Income Tax Notices

Income Tax Notice - Types of ITR Notices

An income tax notice is a written communication sent by the Income Tax Department to a taxpayer alerting an issue with his tax account. The notice can be sent for different reasons like filing/ non-filing their income tax return, making the assessment, asking for certain details, etc. When the Income Tax Department sends a notice, the taxpayer has to act on the notice within the given timeline and resolve the matter with the tax authorities.

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Updated on: 23 Aug, 2023 01:38 PM

Types of Income Tax Notices

The income tax department sends different types of ITR notices to taxpayers depending on the cause of the notice. These notices are as follows –

Notice under Section 142(1)

Notice under Section 142(1)

A ITR notice is served by the assessing officer u/s 142 (1) in two cases. Firstly, if the officer requires additional information and documents pertaining to your income tax returns...

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Notice sent under Section 139(9)

Notice sent under Section 139(9)

If the AO believes that a defective income tax return is filed, he will serve you an ITR notice under this section. The error can be missing information, selection of the wrong ITR form...

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Notice under Section 148

Notice under Section 148

This ITR notice is sent in cases where the assessing officer(AO) has a reason to believe that a taxpayer has filed his ITR on a lower income or not filed when the law mandated him...

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Notice sent under Section 156

Notice sent under Section 156

If there is any type of demand like penalty, fine, tax or any other amount which the taxpayer is supposed to pay to the income tax department, a notice under Section 156 would be issued...

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Intimation under Section 143(1)

Intimation under Section 143(1)

After you file and verify your ITR, they are processed online by the tax department. Intimation u/s 143(1) is computer generated initial assessment which is sent to all the taxpayers u/s 143(1)...

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Notice under Section 143(2) for scrutiny assessment u/s 143(3)

Notice under Section 143(2) for scrutiny assessment u/s 143(3)

A notice u/s 143(2) is sent to the taxpayer if the Tax Department chooses to scrutinize the ITR of the taxpayer. The assessing officer sends this notice within 6 months from the end of the financial year...

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Notice under section 131

Notice under section 131

If the assessing officer believes that the tax payer is concealing his income or a part thereof, he can serve a notice under this section...

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Notice under section 245

Notice under section 245

This notice u/s 245 of the Income Tax Act is served by the assessing officer(AO) if it is believed that you have not paid taxes in the previous FY...

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What is the Purpose of an Income Tax Notice?

An income tax notice may be issued for the following reasons -

  • When no ITR has been filed.
  • Errors or discrepancies in the returns filed.
  • A mismatch between the TDS values and income tax returns is accessible through the Income Tax Department’s Form 26AS records.
  • The assessing officer can ask for specific documents or information from the taxpayer through an income tax notice.
  • It might be issued to conduct an audit as per section 143(1) of the income tax act.
  • For other reasons as the assessing officer might deem fit.

What should be done after receiving an income tax notice?

When you receive an ITR notice under any of the aforementioned sections, the following steps should be taken –

  • Read the notice thoroughly to find out why it has been sent
  • Check the basic details on the notice to ensure that the notice is meant for you. The notice should contain your correct name, PAN number, address, etc., to authenticate that it is sent to you. Also, check the assessment year mentioned in the ITR notice.
  • Find out the discrepancy in your income tax return that caused a notice to be served, if any.
  • Respond to the ITR notice within the stipulated time period to avoid penalties and prosecutions.
  • Ensure that your response is backed by adequate information.
  • Also, make sure to check the notice that you have received is reflected in your income tax account online.
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What are the most common causes of notice?

The most common causes for which you might receive an income tax notice include the following –

  • Mismatch in the amount of TDS reported
  • An error in your income tax return
  • Lack of submission of all the documents
  • Nonfiling of your tax returns
  • When you invest in the name of your spouse and do not mention the same in your income tax returns
  • If high-value transactions have been done during the financial year and they have not been properly reported in the income tax return
  • If the assessing officer does random scrutiny of your income tax return
  • When long-term capital gains earned from equity investments are not reported correctly
  • If the taxpayer does not disclose any income
  • If a wrong income tax return form is used for filing the income tax return
  • If your refunds can be set off against the previous year's tax liability
  • If you have evaded tax in previous financial years
  • If the Self-assessment tax still needs to be paid.

Common reasons for income tax notices to be sent

Section 142 (1)

Section 142 (1)

Return not filed within the due date of assessment period

Section 143 (1)

Section 143 (1)

Return processed successfully. Error in the amount of deduction, loss claimed, etc.

