest income;
  • Ignoring income received from the previous employer;
  • Non deposition of full amount of tax before due date;
  • High-Value Transactions (HTVs);
  • Investments in the name of family members to avoid tax;
  • Not reporting foreign assets;
  • Ignoring reporting of tax-free income.

Refer 8 Common Reasons For Why You Get Income Tax Notices! to know more about the reasons!

The next thing to verify is the validity of the notice issued i.e. the same is issued timely or not by the Income Tax Department. After the above is done, and you know the reason behind why the notice is actually issued to you, the next step would be gathering all the information and documents sought by the department and arranging them at one place so that they can be submitted at the earliest to the Department. It is important to reply timely to the Department, and if you don't have the sufficient documents ready till the time given, you can always ask for an adjournment from the Assessing Officer (AO). The same saves you from the huge amount of penalties.

Further, the reply should be accurate, relevant and therefore, it is advisable to take guidance and help of tax professionals / chartered accountants before submitting any information as incorrect submission may lead to the selection of your case for scrutiny for further investigation. In case, the Department asks you to appear in person and explain the deficiency found, you can appear yourself or authorise any representative on your behalf (being a chartered accountant, lawyer or tax expert). It is advisable that you authorise an expert representative in such situation. In any case, do not IGNORE the notice served upon you and take it seriously; the same can lead to penalties, payment of tax dues and even imprisonment in some cases.

Remember, it is really normal to get an Income Tax Notice for the most common reasons and sometimes the notices are just informative which need not be answered, all you need to is to analyse and not panic! Simply check, gather and respond! And in case, you need expert assistance and clarification, contact us at [email protected] or call +91-9116684439!

CA Abhishek Soni
CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.