How to file Reply to Income Tax Notice

Income Tax Notices:

Income Tax Notices are notices issued by the Income Tax department to the taxpayer. It is issued for various reasons like not filing income tax returns or not filing the income tax return form correctly or any such case that may arise.

Nature of Income Tax Notice:

  • Notices under section 131 (1A) of the Income Tax Act, 1961 is issued if it is suspected that you have concealed, your income by the assessing officer.
  • Notices under section 139 (9) of the Income Tax Act, 1961 is issued when there is any defect in the filing of the return form or refund form.
  • Notices under section 142 (1) of the Income Tax Act, 1961 is issued when the assessing officer wants to assess particular documents in a case.
  • Notices under section 143 (2) of the Income Tax Act, 1961 is issued as a demand notice for additional tax payments.
  • Notices under section 148 of the Income Tax Act, 1961 is issued in cases for reassessment by the officer for tracking any escaped income amount in the documents or assessments.
  • Notices under section 156 of the Income Tax Act, 1961 is issued when the taxation department demands for unpaid taxes, interest etc. from the taxpayer.

When is a person likely to get Income Tax Notice?

  • When there is a difference between the amounts filed in the returns by the taxpayer due some reasons.
  • When there is an error or mismatch of the TDS amount.
  • If there are any transactions and investments done in the name of the spouse by the taxpayer.
  • In case where the assets have not been disclosed in order to avoid wealth tax by the taxpayer.
  • When the taxpayer has not filed the tax returns.
  • In case the Income Tax department wants see the documents provided while filing of the returns by the taxpayer.
  • If there are transactions of higher values, then it needs to be updated to the Income Tax department.
  • If the Income Tax department randomly wants to scrutinize all the documents and returns to check its compliance with the mandated provisions.

What to do when you receive an Income Tax Notice?

  • If a person has received a notice from the Income Tax department the first thing to do is not to panic and be calm and composed.
  • Always read the notice end to end and try to understand what the Income Tax department wants to convey to you.
  • Try to understand the legality of the notice served to you.
  • Check all the basic information given in the notice like your name, PAN number (if given correctly or not), name and designation of the issuing officer, year of assessment it is meant for, document identification number if any, etc.
  • Try to figure out the problem or discrepancy that has arose while filing the Income Tax Returns, for which the notice has been issued.

 How to reply to Income Tax Notice?

Earlier the taxpayer has to file a reply to the Income Tax Notice by being physically present at the taxation department now the procedure can be done online as well as per the new Income Tax Provisions. Here is a step by step guide on how a taxpayer can reply to an Income Tax Notice:

  • A taxpayer needs to go on the E-proceeding facility of the Income Tax department.
  • Under the same resources are made available to file the response to a notice electronically.
  • The Income Tax department usually sends email, SMS and even an uploaded document in the e-filling account of the taxpayer.
  • The taxpayer can check any arrears or notices pending on their name in their respective account.
  • The taxpayer can reply to all types of notices through the e-filing income tax return filing
  • Once the taxpayer has received the notice, he/ she can check it thoroughly and then respond to it.
  • A taxpayer can respond to the notice as per the prescribed format of the Income Tax department online itself. Different types of notices are to be responded with different procedure.
  • It is always recommended to reply to such notices and never ignore them as it can get the taxpayer in trouble or liable to fine or punishment.
  • In case the taxpayer is going to be late in replying, an extension for the last date to reply for the Income Tax Notice can be requested from the Taxation department, only cases of genuine reasons.

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    Author: Anil Agrawal
    EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.