Section 143 (2)

Section 143 (2)

Notice to reconfirm that the tax return filed is accurate, and deduction has not been claimed in excess

Section 143 (3)

Section 143 (3)

Detailed assessment notice to ensure all claims, deductions, etc., are filled correctly without any errors.

Section 147

Section 147

A notice sent if the assessing officer feels that any income has not been assessed

Section 139 (9)

Section 139 (9)

In case of inaccuracy in returns such as missing information, incorrect filling of return, etc.

What documents are required to reply to an Income Tax Notice?

The type of documents required for replying to an income tax notice depends on the type of notice received. Here are some basic documents that are common to every notice -

  • The Income Tax Notice copy.
  • Proof of Income source such as (Part B ) of Form 16, Salary receipts, etc.
  • TDS certificates, Form 16 (Part A)
  • Investment Proof if they are applicable.

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FAQs on Income Tax Notice

EXC -001 means that you have done a transaction that is beyond the permission of the Income Tax Act. It is for cash transactions exceeding INR 10 lakh in a month
Yes, a salaried person can also get an income tax notice. The notice u/s 143(1) is an intimation that ITD sends to every taxpayer. However, you can receive other income tax notices if ITD has reasons to believe that income has been concealed by you or on any other grounds.
If ITD has issued any notice, it will be delivered to your registered email. You can check notices received by you through the income tax notification portal but remember, only some of the notices can be checked through the portal; for all notices inquiries, you can visit ITD and ask your query there. You can also check the authenticity of the notices issued by using “Authenticate notice/order issued by ITD” under quick links on the Income Tax website.
Yes, the income tax notification department can issue ITR notices for current account transactions as well if it has a reason to do so. For example, any transaction exceeding Rs 50 lakhs in a current bank account in a financial year should be disclosed to ITD; otherwise, they may issue notice for the same.
The communication of proposed adjustment u/s 143(1)(a) of the Income Tax Act, 1961 refers to any information by the department that they are proposing some adjustment against refund claimed by you in your income tax return, like the incorrect claim in ITR, disallowance of loss claimed in ITR, arithmetical error in ITR, etc. Such adjustment could be regarding any outstanding demand of previous assessment years.
The Income Tax Department issued a discrepancy in notice u/s 143(1), and the discrepancy can be favorable or not. If any demand raised is correct, then pay the same. IT will certainly pay you if any refund is INR 100 or more.
If any mistake is apparent from the record, you can file rectification u/s 154 (1) intimating the correction of mistakes: Click on ‘e-file’ and choose the ‘Rectification’ option from the drop-down list.
A notice u/s 143(2) for scrutiny assessment can only be issued up to a period of six months from the end of the financial year in which you furnished the return.
If you get an income tax notification, you should understand why the notice has been sent. Notices may be sent due to various reasons. For example, Notices may be sent for the details and papers required by the Income Tax Department, and it still needs to be submitted. In such a case, you need to provide the details as required. If there is any error in the ITR, then notices may be sent to rectify the error. In such a case, you should rectify any error in your return and respond to the notice within the time specified by the income tax department to avoid possible penalties.
If you don't respond to the income tax notice, there can be different types of consequences depending upon the type of Notice you have received. Such consequences include fines of up to INR 10,000 and also imprisonment for up to a year.
The income tax department issues an intimation letter/notice under section 143(1) after your return is successfully processed. It has the details of the information you submitted at the time of filing of ITR and a corresponding column showing the details as per information available with the tax department. This intimation has to be sent within one year from the end of the financial year in which the return is being filed.
You can reply to an income tax notice online. You can visit the online website of the income tax department, which is used for the e-filing of returns. Log into your online account, go to the compliance section, and respond to the notice you have received.
You can pay your tax on-demand online. To do so, you can visit the e-filing website of the income tax department and log into your account. You can then check the amount of outstanding tax demand under Response to Outstanding Tax Demand under the pending actions option. Then, under the Pay Now column, choose Click Here. You would be taken to the NSDL website to fill out the online form and pay the tax on demand. Also, you can directly pay tax by clicking the Pay Now option for the respective DRN (Demand Reference Number) on the Response to Outstanding Demand page.
If you don't respond to the notice within 30 days, the income tax department will adjust if there is some outstanding demand without giving any further opportunity to respond.
ITRV (acknowledgment) is received on your registered mail ID soon after you file ITR. Otherwise, it can also be downloaded from your account on income tax India's official website.
To submit your response for outstanding tax demand online
  • Log in to the income tax India efiling website using your PAN and password
  • Go to the pending actions section from the top banner
  • Select Response to Outstanding Tax Demand and proceed.
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.