How to reply to different income tax notices after ITR filing?

Why do Individuals Receive Income Tax Notices?

Even if you have faithfully paid all your taxes and filed your income tax return, you can still receive notices from the Income Tax Department. But don’t worry; there are various other reasons you can receive an Income Tax Notice. Let’s have a look at them -

• Inaccurate Information in the Income Tax Return
  Suppose there is any discrepancy in your personal details or income details. In that case, you shall receive a notice asking you to disclose your income and asset details both within India and outside India.
• A discrepancy in Declared Income and Actual Income
  You might also receive a notice from the Income Tax Department if the department suspects that you have not reported all your income. In such a case, you must prepare all your income proofs, paychecks, invoices, and bank statements.
• Unexpected Changes in Incomes and Investments
  Any substantial increase or decrease in income levels might attract the attention of the Income Tax Department. If your bank account consists of various high-value transactions, you might receive a notice from the Income Tax Department.
• Unexpected Inconsistencies in TDS
  The TDS mentioned at the time of filing the ITR must correspond to the amount mentioned in Form 26AS and 16A. If there is any difference between both the amounts, you can receive an Income Tax notice under section 143(1).
• For Review and Evaluation
  You might get a notice under section 143(2) if your ITR is scrutinized. It could be due to discrepancies or incorrect reporting. Ensure you reply as soon as possible, or the department could penalize you.
• Delayed ITR Filing
  If you don’t file the ITR by the due date, you might receive a notice from the Income Tax Department for delayed ITR filing.
• Payments of Refunds Against Outstanding Debts
  At times, you might forget to include certain interest income. However, the Income Tax Department quickly notices it and sends you a notice stating that any tax due will be deducted from the Income Tax Refund claimed.
• Tax Evasion in Prior Years
  If you have evaded taxes in the previous years and not in the current year, you might still receive a notice from the Income Tax Department under section 147 of the Income Tax Act.

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What are the Types of Income Tax Notices?

There are different types of Income Tax notices that you might receive. Below is a list of the Income Tax notices -

• Notice Under Section 142(1)
  The Income Tax authorities can issue a notice for further clarification on the ITR filed or ask for further details on the ITR under Section142(1). You might also receive a notice under this section if you do not file the ITR by the due date.
• Notice Under Section 139(9)
  The Income Tax department might send you a notice for a ‘Defective Return.’ In such a case, the AO or assessing officer grants you 15 days grace period to correct the ITR under section 139(9).
• Notice Under Section 148
  If the Assessing officer has strong evidence that you have not reported or underreported any income that is chargeable to tax or tries to evade taxes, you might receive an Income Tax notice under section 148.
• Notice Under Section 156
  The Income Tax Department might send you a notice under section 156 asking you to make the payment of any interest, tax, or penalty due. Generally, the assessee is allowed a window of 30 days to pay the amount asked.
• Intimation Under Section 143(1)
  Intimation under section 143(1) is sent to the assessee when an incorrect claim is made, or any other error in tax calculation is made. The intimation consists of a summary of the details of the ITR submitted by the assessee.
• Notice Under Section 143(2) and 143 (3)
  Notice under section 143(2) is issued when the assessee’s ITR has been selected for scrutiny or detailed checking. The IT Department sends a notice to the assessee stating that their books will be checked to determine the correctness of the claims made. And the scrutiny is conducted under section 143(3).
• Notice Under Section 131
  The Income Tax Officer can summon the assessee in person under section 131 by sending him a notice. If the assessing officer has a strong reason or proof to suspect the evasion of taxes or unreported income, he/she can send a notice to the assessees asking them to be present in person.
• Notice Under Section 245
  Suppose there is any pending tax liability from the previous years. In that case, the Income Tax Department can send you a notice and offset the prior liabilities from the current year’s Income Tax refund.

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What are the Options to Respond to the Demand Notice?

There are 3 different options in which you can respond to the demand notice. Here’s how you can respond under each option -

Option 1. Demand is Correct

When you select this option, a pop-up screen will appear with the message: "If you confirm the demand is correct, you cannot dispute it."

• Click the "Submit" button.
• A success message will appear.
• If you have a refund due, we will adjust the outstanding amount and interest against it. If not, you must pay the demand immediately.

Option 2. Demand is Partially Correct

You will see two fields to enter both the correct and incorrect amounts. After entering these amounts, choose a reason for stating that the calculation is partially correct. You must then provide documentation to support your reason. The potential reasons are:

• Demand already paid:
  • Provide the Challan Identification Number (CIN), including the challan serial number, BSR code, date of payment, and amount.
  • If CIN is unavailable, state that you have paid by challan but do not have the CIN. Include the payment date, amount, and remarks.
• Demand reduced by rectification/revision:
  • Provide the date of the rectification/revision order, details of the jurisdictional ITO who rectified it, and the demand amount.
  • Upload the effect order passed by the ITO.
• Demand reduced by appellate order but appeal effect yet to be given:
  • Provide the date of the appellate order, the reference number of the order, and details of the appellate authority.
• Appeal and stay petition filed, stay granted, or installment granted:
  • Provide the date of filing the appeal, the name of the appellate authority, and details of the office where the stay petition was filed.
  • If a stay has been granted, upload a copy of the order.
• Rectification/revised return filed at CPC:
  • Provide the filing type and e-Filed acknowledgment number.
  • Upload a copy of the challan, TDS certificate, indemnity bond, and a letter requesting rectification.
• Rectification filed with the assessing officer:
  • Provide the application date and remarks.

Option 3. Disagree with Demand

• After choosing this option, explain why you disagree with the department’s call.
• Select your reason for disagreement from the available options.
• Submit your response. You will then see a success screen with a transaction ID.
• To revisit your response, click on "View" under the "Response" tab.
• Check the transaction ID, serial number, date of response, and response type.

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How to Check and Reply to Notices on the Income Tax Portal

Once you receive a notice from the Income Tax, you have to respond to it in the following manner -

• Visit the e-filing portal, i.e., incometaxfiling.gov.in, and log in using your User Id and Password.
  
  
• Click on e-proceedings under pending options menu. It consists of notices issued to you with the timeline of response. a timeline of all actions related to the assessment.
  
  
  
• Click on the links sent in the email. All the messages related to the proceedings will be displayed.
• Click ‘Submit response’ after opening the notice. under the ‘Response’ tab for every email that requires you to send a response.
• Depending on the requirement, you can select either ‘full response’ or ‘partial response.’
• Open the notice received and click on submit response
  
  
  
• Write a description of your response in not more than 4000 words in the textbox in the area near the response/remarks.
• Upload a copy of the cover letter or annexures to serve as proof.
• Click the Checkbox to confirm that all the information provided by you is accurate.
• Lastly, you have to e-verify your identity using a digital signature and click ‘Yes.’

Have you received an Income Tax Notice or an intimation from the tax department, it is important to respond to them timely to avoid any further consequences. Take help of Tax2win tax expert in responding and resolving the notices. Hire an eCA.

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