Income Tax News: Filing your Income Tax Return (ITR) is a critical task, but mistakes can happen. If the Income Tax Department finds errors or discrepancies in your ITR, you might receive a tax notice. Based on the type of mistake and how you handle the notice, the department may initiate proceedings against you. Understanding Income tax notices is crucial to ensure you respond promptly and correctly to avoid any tax penalties.
Here’s an overview of the common tax notices you could face as a salaried individual, the reasons behind them, and the steps you can take to respond.
Section 143(1)(a): Intimation Notice
This is one of the first tax notices you may receive. Referred to as the “Intimation Notice,” it informs you whether the calculations in your filed ITR match those of the Income Tax Department. If there are discrepancies, this notice will outline the differences.
Why You May Receive It:
You could receive a Section 143(1) notice if there’s a mismatch between the income you reported in your ITR and the department’s calculations, arithmetical errors, incorrect claims, or if the figures don’t align with Form 26AS.
How to Respond:
You must respond within 30 days if there’s a mismatch. If there’s no discrepancy or the notice is about a refund, no action is required from your side.
Section 139(9): Defective ITR Notice
If your ITR contains incomplete or incorrect information, you may receive a defective return notice under Section 139(9). A common error could be using the wrong ITR form or failing to report income while claiming deductions.
Reasons for This Notice:
- Claiming House Rent Allowance (HRA) without HRA in your salary.
- Claiming tax deductions at source (TDS) without reporting the corresponding income (like FD interest).
Time to Rectify:
You have 15 days to correct the defect, but you can request an extension if needed.
Section 142(1): Inquiry Before Assessment
When the Income Tax Department notices that you haven’t filed an ITR despite having income above the exemption limit, they issue an inquiry notice under Section 142(1). This is an early-stage tax notice that asks you to file your return and provide clarifications.
Why You Receive It:
This is typically issued if you failed to file an ITR on time. The department may have information showing your income exceeds the basic exemption limit.
Response Time:
You must respond within the timeline specified in the notice, usually 15 days.
Section 143(2): Scrutiny Assessment Notice
A notice under Section 143(2) is sent when the tax department wishes to conduct a detailed review of your ITR. This is commonly called a scrutiny assessment notice.
Reasons for This Notice:
You may receive this notice if the department wants to verify the authenticity of the income, deductions, or claims you made in your ITR.
Time to Respond:
You typically have 15 days to respond, but the deadline will be specified in the notice.
Section 148: Reassessment Notice
If the department believes some of your income has escaped assessment in a previous year, they may issue a notice under Section 148.
Why It’s Issued:
The department suspects that you’ve underreported or omitted income from previous assessments. This notice precedes a more detailed show-cause notice under Section 148A(b).
Time Limit:
You’ll need to respond within 30 days. This can happen up to three years and three months after the assessment year if the income in question is below ₹50 lakh. For larger amounts, the period extends to five years and three months.
Section 245: Set-Off Refunds Against Tax Dues
If you have a pending tax refund but also owe taxes from previous years, you could receive a notice under Section 245. This notice lets you know that your refund may be adjusted against past dues.
Reason for Notice:
This notice is sent if the department finds that you have unpaid tax dues from earlier years.
Responding to the Notice:
If you’ve already settled the dues, provide proof of payment. You usually have 30 days to object if the adjustment is incorrect.
Additional Tax Notices You Might Receive
Apart from the common ones mentioned above, here are a few other tax notices that might be issued:
- Section 154: Issued to rectify any errors found after your ITR is processed.
- Section 263: If a superior officer in the tax department finds an order against the interest of the government, they can revise it within 12 months.
- Section 131(1A): Issued if there’s suspicion that you’ve concealed income. You must respond within 30 days.
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